September 2024 crypto outlook: seasonality, rate cuts and the election

Transcript

GM good morning welcome to the milk Road show The Daily crypto show that's as smooth as a freshly paved Road I'm your host KY readed head joining me today is crypto investor and educator and good friend of the show zenica and today we're going to talk about something probably none of you want to hear but probably need to hear and that's historically September is the worst month for Bitcoin and crypto imagine that after about 6 months of nothing but struggle in the markets uh so we're going to chat about if September 2024 is going to be just as tough and as bad as previous years or if we can expect something a little different this time around before we get into it though let's um take a quick second to hear from our sponsors kelp get ready because your reward farming game is about to

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the S&P 500 as well it's not just uh it's not just Bitcoin but let me just start sharing screen here and I'll just show for those that are watching we've got a chart up here this is why we're talking about this of Bitcoin seasonality so it's kind of the average monthly performance of Bitcoin for actually don't know how many years but a number of years let's call it and the worst one of of them all of all the months of year September it averages a negative 4.6% on the month uh not so great zenica what do you think is this real this year or what do you think's going to happen this time around we're what do we today September 4th as we record what are your thoughts in September yeah I mean like already it's been a bad month like we saw everything drop off a lot last couple of days uh

yes historically September has been the worst month for Bitcoin I'm always a little weary in uh attributing too much on uh like historical data when it comes to bitcoin and crypto because we don't actually have that long like 10 15 years of of this asset class existing um but also an asset class that has changed significantly year to year especially cycle to cycle so just because it was bad 10 years ago for a few years doesn't necessarily mean it's going to be bad today in completely different environment um however it it also does have a self prophecy element when everyone expects it to be bad people are a little more cautious people aren't buying the dips as much people are

waiting for it to end um and so I do think that like you know all us being equal it is probably more likely than not that we do have a bad September um and by bad I don't necessarily mean things are going to fall off a cliff I think just more of the same choppiness like we might not see that explosive leg up that bullish um end of this choppiness that people are expecting uh we have the rate Cuts coming this month or Mo most certainly coming this month and I think that might have some sort of potential effect or relief but also that we probably won't see those for another month or two afterwards and so yeah look I I'm always weary in um relying too much on historical data especially when we don't have like that large of a

significant sample size but I I am being a bit cautious and and and I do think that more likely than not we we we struggle this month well if there's any good news here and for those that can't see this chart October and November look very good they're actually the two well November is the best month of the year always October is the third best looks like April is the second best but October 29.5% on average and November 37.9% on average and really every month after September looks really good all the way up until next August yeah so maybe maybe that's what's gonna happen let me just show some charts and then we'll talk about some of the specifics you talked about rate cuts and things um but in terms of where we're at in the market right now I think this is like a

some interesting charting that I saw which right now I have the coinbase chart up and basically just drew an ascending line from or a trend line from when we bottomed back in 2023 uh all the way up to where we are today and there's this trend line that we have been touching we've touched it four times now since the bottom and Every Time We Touch It coin absolutely Rockets what's interesting and we're right on that line right now as we speak so like we'll see what happens obviously markets are closed as we're recording so I don't know what's going to happen but you can look at ethereum same line if you look at ethereum when it bottomed out back in I think it was June of 2022 um uh same idea here it comes up every time it touches it it's um it's rocketed now we touched it back in like

August and we're sort of coming back close to it but haven't touched it yet but again we're on that sort of trend line and then the big one in terms of at least the stock market is NVIDIA which is the same line so again bottomed out in 2022 it's double tapped it multiple times in this like Bull Run that nvidia's been on and every time it double Taps it skyrockets and what have we just done or actually we haven't done it but we're close to another double tap so part of me says okay if we double tap on all these and we and we go back up like this is our our finally our chance to sort of lift off but if we break below these I'm actually getting a little bit scared in terms of where we're at so what scares me a little bit

is we're at the beginning of September and so if we have a rough September we might be breaking down below some pretty heavy support um so I don't know that's just one way to just kind of lay the ground a little bit for those that are that are watching we're at some very very important times for markets I think right now and so we'll see where things go but if we break down I'm actually a little bit scared I don't know if you've taken an eye on this at all if you're thinking about anything to do with TA or looking at Price action but what does this what does this bring up for you no this this basically Echo is exactly what I've been thinking as well um I hadn't actually looked at the charts but the charts just mirror uh thoughts I've been having because uh when we step away from

crypto and look at things like um NV video is a great example um and it's obviously been on an explosive run for for years and especially the last 12 to to 18 months uh it it can't go up this at this rate forever it has to stop at some point the music has to stop and I think when that happens it's it's such a large percentage of like I think Nvidia is like 6% of the whole S&P 500 alone something like that some crazy high percentage I mean tech stocks like the Magnificent 7 or whatever they're called they like 30 something percent um if we see a crash in them for whatever reason that there's so many factors that could lead to that um we will see that flow into crypto we will see that flow into every everywhere like like it or not crypto is still correlated to equity

markets and the rest of the world um and and perhaps even more so because it's it's such a risky asset and it's 247 when the stock market closes you can't sell off your stocks when the you you need money you need Capital you go sell your crypto um so I'm really uh I think we're on like a knife's Edge at the moment where if we do drop below this if you know Nvidia drops another 10% another 10% then I think we we see this like House of Cards effect crumbling um we might you know rebound quickly and bounce back within within a month or two after that and and it could be happy days depending on um you know fiscal policy and if people feel like they're getting more Capital back and and all all all sorts of stuff like that but it it's certainly on my mind it's risky and

uh you know I'm sort of consolidating my portfolio accordingly where I'm trying to get out of like too much of the riskiest assets um or if I'm like sort of buying something to trade I'm not planning to hold it for longer I'm like in and out scalping not not you know holding something for three to six months because I think that it's really risky out there right and interesting so I just also pulled up the NASDAQ same trend line the only one that doesn't really fit on here although it has hit off the same trend line a bunch but it isn't even close to going back to is Bitcoin Bitcoin actually looks really good in terms of this uh in terms of this trend line so Bitcoin could go down I don't know 10 20 maybe 30% and still not hit that trend line so that's one

thing that looks good here I guess but when we get close to these lines here where it's like okay if we go up we're good if we go down break below this like potential back into the bare Market Zone I like to step back and okay what's happening in the market like does it make sense for us to break below this go into a bare Market Zone there's a lot of talk around recession um but in my opinion we've got rates coming up liquidity is increasing so like I think things are pretty good recession doesn't look like it's G to happen although it still could what's your thoughts you said rates are coming and so you're expecting them to cut is this a bullish cut or is this a bearish cut in your opinion right now I think it's um it's a necessary cut I think it's um uh I think

it's bullish in the sense that it will unlock liquidity people will have a little more Capital to put into risky assets um and maybe take away from the their saving accounts and bonds and things that are returning and yielding less uh I think the big question is uh is it too little too late like maybe we needed these Cuts three four five months ago um because we've seen so many flow on effects in the economy now where there's a cost of living crisis people are struggling people don't feel rich or wealthy is a 25 or 50 basis point cut really going to put that much extra money in people's pockets um I think we need a series of continued Cuts over the next six 12 18 months and I think we will get them um but I think that also means that it's going to take a while

for this to play out and for it to reflect in the charts I don't think a a 25 basis point cut comes and then all of a sudden we just rock it up from there I think it's going to take a little while and um yeah like the chart right here shows that it doesn't necessarily happen like that it does take some time yeah great I find rates matter of course as you said especially if we're talking are we in a recession Etc like rates are going to help just ease the average consumer um but is it what really moves markets like I don't know that it does um and looking at this chart you can see that technically it did during covid rates went down to zero and all of a sudden we skyrocketed but I think the other big thing is liquidity went

absolutely nuts I actually have the chart right here at the same time liquidity went nuts and that's kind of what markets tend to follow is more liquidity than anything but rates are kind of a sign that if we're lowering them probably more liquidity is coming yeah because interestingly if we go back to like 2016 2017 2018 that two cycles ago Bull Run we were raising rates that entire cycle um which is quite interesting and we kept raising and we went into the bare market so um I don't know I don't know how much rates really matters here I kind of think we'll see rates we'll definitely see rates cut I don't know if it's GNA be 25 or 50 in September um but I don't know that like the moment they do that all of a sudden that's going to move the market I don't

think so we all know it's happening we've been talking about it for months uh and there's been like two months between uh between the two rate decisions so like at this point everyone is like yeah we're cutting and so if it was going to do anything it's probably already priced in I think the bigger thing maybe is probably the election coming up which is in November um what are your thoughts around that is that going to be a big deal for the market or is it more just liquidity it's GNA be a huge deal I think for um I mean crypto has become an election issue this time around it's basically a partisan issue which is is not necessarily a great thing but we've seen Trump obviously come out very Pro crypto at least he's saying he's Pro crypto who knows what he's actually thinking or doing or

planning to do you can't really trust that much can't really trust any politician um and I think if Trump does get elected and wins it'll probably give a little bit of a boost to crypto it seems like the crypto Community expects that to be good long term for crypto regulation for fiscal policy all that kind of stuff if uh carela wins then they they have like indicated that they will be more Pro crypto than say previous administrations which is a good thing but I think it will be not nearly as good as if Trump wins and so like it's definitely a big thing to be watching um my concern is that Trump wins and we get a little bit of a pump camalo wins and we get a big crash and

so I don't know that the risk reward is there and maybe you want to drisk going into the election um obviously you want to keep an eye on polls like right now it's bang on 50/50 if that changes in the lead up to to the elction then um you might want to be uh changing your portfolio accordingly because a trump win will probably be good for crypto but um yeah so you think if Calo wins it's going to be really bad for crypto or just like a a quick you know people are scared at first and then you know we go back on it's so hard to tell at this point Democrats have been historically awful for crypto like Gary gendler the SEC is just like everyone listening knows how terrible they have historically been and so it's not we just can't expect them to be better we

need them to show us that they're going to be better and that that that takes time so I think I think it will be bad to begin with and then if they say you know what we're going to be sensible of reasonable we're going to regulate we're not going to over-regulate we're going to you know treat crypto like it should be treated in our minds great then crypto will go up long term but I think most people will expect the the worst and and that's that's my fear yeah I understand that I think for me I agree Trump wins we probably have a god candle that day and crypto does amazing if Cala wins I think it's a slower grind up I think we still do well mainly because I think we're in a global liquidity cycle where liquidity is going to rise and I think Bitcoin and crypto

ultimately sort of Falls that so does Tech and I think that's what we're in but I do think probably if Kamala wins we take a short-term hit and then it's like it's not as crazy of a bull market as it would be if if I think Trump wins um anyway that's just sort of my guess I don't know for sure obviously but I kind of see as that so let's get clear here September we think probably bad month uh which has already started out to be quite bad uh and maybe it's not like the end of the world type of month um but it's just not great probably continues to chop I would say yeah October typically is really really good now the election is beginning of November and so it's a weird month in every four years leading up to that do you think it's

still going to be a bullish month though ideally I would assume if you think Trump is getting the odds higher then probably we have a really bullish month or do you think that that matters leading up I think um I think we probably see more chop like I know it's not what anyone wants to hear but it's like it's the market is still uncertain in October like there we we haven't really seen any unlikely to have seen any significant Catalyst indicating oh yeah it's free and clear we're going to go up so I think I think until the election happens and we see uh like we might Trend upwards a little bit but I don't think we see God candle after God candle I don't think we like break 70 80k um anything like that I think we're probably in the you know 55 to 65k range

um all the way up to the election is is probably like that's if I had to bet on a 10K range that's where I'd say we're at I don't love it but um it's not the worst like got yeah it's only two more months guys we've been battling for six months uh we just need two check marks we need rate cut come in September and probably just like they say hey we're going to continue to do this which I think is pretty obvious at this point yeah and then Trump win if that happens Market back on zenica is freaking bullish in that moment let's pretend that we get those two check marks because honestly the odds right now I actually looked uh before we start recording the odds are actually getting much higher for Trump I think he's 53 or 54% now so starting starting to creep up

which is nice um and so let's say we get the both green check marks in terms of markets here um what are you doing with your portfolio have you made any changes to plan for this or are you still waiting like let's wait the two months and then I'll make I'll deploy come you know November 7th or whenever um or what's your sort of like allocation right now I'm um I mean for the last like nine months I've been selling off most of my like riskier assets and just consolidating cuz my portfolio has been a mess for a long time and I'm basically just trying to stack Bitcoin and eth um and soul and I think that that's still my plan going into um into the election I'll very happily hold those three coins I think that um they're the best coins to hold long-term medium-term shortterm

maybe maybe not and and that's my plan I think potentially depending on how crazy it gets on Election Day I might take some profits if we see like a ridiculous couple of God candles and things are absolutely crazy because I think that um it'll you know yes it's good news but it'll take a time for take some time for like policies to come into play and for things to play out um both in terms of rate cuts and uh Trump being uh elected doing and by the way listeners might be like taking profits profits are from what we've been down only for six months but this is the beauty of paying attention during bare markets in 2022 and early 2023 and making sure to buy the right assets back then because even though it's been a struggle of a year if you bought in early enough you've been

doing all right and you can still take profits even today which I think many people are like H I don't know about profits right now um let's say you were to move out of eth Soul or Bitcoin I don't know if you have been at all but let's say you were go a little bit more D gen down the risk curve is there any I don't know sectors you're looking into is there any specific tokens that you're looking into like what are you kind of eyeing up because I know you're always sort of eyeing other things regardless of if you're actually buying it or not I'm sure you're always keeping your eye on the market what are you kind of looking at in terms of what narratives or sectors or tokens might outperform I think AI is is is uh probably going to be one of the biggest narratives of the

next big wave up in this bull cycle um to bit tensor is a token I've held for about a year now and I think I'm I'm pretty bullish on it and um the thing with AI though is it's so tied to envidor in the whole AI sector outside of crypto that if that tanks there it's going to struggle but I'm so bullish on AI that I think that they will probably do all right medium long term and so I think AI sector will do good I think gaming is you know people have been talking about crypto and web 3 gaming for as long as I've been in the space and it's never really come to bear like we don't have that many great good fun games yet but you know it takes 5 10 years to to create a good game it's been five to seven years since people have

been building games in the space now and so I think over the next one two years we start to see actual genuinely fun games come to Market that have mass widespread appeal and that have a crypto element to them and so I'm keeping an eye on the gaming sector um as well one token I hold there is prime um the token parallel and they also have a uh AI game coming out Colony so it's like kind of hits both check checks both Colony looks unreal we had this founder on our podcast I can't remember his name right now but um what they're building is actually insane it's super cool I I have up on the screen here by the way as we're talking just the top performing crypto sectors over the last 30 days uh and and deepen is actually number one second which is quite interesting I know

you've talked about this a little bit is nft applications uh nfts coming back for another Bull Run I know you've called it a couple times that you think they will have a run um but I'm surprised to see them being the second highest performing sector in all of crypto at the moment that's wild yeah I mean and people always write off nfts ignore nfts um and you know your right to do it for 99.999% of them they're junk scammy but it's just like mean coins it's just like altcoins there's a lot of junk out there but there's some genuine use case and the technology nft technology I I will you know die on this hill I think it's it's World revolutionary changing technology that will be everywhere at some point doesn't mean the tokens that ex now will go up in price or anything

like that but the tech is good and as more people come around to see that and as it gets more integrated in people's lives and and the world I think there will be Pockets within the nft space that do very well financially as well so too many people are sleeping on nfts and that's fine by me because I can just continue to accumulate and and consolidate into things that I want to hold long term but um yeah they'll have that moment again yeah I agree okay let's this one's actually going to play on your episode last week about the four-year cycles and so everyone I think is expecting a four-year cycle and I mean I do too it's my base case until I see something otherwise but I think 2025 2020 maybe it's early 2026 uh that it's like we top out um and we go into

another bare market now you talked about how this can't happen for Forever at some point we're going to stop having these fouryear Cycles which I completely agree with and what was interesting is um if you look at internet companies from from back in the day they had these huge Cycles in like the late 90s and obviously early 2000s and then the dotcom crash happened everything tanked went down like 95% and everyone thought it was all over with and then it was just like this long secular 20year bull market almost except for the 2008 financial crisis which is a little blip in the chart where just these things just went up and up and up yes they still had kind of Cycles but they were very small nothing like these like 90% drops that they had back in the late 90s and in that that.com boom um do you

think we are at a point in crypto where that might be it now and maybe last cycle was our dotc bust and now it's like as we talked about we've got nfts you've got gaming we've got dpin we've got defi all these things where like in stable coins where we have sectors that like are legit people use them they're growing they're not the fastest growing things in the world all of them but they're they're there they're creating Revenue there's profitable companies like it's it's if you're in the space it's pretty obvious that like these things are going to work out not all of them but like the sectors are there and they're going to be here so like could that be what we're in and this is just going to be a slow grind up and it's not going to be this crazy for your cycle or

do you think we're just not there yet I think we're not there yet I I very much get what you're saying and I think we will get there but I think the thing about the doc crash and what happened afterwards is it wiped out the vast majority of companies and uh what remained and what sustained over the next few years and and couple of decades were legitimate businesses and they weren't nearly the crazy valuations and and scammy and all the kind of stuff that was happening then if we look at crypto right now and we're honest with ourselves the vast majority of things that exist are vaporware scammy no practical use aren't solving real world problems like a billion dollar valuation for something that you know outside of crypto wouldn't even be worth $5 million it's it's insane valuations everywhere and you can't ignore that and so um I I

do think we need like I don't know if it's like a big wash out and great reset and all these things go to zero or it's just like you know a gradual decline in a lot of them and chop and then eventually people just stop paying attention to those and we get legitimate things right but we're not in that post.com crash yet uh we need we just there's just too much garbage out there and maybe there'll always be a lot of garbage just the nature of crypto and the decentralization of it and the gamification of the world and all that kind of stuff but yeah just too much junk still I agree there's way too much junk probably like 98% is junk in this space 2% is good the one thing I think as you explain that like oh yeah that makes sense but then I just think tokens

are a whole different Beast than stocks right like I don't know when I think of some of these like I don't know cardano for example in my opinion probably should be closer to zero than whatever it is right now yeah and but then I think there's just all these tokens that are probably owned by cardano that are just sitting in their staking contract and like they'll just never go to zero because they're just sitting there right so like maybe just the nature of tokens are very different than how stocks work I'm not sure because I I always wonder why is there so many zombies companies in crypto that just aren't going to zero and are still worth billions it just it blows my mind um and so maybe that's why but I don't know anyway they're worth billions but it's a lot of it's like

fake worth it's like if you actually went to sell a significant amount you'd never actually get that liquidity out that's there always like hidden valuations in the space and and yeah which is why you got to be careful of where you allocate your capital and why I think as you said Bitcoin eat Soul just keep it easy and try to get out a lot of the uh and just get it into those and accumulate that and like you're probably good to go you know yeah instead of trying to play around with all these other tiny little low cap tokens that may have real liquidity may not like it's so challenging to to to go down that risk curve um denica let's leave it there that was a fantastic episode really helpful to understand kind of where we're at I hope that we're both wrong and September ends up being

better me too than than we think it is and we just rip all the way into the election and Beyond there's a chance it happens but uh according to historical data it doesn't look like will at least not in Bitcoin uh but we'll see what happens if you want to keep tabs on what's going on in the market make sure you subscribe to this Channel and listen to our episodes that come out daily for you at least five times a week senica thanks so much for joining us looking forward to having you on next week and we will continue this journey we are on in the crypto world uh but thanks again for joining thanks very much for having me all right guys today's the day we've all been waiting for it's time to announce the winners of our crypto giveaway we had incredible response M VI

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