Uptober: Q4 is in Play.

Cuts, Cuts, Cuts. Cuts occurring everywhere! Governments around the world are gearing up to loosen quantitative tightening regimes, initially in place to combat inflationary pressures, thanks to Covid-19.

If you take away one thing from this article, let it be this, whatever interest rate decision a central bank decides (whether an interest rate rise or an interest rate cut), etch into your brain that it’ll take somewhere between 12 to 18 months to feel its effect. This is an important note, in effort to make better investment decisions. It should be noted: that 12 to 18 months is a frame of reference only, nothing more & nothing less. This lag is due to “the time it takes for the new debt issuance to bear enough weight on the economy to slow it down” (Lebowitz, 2023). The chart(s) (below) shows it can happen earlier than 12 months & remain for longer. Study the interest rate cut cycle years to gather more in depth clues, but “nearly every interest rate cutting cycle has seen the economy enter a recession before or after rate cuts have started” ((Conte, 2024)). Do Your Own Research (DYOR).

But what does this particular rate cycle mean during an election year? My honest answer is: I have no fucking idea. But I have been hedging my bets for this cycle ever since March 2020, bags loaded in my strongest conviction plays, along with a plan for scaling profits & hedging bets. My strongest conviction plays being Bitcoin, followed by Gold & Cash. Why? Because I’ve learned that interest rate rises mean your cash gains strength & assets fall, as money gets taken away from the system. Therefore, keep some cash on deck. As interest rates cuts occur, that means that money flows into the system again, which are great for liquidity driven assets (Bitcoin (83.20% correlation) & Gold (68.10% correlation) & bad for cash (see chart below).

And sure, the S&P 500 ($SPX) has a liquidity correlation of 81.20%, but with only Mag 7 holding this index together, at record valuations, and uncertainty everywhere, all at once. Although I’ve sprinkled into some of my secular plays for the long-haul, I’ve personally chosen to hoard more cash than investments until post US election because markets hate uncertainty, & so do I. until further notice. In addition, I am anticipating a recession, as CEO’s lack confidence in the economy, government’s can’t afford to pay back their debts, interest rate movement occurring at record pace, unemployment on the rise, credit card debt at record levels & personal savings at historic lows, & stocks being at the whim of Monday to Friday & not open 24/7 if & when I may need it to be. Hopefully, none of these happen, but again, I am preparing for all scenarios as best I can. Scenarios considered are: inflation, deflation, stagflation, bank collapses, government defaults, recession, war, etc.), as I am of the opinion that NOTHING is safe. But the outcome that I am most hedged against is: currency debasement, meaning theft of your time & energy, drained by the leaky faucet’s money printing regime (see chart below).

Therefore, I think a combination of Bitcoin, Gold & Cash can diversify my portfolio enough (for now), until I can get more economic clarity. But do not be fooled, I keep only enough cash for my daily expenditure & for opportunities to come (in the short to medium term). I have no intention to leave cash sitting in bank deposits and/or money market funds for years, because then I will be the big loser, because I allowed the government to swallow my purchasing power by some mechanism caused by mismanagement of money.

To end, there are many people with my same line of thinking (with their cash positions at least), as we see record cash amounts sitting in money markets earning a “risk-free” 5% (give or take) in US treasuries. But whatever will occur to force that money to leave its “safe space” aka hibernation & start to slowly leave safety & comfort for more risk…that’ll be your clue to start to pay close attention. I am of the opinion that when money does start to accumulate risk, it will not be out of willingness, but by force.

Although NONE OF WHAT I AM SHARING IS PERSONALIZED FINANCIAL ADVICE. This is purely an opinion piece thanks to what I call my “Covid Education." To help you along your own journey, you can gain incredible insights (as I have) by reading books. In the great words of Mark Twain…

Three books that I highly recommend & that work well in tandem for the basis of my own personalized thinking are:

1. “When Money Dies” by Adam Fergusson

2. “The Fourth Turning” by William Strauss & Neil Howe

3. “The Great Devaluation” by Adam Baratta

DO YOUR OWN DUE DILIGENCE!

🚀Bitcoin Breakdown:

To give a brief update on Bitcoin, Q4 during an election year is the sweet spot, historically. Starting in Q4 until Bitcoin’s bull market peak (sometime in 2025 is my best guess based on historically evaluations), my attention will be on the $DXY in tandem with Bitcoin ETFs, Microstrategy & Bitcoin Miners. If the $DXY gains strength, assets will most likely fall. If the $DXY weakens, risk-on. As with paper Bitcoin players coming onto the scene & stealing the spotlight, I am of the opinion that Bitcoin will look drastically different this cycle, but that it will also maintain confluence with past cycles.

The simple way I have been & will continue to time market exit & entry is via Bitcoin MVRV Z - Score. But to also help me maintain discipline with HODL’ing during this 4th Epoch, I will also be referencing Bitcoin’s Monthly & Quarterly Returns by percentage (%) (see chart(s) below).

A few things to note are:

Monthly Returns Chart by Percentage (%):

1. 80% of Octobers land in the green.

2. 100% of election years had a green October/November/December.

3. As September is typically Bitcoin’s worst month, historically, with only 4 September’s ending in the green (2015/2016/2023 & 2024) out of 12 years (excluding 2009 to 2012). However, it can be noted that, historically, when Bitcoin did finish green in September, it finished the all months in Q4 (October/November/December) in the green too. As of writing, the Bitcoin price has dropped from around $64k to $60k, with the start of October in red (!), but really nothing has changed. The first week in Q4 in Bitcoin exhibits volatility as portfolios are rebalancing from Q3 to Q4 holdings. In the years of: 2016 & 2020, “Uptober” typically started in the second week of October, rather than the first week. In 2016, it began on October 11th, 2016 & in 2020, it began on October 8th, 2020. History doesn’t repeat itself, but it often rhymes. Lets see, time will tell.

4. March is a good time for swing traders to take some chips off of the table, as tax season approaches. But in the Bitcoin community, there is a saying, “Sell in May & go away.” To each their own. Good luck.

Quarterly Returns Chart by Percentage (%):

1. Bitcoin bear market Q4’s (2014/2018/2022 & with 2019 as an anomaly) have always been in the red historically. According to the Q4 data on Bitcoin Quarterly’s, (outside of 2014/2018/2019/2022) have seen green Q4 returns. History doesn’t repeat itself, but it often rhymes. Therefore, from a purely historical context, I would extrapolate that the likelihood of Q4 2024 & Q4 2025 have a high probability of finishing their respective quarters in the money (green). Lets see, time will tell.

2. Q3 is historically Bitcoin’s worst 3-month combination (Average: +5.39% & Median: -4.64%)(@caprioleio & CoinGlass, 2024) & Q4 has historically been Bitcoin’s best 3-month combination (Average: +88.84% & Median: 56.90%)(@caprioleio & CoinGlass, 2024).

I am no fan of Blackrock, check out these slides from a recent talk given by them at an event os theirs titled: “Digital Assets Conference 2024” on October 03rd, 2024. Please enjoy for personal consumption, as it shows the latest inights on Bitcoin’s volatility & future performance in the eyes of Blackrock, the world’s largest asset manger (see photo(s) below):

🌍Community Events & Workshops: 

Need an excuse to visit “Bitcoin Country” aka El Salvador, look no further…Adopting Bitcoin 2024 has got your back. Looking forward to meeting new & old faces :)

Check-out Adopting Bitcoin Satellite Events at: https://sv24.adoptingbitcoin.org/satellite-events

📚Hand-Picked Recommendations:

Books (the ones that I highly recommended earlier):

>Buy It Here<

>But It Here<

>Buy It Here<

All for now! Time to prepare my garden beds for Winter :)

#SowSaveSustain

Raven at Finperma

Source(s) Verification:

@caprioleio, & CoinGlass. (2024, September 17). Bitcoin Quarterly Returns (%). Retrieved from X: https://x.com/caprioleio/status/1835972005595906070

@thinkingvols. (2024, October 03). Digital Assets Conference - Brazil 2024. Retrieved from X: https://x.com/thinkingvols

Callahan, S., & Alden, L. (2024, September 24). Bitcoin: A Global Liquidity Barometer. Retrieved from Lyn Alden Investment Strategy: https://www.lynalden.com/bitcoin-a-global-liquidity-barometer/

CoinGlass. (2024, October 04). Bitcoin Monthly Returns (%) . Retrieved from CoinGlass: https://www.coinglass.com/today

Conte, N. (2024, January 31). MarketsVisualized: Past Interest Rate Cut Cycles and 2024 Forecasts. Retrieved from Visual Capitalist: https://www.visualcapitalist.com/visualized-past-interest-rate-cut-cycles-and-2024-forecasts/

davidjkentwriter. (2024, April 18). History Doesn’t Repeat Itself, But it Often Rhymes. Retrieved from WordPress: https://hotwhitesnow.wordpress.com/2024/04/18/history-doesnt-repeat-itself-but-it-often-rhymes/

Lebowitz, M. (2023, September 13). The Lag Effect Unveiled. Retrieved from RIA Advice: https://realinvestmentadvice.com/the-lag-effect-unveiled/

River Financial. (2024, October 03). Currency Debasement Since 2000. Retrieved from X: https://x.com/FinanceFighter_/status/1841821901192057278