Episode #2

Hedging Alpha 🥷🏼

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Story of the week:

Trump win sends Bitcoin to the moon 🚀

Today is Sunday, November 10th. For the first time in its existence, a bitcoin reaches the price of 80,000 US dollars. But how did this happen?

1. Seasonality: Bitcoin price usually follows a seasonality. The bitcoin seasonality describes patterns and trends in the price of bitcoin that occur frequently at certain times of the year. At the moment, two things are important regarding seasonality: the winter season and the halving event that happened in April. In winter, the price of Bitcoin tends to rise. On the other hand, in summer, the price usually stagnates. Then there was the April halving event. Every 210k bitcoin blocks mined (which is approximately every 4 years), such a halving event happens. After the event, the reward for each block mined is halved, which means that the supply of new Bitcoins is halved. While this was the 4th halving event in history, which slowed the immediate impact on prices, the logic of supply and demand still applies in the long run.
2. Bitcoin ETFs: The spot bitcoin ETFs delivered more than the expected inflow. Blackrock’s Bitcoin ETF has already generated more inflows than its Gold ETF less than a year after being approved in the US. Why is this important? Gold is the world’s largest asset by volume and bitcoin is often referred to as digital gold. The seasonality + the great performance of the ETFs laid a solid foundation for a catalyst to push prices even higher.
3. The catalyst Donald Trump: While many people in the world hate Donald Trump, the crypto community loves him. But why is that? Trump has been described as a strong supporter of cryptocurrencies. On the one hand, he and his sons have launched a project called World Liberty Financial, which is a DeFi platform and issues its own crypto token. On the other hand, he has announced his intention to make the USA the international crypto capital and, among other things, to establish a national bitcoin reserve.

Before the election, the price dropped below 67k, which I considered a buy zone in case Trump becomes the next president. Fortunately, the trade fully unfolded. The election of Donald Trump as the 47th US President led to a new Bitcoin ATH on November 5th at around 75k before people started to “sell the news” back down to 73k. As written earlier, the price just 1 week later is at 80k.

But where does it go from here?

Personally, I think the election was the starting point of the 2024/2025 bull run, which traditionally unfolds in large price increases with very little to no retracements. This means that I believe the price can go to 100k - and if it does, it will do so in large climbs in a short period of time. If it turns out that price cannot break through 80k and starts to fall sharply, I would consider < 73k, < 68k, < 63k and < 59k as potential buying zones.

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What else happened this week:

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Markets

Most important figures of the week:

Palantir and Super Micro Earnings:

Both Palantir and Super Micro reported earnings this week. While Palantir's share price rose by 22.5% on Tuesday due to EPS and revenue beating expectations, Super Micro's share price fell by a further 20% on Wednesday.
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Fed rate cuts:
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On Thursday, the Fed cut interest rates once again, this time by 25bp. The vote was unanimous. The statement said that the mood on the labor market was “generally eased”. Furthermore, the section in which it was stated in September that the Fed was confident that inflation would continue to move towards the 2% target was omitted. The market is expecting a further cut of 25bp in December

Top movers:

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Chart of the week:

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Winner of the week:

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Loser of the week:

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Meme of the week: