"Pay attention to seasonal effects, hold tight and wait for New Year's performance 🎄"
Liquidity has turned as previously mentioned, with L1, AI, and DeFi all performing well. The performance of altcoin markets is highly correlated with global liquidity, so once liquidity strengthens, altcoins will begin to soar. Congratulations everyone, we are already in the banana stage 🍌.
According to market data, from mid-November to now, approximately $170 billion of liquidity has been released by the US government (during this period, global liquidity has increased by about 0.87%). The market capitalization of stablecoins has increased from $179 billion to $193 billion (an increase of about $14.5 billion, a growth rate of 8%), while the overall market capitalization of cryptocurrencies has risen from $2.8 trillion to $3.4 trillion (an increase of about 21%). This means that about 8.5% of liquidity has flowed into the cryptocurrency market (this does not include ETF funds). If we consider the $64 billion inflow of ETFs, it is estimated that a total of 46% of liquidity releases have stimulated the rise of the cryptocurrency market.
From Figure 1, it can be observed that the improvement in liquidity over the past two weeks has resulted in a 4-fold capital multiplier effect (comparing market cap growth with released liquidity). It is expected that under Trump's administration next year, the environment will continue to be loose. If liquidity grows exponentially, it is conservatively estimated that the growth in cryptocurrency market capitalization still has a space of at least $1.3 to $2 trillion (with liquidity increasing by approximately $340 to $510 billion), which means reaching my initial target of around $5 trillion in market cap for this bull market. We can simply estimate how much expected upward space each cryptocurrency might have! 👁️ (See Figure 2, or tweet on 𝕏 👉🏻 https://x.com/kenjisrealm/status/1764984758017441825)
Last Wednesday (11/26) was the clear turning point for liquidity, marking the start of the altcoin season! As shown in Figure 3, the liquidity level in risk markets continues to remain low (below the average), so there is still significant room for growth! However, as we enter the final month, everyone must pay attention to seasonal effects. Funds that were originally positioned before Q4 will begin to take profits, so more volatility in the market is expected. While the market outlook is optimistic, as mentioned earlier, a pullback to get in will be the most beautiful encounter ~ 🥰
Returning to the discussion of market capitalization, the overall market capitalization of cryptocurrencies and stablecoins has just reached a new high. Excluding BTC and ETH, the market cap is close to the 2021 peak (Figure 4), while the DeFi market cap has just formed a cup-and-handle pattern (Figure 5). I am very optimistic about the DeFi sector's potential explosion in the upcoming bull market. Now we are just missing the last piece of the puzzle, which is Trump's choice for SEC chairman! If the new SEC chairman embraces financial innovation, it is expected that there will be more leniency and policies toward DeFi, meaning more funds and institutions will actively embrace decentralized finance...
Finally, there are still many significant events this month worth paying attention to, such as the Microsoft shareholder meeting vote on 12/10 (whether to purchase BTC), and the central bank's interest rate decisions later this month. Currently, it is expected that the EU will take a more dovish approach to interest rate cuts, the US will maintain a rate cut of one basis point, and Japan may implement a third rate hike! The likelihood that the US will maintain short-term interest rates above 4% in the first quarter of next year is quite high (see Figure 6), which means that the economic data performance in February and March will be very important!
The end of the year is very busy, and I expect to finish the meme data research mentioned last time (current progress 20%...) This year is almost done! Friends attending the TBW event next week, see you there! 🤣
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