Crypto Insights:
July 2024 Edition

Solana (SOL) Analysis

Solana is gearing up for a potentially bullish Monthly Close. The key level to watch is $165, which had been a significant resistance in May and June but has been surpassed this month. With the Monthly Close imminent, SOL has a strong chance of closing above this critical level, potentially converting it into new support.

Should SOL manage to close above $165, any subsequent dip back towards this level would likely be a retest attempt. If this retest sees volatility, we could see prices dipping as low as the $140s. However, textbook technical analysis suggests that once an old resistance is broken, it often turns into support, paving the way for further upward trends.

  • The big questions are: will we see a retest in August, and if so, how volatile will it be?

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In This Issue:

  • "Our Louisiana Purchase Moment"

  • Bitcoin Thoughts and Analysis

  • Legacy Markets

  • The SEC Backs Down On Multiple Tokens

  • Are Solana's Metrics Honest?

  • BlackRock's CIO Praises Bitcoin and Ethereum

  • This Is Why Trump Likes Bitcoin

  • Get Ready: Institutional Giants About to Pour Billions into Crypto!

  • FOMC Meeting: Conclusion and Future Expectations

"Our Louisiana Purchase Moment"

Senator Cynthia Lummis's speech at Bitcoin 2024, following President Trump's address, introduced the groundbreaking "Bitcoin Reserve Bill." This legislation proposes creating a strategic Bitcoin reserve for the United States, beginning with 200,000 Bitcoin and aiming to accumulate 1 million Bitcoin over five years. The primary goal is to use this reserve to significantly reduce the national debt.

Lummis highlighted the transformative potential of Bitcoin, comparing this initiative to the historic Louisiana Purchase. She emphasized that this strategy would not require raising taxes and would involve converting excess reserves from the Federal Reserve Banks into Bitcoin, an asset with a historical annual growth rate of 55%.

The bill promises to:

  • Establish a Bitcoin strategic reserve

  • Create a secure network of storage vaults

  • Initiate a purchase program

  • Ensure transparent management of Bitcoin holdings

If implemented, this strategy could see the U.S. government purchasing 800,000 Bitcoin over five years, potentially costing over $100 billion depending on Bitcoin's price trajectory. The plan, while ambitious, aims to leverage Bitcoin's appreciating value to address national debt issues.

Michael Saylor's insights were also referenced, illustrating various strategic levels of Bitcoin acquisition. Saylor's analysis suggests that significant Bitcoin holdings could halve the national debt or even create a surplus, highlighting Bitcoin's potential as a transformative asset.

Bitcoin Thoughts and Analysis

Bitcoin's daily chart indicates a potential hidden bullish divergence. Confirmation would require a price rise and a noticeable uptick in RSI, potentially nullifying the current bearish divergence. For now, Bitcoin remains in a consolidation phase.

Legacy Markets

Global markets have rebounded, driven by bullish news in the technology sector. Notable movements include:

  • Nasdaq 100 futures up by 1%

  • Significant gains for companies like ASML Holding NV and Nvidia Corp.

  • Anticipation of a potential rate cut by Federal Reserve Chair Jerome Powell.

Key events to watch this week include the Fed rate decision, major tech earnings reports, and various economic indicators from the Eurozone and the U.S.

The SEC Backs Down on Multiple Tokens

In a significant development, the SEC has ceased pursuing claims that several tokens (including SOL, ADA, and MATIC) are securities in its lawsuit against Binance. This move could pave the way for clearer regulations and greater market stability, although the market has yet to fully react to this news.

Are Solana's Metrics Honest?

Recent research suggests that Solana's reported metrics may be inflated, with a high transaction-to-user ratio indicating a large number of non-organic trades. This analysis raises concerns about the authenticity of Solana's metrics and the potential impact on retail investors, who may be losing money to sophisticated players and bad actors in the market.

BlackRock's CIO Praises Bitcoin and Ethereum

BlackRock's CIO has highlighted the growing interest in Bitcoin and Ethereum ETFs among major financial institutions. While there are no immediate plans for a Solana ETF, Bitcoin and Ethereum are viewed as meeting the necessary criteria for investability.

This Is Why Trump Likes Bitcoin

Trump's fundraising during the Bitcoin 2024 conference saw a significant boost, raising his total crypto donations to $25 million. This surge underscores the growing political and financial influence of the crypto community.

FOMC Meeting: Conclusion and Future Expectations

The Federal Open Market Committee (FOMC) has decided to keep rates unchanged at 5.25-5.5%. This decision, while expected, has resulted in low volatility across traditional markets and crypto. However, Federal Reserve Chair Jerome Powell's dovish tone suggests a rate cut is likely in September, contingent on continued positive economic data.

As we approach the first FOMC meeting since the last rate hike, market expectations for a rate cut are over 90%. Historically, the Fed has aligned with market expectations, making a September rate cut highly probable. Powell's comments indicated that further "good" economic data could trigger this cut.

In the short term, an announced rate cut is likely to be priced in by the time of the announcement, potentially leading to a weaker dollar and rising stock prices. Positive ETF flows could also give crypto a boost, turning the September FOMC meeting into a potential sell-the-news event.

In the long term, lower interest rates will reduce borrowing costs, stimulate spending, and increase money circulation. A portion of this new capital is expected to flow into the crypto market, introducing fresh liquidity and investment opportunities.

Conclusion

  • As we navigate these transformative times, the potential for cryptocurrencies, particularly Bitcoin, to reshape financial landscapes is becoming increasingly evident. From strategic government reserves to major institutional investments, the future of crypto looks promising. Stay informed and be prepared for the rapid evolution of the crypto world.

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