Crypto's - Flight to Quality 💥💥💀

🚩 In 10 bullet points:

👇 1) Bitcoin benefits from full-blown government-guaranteed deposit insurance, from inflation falling back to the 3% level, which allows the central bank to become less hawkish, and from regulatory overhang that has impacted stablecoins such as BUSD and, recently, USDC. As those three trends persist, Bitcoin prices can stay high and continue to rally.

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👇 2) The Federal Reserve’s interest rates policy has severely damaged some investment portfolios and threatened the economy's financial stability. This reflects our expectations that the Fed would change its hawkish stance in 2023.

👇 3) First, there has been a shift from higher beta cryptocurrencies into Bitcoin, and second, a change from stablecoins into Bitcoin.

👇 4) While there appears to be a clear path to regulation (see our previous reports), there is a specific understanding that some can escape regulation. Notably BTC and USDT.

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👇 5) In our book, “Crypto Titans" (available for pre-order on Amazon or link above), we analyzed all those banking, on-and-off ramp relationships and therefore we are aware of the impact this might have on the industry.

👇 6) Regulation and central banks have classified Bitcoin as a commodity and therefore do not fall into the potential security category. Largely viewed in operating outside of the U.S. regulatory overhang, Tether’s USDT has continued to gain market share and is by far the most dominating stablecoin.

👇 7) Compared to the DeFi summer, crypto is not going through an innovative period, and prices tend to be driven by macro variables, a function of liquidity. This liquidity can manifest itself in lower bond yields. The two-year treasury yield has declined during the last week at its fastest pace in twenty-five years.

👇 8) Bitcoin dominance has increased from 36.2% to 42.8%, with the trend continuing to rise. There is also no strong argument why Bitcoin should materially decline from current levels. Instead, we can see that Bitcoin’s unique characteristics provide safety during uncertain periods.

👇 9) On March 25 2013, the small European country of Cyprus was bailed out and the country’s second largest bank was closed. Those events were overshadowed with Bitcoin prices rallying from $13 on January 1 2013 to $73 when Cyprus was bailed out.

👇 10) Bitcoin peaked at $230 on April 9 2013 when European lawmakers were seeking greater protection for depositors. We can only imagine what Bitcoin prices would have done if the U.S. government had not stepped in and implemented an unlimited nationwide deposit insurance. Bitcoin loves liquidity and is the primary crypto weapon of choice when those liquidity floodgates are being alternated - such as now.