Delivered each Friday via email and Saturday on the Collective Shift platform.
The Weekly Shift gives you actionable insights into the crypto market without the BS.
Everyone is asking what will spark the next phase of the bull market. Improving global liquidity is shaping as one of the most likely sparks. Here’s why. 👇
Global liquidity 101
Central banks? Interest rates?
We know it sounds boring (😴) but ignoring this could be a huge mistake. Let us explain.
When central banks cut rates, two things happen:
- Money gets ‘cheaper’: Borrowing costs fall.
- Risk appetite increases: Investors seek more risk or higher yields.
For example, in recent years, with rates being relatively high, a 5.0% ‘risk-free’ return from U.S. Treasuries has looked quite appealing. But remember 2020? Rates were around 0% all around the world, incentivising people to take more risky investments.
Rate cuts are starting
Globally, central banks have cut rates 35 times in the last three months.
The interest rate easing cycle is well and truly kicking off.
And this is directly translating to higher global liquidity, which is also increasing due to increased fiscal (government) spending.
In Australia, the Reserve Bank held rates steady in August.
But all eyes are on the U.S. and the next Fed meeting on September 19–20.
Markets are pricing in a 100% chance of a rate cut next month, with a 44% chance of rates dropping by 100 basis points by year-end, as per CME FedWatch.
One reason for these expectations is because inflation continues falling, with July’s annual CPI data slowing to under 3.0% for the first time in over three years.
The correlation you can’t ignore
Central bank balance sheets tend to increase alongside global liquidity.
During these periods, BTC’s price tends to perform well, according to Fidelity Research. (Of course, correlation does not equal causation—but the below chart is hard to ignore.)
As we’ve said over the years: although the Bitcoin halving acts as a narrative catalyst, global liquidity is a technical catalyst that, so far, has arguably been a more significant driver of BTC’s price.
The big takeaway: don’t ignore macro
Understanding the dynamic between crypto prices, interest rates and global liquidity is critical.
Over the next 12 months, if global liquidity keeps rising and rates keep falling, history suggests it’ll be happy days for crypto.
Click below for our weekly wrap-up (or click here)!
Kamala Harris flips Donald Trump in U.S. election odds
What happened? After taking the lead a week ago, Harris now leads Trump by eight percentage points, as per Polymarket.
Why does it matter to you? The election outcome will likely affect how the rest of the crypto bull market will play out. As it stands—without hearing much from Harris yet about crypto—it’s safe to say that the crypto market would prefer a Trump win.
MetaMask to debut debit card
What happened? MetaMask is releasing a blockchain-based debit card developed with Mastercard to allow users to buy directly from its self-custodial crypto wallet.
Why does it matter to you? MetaMask remains the largest crypto wallet—its entry into debit cards could help improve accessibility to and usability of crypto.
Majority of Mt. Gox’s BTC has now been redistributed
What happened? A wallet associated with Mt. Gox, holding $2.2B in BTC, has begun test transactions with a wallet tied to BitGo, one of the five exchanges working with the Mt. Gox trustee to distribute BTC to creditors.
Why does it matter to you? Distributions are entering the final stages, with the Mt. Gox trustees having now sent ~66% of its BTC to designated exchanges. One of the largest and longest-running sources of market uncertainty will soon be behind us.
- Ethereum saw its average gas price slide to four-year lows of less than 1 gwei (~$0.05 USD).
- Solana validators were forced to issue an emergency patch to fix a vulnerability but avoided downtime.
- dYdX announced a significant upgrade, dYdX Unlimited, allowing users to list new token trading markets without governance approval.
- Optimism announced a plan to fix Ethereum’s poor UI by unifying standards across its Superchain.
- MakerDAO has been profitable every month since at least January 2020.
- Canto suffered a two-day outrage because of a consensus issue.
- EigenLayer launched rewards for restakers.
- Symbiotic’s staking network launched its devnet and announced plans for a Q3 mainnet.
- Near launched ‘Chain Signatures’, a key innovation to simplifying DeFi across chains.
Our next livestreams are fast approaching. We look forward to sharing market updates and strategies for deciding what to do with old coins.
â–¶ Checkmate’s Onchain Analysis:
â–¶ Ben & Bergs Podcast: Market Narratives, ETH vs SOL & Investment Lessons
â–¶ Victor: Will The U.S. Election Actually Change The Crypto Investment Outlook?
▶ Nick: ETH vs SOL: Why There’s Room For Both
In case you missed it:
▶ Monthly Strategy Session: Ben’s Investment Plan Amid This Chaotic Market
â–¶ Monthly Q&A: U.S. Election Effect; Solana vs Ethereum & Our Portfolio Strategies
▶ Matt: Why Crypto Is Crashing & What I’m Doing
Thanks for reading the Weekly Shift.
We hope you’ve enjoyed it, and look forward to seeing you next week!
Disclaimer: We are not Financial Advisors. All opinions expressed by Collective Shift and its representatives are intended for informational purposes only and should not be treated as investment or financial advice of any kind. Any information provided is general in nature and does not take into account the viewers specific circumstances. Collective Shift and its representatives are not liable to the viewer or any other party, for the viewer’s use of, or reliance on, any information received, directly or indirectly, from this email. The viewer should always conduct their own research and obtain independent legal, financial, taxation and/or other professional advice in respect of any decision made in connection with this email.
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