Bitcoin's "Rate Cut Rally": Data or Delusion?

Bitcoin's Decisive Moment: Beyond the Rate Cut Hype The narrative around Bitcoin right now is thick with anticipation. The Fed is supposedly gearing up to end Quantitative Tightening (QT), and the market consensus, as always, is pricing in a December rate cut. The cheerleaders are out in force, promising a new bull run. But let's take a look at the underlying data, shall we? History certainly rhymes. The Fed balance sheet versus Bitcoin charts are trotted out like clockwork, showing past instances where the end of QT coincided with Bitcoin rallies. 2010, 2012, 2019 – each gets a mention. The implication is clear: history is about to repeat itself. But a closer look reveals a few discrepancies. Bitcoin's recent performance hasn't exactly mirrored the expected exuberance. Global M2 is up, yet Bitcoin is…stagnant. This suggests that simple monetary liquidity isn't the only driver. Instead, Bitcoin seems increasingly tethered to traditional business cycle indicators, specifically the U.S. Purchasing Managers Index (PMI). And that’s where the picture gets more interesting. The copper-to-gold ratio is often presented as a leading indicator for PMI trends. Copper, the industrial metal, tends to bottom out before PMI rallies, and tops before PMI declines. Currently, the ratio is showing signs of bottoming, which aligns with the end of QT narrative. But, and this is a big but, correlation isn't causation. Are we sure that we aren't simply seeing a few data points that fit a preconceived narrative? It's not just about monetary policy. The Bitcoin price depends on institutional adoption and how well it can defend its support level, as BitcoinWorld points out. The $80,000 to $82,000 zone is a crucial test. If Bitcoin defends this level, it could maintain its bullish momentum. But if it breaks down, we might see more significant selling. And what about the halving? The Bitcoin halving 2024 is expected to reduce miner rewards, creating supply scarcity that historically led to price increases. If we look at the data, we can see that in 2012, the percentage increase was 9,067%. In 2016, it was 2,931%, and in 2020, it was 702%. The returns are diminishing. Are we sure that history will repeat itself? On the institutional side, spot Bitcoin ETF approvals and corporate treasury allocations are creating a more stable demand base. Ethereum is also experiencing institutional confidence, with BitMine acquiring 69,822 ETH, worth $200 million (that's almost 3% of the entire supply). But let's not get carried away. ETF flows can reverse, and corporate treasuries can reallocate (usually at the worst possible moment).

AI Credit Risk: The Overlooked Bitcoin Threat?

The AI Credit Risk Wildcard Here's where things get genuinely dicey. QCP Capital highlights worsening credit risk signals in the artificial intelligence sector. Nvidia's accumulating accounts receivable and inventory, coupled with widening credit default swap (CDS) premiums, are flashing warning signs. Why does this matter to Bitcoin? Because the AI sector has been a major driver of risk-on sentiment. If that sentiment falters, it could drag everything down with it. And this is the part of the report that I find genuinely puzzling. Most analysts I read are looking at the halving, the ETFs, and the macro environment. Very few are looking at the potential credit risks lurking in the AI sector. The Ethereum market also presents a mixed outlook. The Relative Strength Index (RSI) revealed a hidden bearish divergence between November 18 and 28 (I've looked at hundreds of these filings, and this particular divergence is not encouraging). Long-term investors sold off more than 973,600 ETH in just one week, a 191% surge in selling activity since November 22—to be more exact, since November 22nd. Ethereum News Today: Ethereum Faces a Pivotal Moment at $2,880—Will Institutions Keep Buying or Will Bears Take Over? So, What's the Real Story? The confluence of factors—QT ending, potential rate cuts, halving hype—creates a compelling narrative. But narratives are dangerous. They blind you to the underlying risks. The AI credit risk, the mixed signals from Ethereum, the diminishing returns from halvings – these are all data points that the cheerleaders conveniently ignore. The market is at a decisive moment, but not necessarily in the way everyone thinks.