The Bitcoin / Ethereum ratio is breaking out 💥

Many have been asking, so for the next 30 days, for new yearly subscribers of our substack updates, we will send a signed copy of the book ‘Crypto Titans: How trillions were made and billions lost in the cryptocurrency markets” to their postal address (no extra shipping and handling fees).

👇 1) Readers will know that we have suggested that Bitcoin should be a core-long position this year as we expected US inflation to crash lower and set off the animal spirits of a deflationary boom. Tactically, we recommended Bitcoin shorts (at 29,500) and on other occasions.

👇 2) But we also warned in August that the strength in the US dollar could be a roadblock in the near term, and a few days ago, we warned that higher bond yields, combined with a rally in oil prices, could keep Fed Chair Powell on the hawkish side.

👇 3) During the last few months, we have recommended shorts in Bitcoin Cash, Axie Infinity, ApeCoin, Ethereum, etc. For us, this is still a trading market where we have positive catalysts on the one side, such as potential Bitcoin ETF launches, and macro tailwinds that benefit Bitcoin primarily as the direct inflation trade of choice.

👇 4) In contrast, the negative catalysts focus more on the altcoin space: Ethereum revenues are shockingly low (as we pointed out on several occasions), the lack of EIP-4844 buzz, unlock overhang, etc.

👇 5) As the stronger USD (and weaker CNY) could prove to be an early warning indicator of a significant (economic) accident (see previous report) in the making, with the combination of low volatility prices and high (on-chain ‘risk-free’) yields, we had suggested using Bitcoin call options – instead of having significant capital at risk.

👇 6) Nevertheless, if the SEC approves a Bitcoin ETF, which we believe is a 70% probability over the next six months, then there could be an immediate re-pricing and Bitcoin could be +20% more expensive in an instant. Hence, it is essential to keep upside exposure to such an event.

👇 6) The only question is how you manage your risk. Either through options, parking the remaining exposure in high-interest rate-paying treasury-linked tokens, or pairing Bitcoin longs with tactical shorts in altcoins. Despite Ether's higher beta, the Bitcoin / Ethereum ratio is reaching a new one-year high.

👇 7) Bitcoin dominance has also reached +49% of the entire crypto market cap. While there is some talk about Ether ETF applications with the SEC, Bitcoin would see the dominant inflows.

👇 8) As we pointed out two days ago, October tends to be a solid month for Bitcoin, and Q4 is seasonally the best time to be in crypto. There are risks, significant risks.

👇 9) Therefore, the trade is still long Bitcoin against (almost) everything else.

👇 10) You should carefully manage your risk.