Market Update November 2024: Promising month with excellent returns

October 2024 continued the "Uptober" trend, marking the tenth out of the twelfth October month that closed with a positive gain for Bitcoin since 2013. The past month was particularly noteworthy as Bitcoin surpassed its all-time high (ATH) in euros. Subsequently, the Bitcoin price broke its ATH again this morning as a result of the US elections, with a record price of €70.130. Another significant development this month was the acquisition of Bridge, a payments platform built with stablecoins, by Stripe for $1,1 billion.

MicroStrategy's CEO, Michael Saylor, is once again influencing market dynamics with the company's newly announced $42 billion equity plan and debt notes. This strategic initiative aims to initially accumulate more Bitcoin through the sale of shares. The company's stock has experienced remarkable growth, appreciating 470% over the past year and currently trading at a substantial premium. Summarised, this October has proven to be another exceptionally productive month in the crypto market.

📈 Market Update

A brief analysis on Bitcoin, Ethereum and Blockrise Fundamentals

Bitcoin Analysis

Bitcoin demonstrated a strong performance in October, achieving a 20% price increase. This growth occurred following substantial market inflows, with a majority of long-term investors retaining their holdings. The current market situation show 90,6% of the Bitcoin holders in profit, which may potentially lead to a slight market adjustment. However, should the trend of minimal profit-taking continue and holder profitability remain stable, it could indicate the onset of a year-end market uptrend.

Ethereum Analysis

Ethereum demonstrated positive momentum this month, achieving a 12% gain. As previously observed, Ethereum's performance has been comparatively modest relative to Bitcoin. While traditional asset management strategies prioritise maximising returns, this relative underperformance can be interpreted as a beneficial diversification factor within the portfolio. Notably, Ethereum retains significant growth potential, with a 50% margin before reaching its yearly peak, whereas Bitcoin, denominated in euros, has already surpassed its ATH this month.

Fundamentals

Blockrise implements a comprehensive asset management approach through its "Fundamentals" strategy. This methodology involves strategic allocation and management of assets across Bitcoin, Ethereum, and euro positions, with monthly reassessment and rebalancing.

The Fundamentals strategy has maintained its strong trajectory, delivering a monthly return of +14,5% and elevating the year-to-date performance to +43%. In the next weeks, Blockrise will release a comprehensive analysis comparing the Fundamentals performance against industry competitors, promising to unveil intriguing insights.

Following our monthly portfolio rebalance, and after thorough analysis of prevailing market conditions and upward volatility trends, the strategy maintained its strategy allocation: 77,5% in Bitcoin, 15% in Ethereum, and 7,5% in euros. This positioning is designed to optimise the risk-return profile within the current market environment.

🗞 Crypto Highlights

An overview of the most notable events in crypto:

Unprecedented Inflows to Bitcoin ETFs

In October, Bitcoin ETFs experienced record-breaking inflows of $5,3 billion, coinciding with Bitcoin's strong performance. Bitwise CIO Matt Hougan observed a significant shift in institutional focus, with financial entities expanding their interests beyond Bitcoin miners and MicroStrategy to include ETFs. Bloomberg analysts anticipate potential additional inflows, driven by short-term investors' concerns about missing opportunities. Furthermore, Bitcoin investors maintain their conviction that ongoing government monetary policies may lead to currency devaluation, potentially supporting Bitcoin's value appreciation.

European Regulatory Landscape: MiCAR Implementation

The Markets in Crypto Assets Regulation (MiCAR), a European legislative framework introduced in 2020, is set to be implemented in early 2025 after four years of development. Achieving compliance with MiCAR presents a substantial challenge for industry participants, necessitating significant resource allocation and time investment. While some crypto asset service providers (CASPs) are proactively addressing the documentation requirements, others are opting to relocate operations outside of Europe to mitigate regulatory pressures.

Initially, MiCAR's requirements may appear to demand considerable effort for seemingly limited returns. However, it's crucial to recognise that regulatory frameworks play a vital role in emerging industries. The crypto asset sector, like any other industry, has experienced its share of misconduct and controversies. Sustainable industry growth is contingent upon establishing regulatory clarity and stability.

The true strategic competition will commence once companies secure their MiCAR licenses. The current phase of preparing for MiCAR compliance is analogous to preparing for a championship event. In the coming months, the competitive landscape is expected to expand from domestic markets to the broader European arena. CASPs will strive to establish significant market share within their respective niches. Entities with limited product differentiation, such as crypto-exchanges, may engage in price competition, potentially benefiting consumers. Additionally, some CASPs may become acquisition targets for larger external entities seeking to establish a dominant presence in the European market. While MiCAR compliance requires substantial investment, this commitment of resources and time is anticipated to generate long-term value for stakeholders.

🔐 Blockrise update

The Blockrise App received a few updates this month, with new crypto asset pages and the ability to do transactions from the mobile browser to the Blockrise App. This is the first step to allowing all actions to be done through the Blockrise App, a major improvement! Additionally, a major new part of the custody software has been launched, which allows for multi-sig transactions. Over the next few months, more features will be made available to utilise this infrastructure. At the moment we are prioritising all necessary implementations for MiCAR over new features.

Then, our CEO Jos Lazet has been featured in the media several times this month. Most recently, Jos spoke with BNR Cryptocast on the entrepreneurial challenges on running a crypto business. Moreover, a few of the Blockrise team attended Bitcoin Amsterdam and the future of Bitcoin in Antwerp, two very successful events!

🏦 Macro Economy

An overview of relevant global economic events:

Central Banks Navigate Uncertain Economic Terrain

In recent months, central banks globally have been implementing interest rate reductions in response to decelerating inflation. The efficiency of these adjustments is contingent upon two primary factors: the scale of the change and the disparity between market expectations and actual outcomes. Substantial alterations typically exert a more pronounced influence, while unanticipated shifts can precipitate significant market corrections, as evidenced by the unwinding of the yen carry trade. Japan's recent modification to its interest rate policy, only the second such adjustment in two decades, caught market participants off guard and resulted in a considerable market recalibration.

Currently, central banks are meticulously calibrating the tempo of interest rate reductions, taking into account both the magnitude and market anticipations. For instance, the European Central Bank maintained its current interest rate this month, citing higher-than-projected growth in the euro-area economy. Japan similarly held its rate steady, in alignment with its strategy for future incremental increases. The Federal Reserve also maintained its position, awaiting additional economic indicators. Central banks aspire to execute their adjustments with optimal timing, though the efficacy of these decisions can only be accurately assessed retrospectively.

For investors, traversing this intricate landscape of central bank policymaking presents a formidable challenge. With interest rates at relatively elevated levels across most economies and all central banks initiating policy adjustments, the forthcoming months are anticipated to usher in heightened volatility across global financial markets.

U.S. Presidential Election: Implications for the Crypto Market

The U.S. presidential election has dominated public discourse in recent months, with an unexpected development being the withdrawal of Joe Biden and the subsequent resurgence of Kamala Harris as the Democratic candidate. Harris swiftly regained public favour, resulting in a closely contested race with her opponent, Donald Trump. Investors are closely monitoring the situation, assessing the potential ramifications of each candidate's victory on their investment strategies. Bloomberg reports that European investors are preparing for a potential Trump victory, given the underperformance of European equities during his previous tenure. Consequently, there is a noticeable shift away from equities that historically underperformed under Republican administration.

Irrespective of the election outcome, the crypto market is likely to experience a positive sentiment. Both candidates have demonstrated a non-adversarial stance towards crypto assets and have acknowledged their significance. Trump, in particular, has made more emphatic statements regarding Bitcoin, including a commitment to maintain the country's Bitcoin holdings if elected. This suggests that a Republican victory could potentially have a more favourable impact on the crypto asset market.