👀 And so it begins

GM everyone. This is 2036.

Yesterday, the Central Bank of Canada lowered its interest rate from 5% to 4.75%.

It’s the first G7 central bank to do so.

As a quick reminder — when interest rates fall 📉 risk assets tend to rise 📈

That’s because lower interest rates = lower return on ‘risk-free’ assets like bank deposits and government bonds.

So investors must go further out on the risk curve to get returns into assets like stocks or crypto.

(that’s why the recent period of low interest rates fueled one the greatest stock market rallies in history).

Today, the European Central Bank followed suit.

This puts pressure on the US Federal Reserve because if non-US central banks coordinate to lower interest rates simultaneously, it will push the US dollar higher, which is bad for US exports.

And that’s one of the reasons Bitcoin is inching closer to its previous all-time high.

The market knows that the Fed will eventually have to cut rates. It’s just waiting for the signal that it will do so.

This could be a poor jobs report tomorrow, inflation coming in cooler than expected, or other indicators of the economy slowing down.

But the Fed now feels the pressure from the other G7 central banks.

Risk assets can feel it.

Bitcoin desperately wants to break past $72,000. And stocks keep making new heighs.

It’s as if they’re just waiting for the canon at the starting line to roar higher.

This would be in Biden’s best interest, too.

Any sitting US president has a 77% chance of getting re-elected. But if the economy is in a recession, that number falls to 32%.

Joe Biden needs rate cuts to avoid the economic slowdown, which is ever-so-gently showing up in economic indicators.

And big investors are getting ready for it.

Tuesday saw the biggest daily inflows into the Bitcoin ETFs since March.

And this weekend, one of the most influential podcasts in the world - the All-In podcast - had an entire segment on Bitcoin.

Billionaire Chamath Palihapatiya explained bitcoin could move significantly higher within the next 12 to 18 months, based on bitcoin’s historical post-halving rallies.

Sounds like something you may already have heard before?

He even thinks Bitcoin could reach $500K by October 2025.

Beautiful.

Big money is waking up to Bitcoin’s catalysts.

And the Fed will soon provide another one in the form of lower rates.

For the first time in history, the Bitcoin and Ether ETFs provide easy access to the asset class for institutions.

So, while our coins take off - we wait.

The long-awaited macro tailwind of lower rates and US elections is approaching by the day.

And with two pro-crypto parties and a sitting president who wants markets higher - I expect it’ll be a good year.

**

In other news, a large crypto conference called Consensus 2024 took place last week.

Two excellent presentations came out of it: Erik Vorhees’ keynote, and Riva Tez’ bullish case for crypto.

If you have time, I highly recommend watching them both.

1/ Robinhood to buy crypto exchange Bitstamp

2/ Institutions are buying memecoins

3/ Standard Chartered: ‘bitcoin could hit $100K ahead of US elections’

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.