Markets Stall, Bitcoin Stands Tall
Before we get started…if you want to learn more about bitcoin – connect with the Onramp MENA team.
And now, for the weekly roundup…
Key Highlights
Appetite for bitcoin, bitcoin spot ETF options, and MicroStrategy stock continue to ramp up, a function of bitcoin’s unique volatility profile
The broader market rally moderates in the face of sticky inflation and geopolitical uncertainties
The Market Thinks…
The Fed will cut the overnight rate by 25bps at their December meeting.
But longer term U.S. rates (2YR and longer) will remain elevated
Microsoft will NOT vote in favor of adding bitcoin to their balance sheet (13% chance via Polymarket).
But in our opinion, they may revisit the decision after seeing the impact on MSTR performance (more on this later)
NVIDIA could have done better.
NVIDIA stock trades 1-3% lower after announcing better than expected revenue/EPS, but only modestly better Q4 revenue guidance
To the Scorecard…
The ‘Trump Bump’ in US and Chinese equities flattened over the past 5 days as markets digest longer term impacts amidst cabinet picks and stubborn inflation being priced into the term structure of the US Yield curve. Bitcoin punched to a new all time high of $99,073 today on reports of renewed buying by MicroStrategy and the potential for a newly created digital assets department in Trump’s administration (which would likely implement a Bitcoin Strategic Reserve).
The market appreciates the Fed may control the front end of the curve, but is likely to cut again in December (~58% probability), with subsequent cuts pushing the overnight rate lower over the next year to below 4%.
But, the UST 2Y lifts above 4%, remaining in a post hike range of 3.5% to 5% by a market convinced that inflation is more sticky than a dovish Fed thinks.
Sticky U.S. rates are destabilizing for other markets as we see another surge in the Japanese Yen. We are reminded that the last time the Yen breached 160 in late July, the Nikkei dropped over 9%, forcing Bank of Japan intervention.
MicroStrategy’s dedicated effort to buy bitcoin by issuing equity, convertible bonds and high yield bonds has resulted in an 8.3x increase in its equity over the past year.
MSTR’s stock was the most traded stock in any U.S. Market last week. The question for companies now is whether or not MSTR’s embrace by the market is a short lived parlor trick, or an enduring scheme to drive performance.
MSFT should take notice as it considers whether or not to add BTC to its balance sheet given both NVDA and MSTR post returns that dwarf MSFT’s over the past year.
Charts Of The Week
“Bitcoin is in a world of its own, as illustrated by the drawdowns and rallies of all asset classes.”
— Jurrien Timmer, Director of Global Macro at Fidelity on X
Quote of the Week
“The ‘bitcoin is useless’ skeptics focus too much on the speculative trading and not enough on why reserve demand grows and sustains the exponential price increases.
To understand reserve demand, you need to understand the purpose of holding a cash balance at all. Holding money is about reducing uncertainty, by holding the most marketable good.
The finite supply is key: increased reserve demand against a fixed supply means a higher purchasing power. For any other good, this would increase production. With bitcoin it can’t.
A higher purchasing power in turn makes it more marketable. Number go up begets number go up. Far from useless, bitcoin is the greatest monetary technology in history.
Bitcoin has exactly the properties it needs to attract reserve demand. As the price goes up, it only becomes more attractive. Speculators simply profit from anticipating and accelerating the inevitable.”
Podcast
The New Frontier E008: Islam, Economics, and BTX in Ethical Finance with Sheikh Mu’aawiyah Tucker
In this episode, we’re joined by Sheikh Mu’aawiyah Tucker, a scholar of Islamic economics and Bitcoin advocate, to explore the intersection of Sharia principles, financial sovereignty, and the transformative potential of Bitcoin. Sheikh Tucker shares his compelling journey from studying at the Islamic University of Medina to becoming a passionate advocate for sound money principles and Bitcoin adoption. We dive deep into the core issues with fiat money under Islamic economic principles, the misconceptions surrounding Bitcoin’s permissibility in Islam, and how Bitcoin serves as an “anti-riba” solution to the exploitation inherent in traditional monetary systems. Sheikh Tucker offers profound insights into the importance of ethical issuance, the cultural evolution of money, and the unique properties that make Bitcoin a revolutionary medium of exchange. This episode provides a thoughtful examination of how Bitcoin aligns with Islamic values, challenges long-standing narratives within Muslim communities, and presents a pathway toward financial justice and empowerment. Join us for a fascinating conversation on the philosophy, ethics, and transformative power of Bitcoin in the modern Islamic world.
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