BitMEX Alpha: Weekly Trader Report (September 20-27)

Original author: BitMEX

Brief Overview

• The crypto market has continued its bullish momentum, with total market capitalization (excluding BTC and ETH) breaking above key trendline resistance. If you read our last weekly report and added to your position, you are probably in profit now ;)

• This week’s surge was helped by China’s central bank announcing its most aggressive easing measures in recent years, hot on the heels of the Federal Reserve’s unexpectedly aggressive 50 basis point rate cut last week. The combined effect of these policy shifts has injected new optimism into the cryptocurrency market.

• The altcoin market performed well against $BTC, with several tokens recording impressive gains. Notably, $SEI, $SHIB, and $NEAR performed well.

• In our trading analysis section, we will explore Arthur’s latest article , The Volatility Supercycle , and break down how he remains the king of crypto trading even though his 2024 macro predictions are no more accurate than a coin flip.

Data Overview

High-quality currency

• $SEI (+39.2%): As another parallel EVM chain, SEI remains a top speculative coin due to its close relationship with Monad.

• $SHIB (+34% ): $SHIB added over $33 billion to its market cap in the past week, which is very impressive for this meme coin.

• $NEAR (+27.2%): Could benefit from the AI sector rally in the US stock market. NEAR is also undervalued compared to other L1 alternatives, making it an attractive investment option.

Poor quality currency

• $DOGS (-11.3%): The recent Binance listing of Hamster Kombat is diversifying the liquidity and attention of $DOGS.

• $DYM (-4.4% ): With competitor Initia announcing a major funding round this week, $DYM’s continued underperformance is unsurprising.

• $XRD (-1.3% ): Down only 1.3% - You can’t say $XRD had a bad week. It’s just that other coins were too strong.

News

Macro:

• ETH ETF weekly outflow: $26.3 million ( source )

• BTC ETF weekly inflows: +$612.1 million ( source )

• China launches a series of measures to boost economy ( Source )

• PayPal will allow US business accounts to buy, sell, hold and transfer cryptocurrencies, except in New York State ( source )

• US presidential candidate Harris pledges to make the United States a leader in the blockchain field and reiterates support for digital assets ( source )

• Societe Generale to launch Euro stablecoin EURCV on Solana ( Source )

project

• Berachain launches RFB incentive program to provide liquidity and other support to early teams ( source )

• Initia completes $14 million Series A funding at a $350 million token valuation ( source )

• Robinhood and Revolut are exploring launching stablecoins ( source )

• Crypto-native travel booking platform Travala integrates Solana blockchain, supports booking hotels and flights with SOL, USDT and USDC, and provides SOL travel rewards ( source )

• $EIGEN will be available for trading on September 30, and pledged users will have a 7-day withdrawal period ( source )

• Ethena to launch new stablecoin backed by BlackRock’s BUIDL fund ( Source )

• Blast launches Global Deposit Layer (GDL), supporting deposits to any Blast address or DApp through multiple centralized exchanges and fiat onboarding channels ( Source )

• Worldcoin launches World ID verification service in Malaysia ( source )

Trading Alpha

NOTE: The following does not constitute financial advice. This is a compilation of market news and we always encourage you to do your own research before executing any trades. The following is not meant to express any guaranteed returns and BitMEX cannot be held responsible if your trades do not perform as expected.

Arthur’s predictions are only correct 25% of the time… What keeps him making money?

In his latest article, Volatility Super Cycle , Arthur calculated the accuracy of his predictions and found that only 2 of his 8 short-term macro predictions for 2024 were correct.

How does he remain the king of crypto trading when his macro predictions for 2024 are less accurate than a coin flip?

Arthur has a core fundamental principle in investing: Due to excessive leverage in the trade and financial systems since the collapse of the Bretton Woods system in 1971, governments and central banks around the world are unable to respond to any major financial market volatility - whenever the (government-run) financial system faces challenges, they resort to the Brrrr button - suppressing volatility by printing money to keep the traditional financial system running. This has been their consistent policy response.

Thus, while Arthur may have misjudged short-term market trends multiple times, the pattern remains intact. As long as Arthur’s portfolio is able to leverage printed fiat money—a key tool for governments to dampen natural volatility and avoid systemic collapse—the accuracy of his short-term forecasts becomes less important, provided that policy responses are as expected.

Let’s look at the scale of money printing needed to dampen volatility.

Its like pushing an inflatable ball underwater - the deeper you push it, the more energy is needed to keep it underwater. The global distortions are so extreme, especially for US hegemony, that the amount of money printing required to maintain the status quo is rising dramatically every year. Its a law of physics.

The red line in the above chart roughly represents total bank credit, including excess reserves and other deposits and liabilities (ODL) at the Federal Reserve - a reliable indicator of commercial bank loan growth. ODL tends to increase in times of crisis and high volatility. This pattern suggests that continued increases in money printing are needed to dampen the inevitable volatility in the financial system.

The role of Bitcoin and cryptocurrencies

All this newly printed fiat money needed an outlet, and Bitcoin/cryptocurrency became the perfect release valve.

The fiat money needed to dampen volatility will inevitably flow into cryptocurrencies. Assuming Bitcoin’s blockchain technology remains robust, it will continue to benefit from the elite’s attempts to defy the laws of economics. There has to be a balance—you can’t conjure something out of thin air. In our modern digital environment, Bitcoin becomes the most technologically superior way to offset the extravagant behavior of the ruling elite.

Be patient and manage risk

It is notoriously difficult to profit from short-term price movements. Arthur’s record—only 2 out of 6 successes—illustrates this difficulty. If Arthur had gone all in on every prediction, long or short, his family office, Maelstrom, would probably be bankrupt by now.

While there is no doubt a volatility-suppressed supercycle is on the horizon, patience is critical. Avoid risky actions, such as borrowing fiat currency to buy more Bitcoin. Remember, such impatience could lead to total loss as the underlying value inevitably fluctuates.