November 8, 2021
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Introduction
Well, what a weekend it has been: After the dip on Saturday made many on Crypto Twitter nervous, the markets have turned around yesterday, with BTC and ETH leading the pack.
While ETH has broken to new highs today, BTC had its highest weekly close ever and is now facing its last resistance before entering price discovery mode: October’s all-time high at approximately $76k. “What’s next?” is obviously on everyone’s mind right now…
Crypto Surpassing $3 Trillion in Market Cap
BTC’s and ETH’s price rises over the last 24 hours have pulled a lot of capital into the crypto markets (which is obviously great for altcoins later on). Consequentially, the total crypto market capitalization surpassed the psychologically significant $3 trillion mark – smashing the old highs from May!
Every trillion that the crypto markets gain is an additional argument for legacy finance and the mainstream to stop ignoring this exponentially rising asset class.
It’s clear who has been and will be benefitting the most from crypto: People in emerging economies and…
… millennials (and Gen Z).
Wealthy young investors don’t see much use for the wealth-management firms their parents rely on. They would rather pick their own stocks or plow their money into crypto.
One Bank After the Other Is Fomoing into Crypto
Is it even news anymore when the 5th largest US bank plans to offer crypto services to its customers after we have seen one bank after the other announced their crypto plans recently? Well, just a year ago, such a headline would have propelled crypto prices to the moon – today it’s just “meh”… 😪
Just in as well…
A Macro Storm Is Brewing
While things are looking rosy in both crypto and stock markets right now, there are reasons to be cautious and alert to what is going on in the macroeconomy. Unfortunately, we live in a world where the prices of assets depend to a large extent on the decisions of a few powerful people – namely central bankers.
With inflation proving not to be transitory and central banks around the globe starting to raise interest rates, the scenario of a “global tightening” is starting to become a reality. For now, the three most important central banks, the Fed, the EZB, and the Bank of England, are almost the only ones resisting tightening their monetary policy… for now.
The next months will be crucial to determine if rising inflation forces the hand of even the most dovish central bankers, with a potentially catastrophic impact on the markets – or not. Meanwhile, diversification is probably the best approach to protect ourselves from different outcomes.
