A Crypto Christmas Special with Jlabs Digital: Past, Present and Future

This year we start this special with JLabs Digital, formerly Jarvis Laboratories. One of the most prominent cryptanalysis companies in the nascent sector. His view of market dynamics has been popular due to his use of solid data and easy-to-follow style.

JJ:

So, now that bitcoin crosses the $40,000 threshold, does this mean a conclusive end to the bear market? (…) I'm leaning towards the twisted part of that. I think most of this rally was really driven by disbelief and people shorting at every pump, especially as we approached $30,000, there was just a huge disappearance of the short positions that had been exhausted during the last year between options and derivatives. So, in my opinion, that forced purchase is really what made us over $40,000. So to sustain this, there will have to be continued spot buying to see the price above, say between $48,000 and $52,000.

I think it's possible that we get to that range, but I don't think we're going to get to that range and keep moving forward. I think sooner or later we will go back down and test that $30,000 mark again. So that's an eye that investors and traders should keep in mind until 2024. I think that inevitably there will be that large loss of leverage, as is very typical in bitcoin.

Q: Right now, we are seeing bitcoin hit new highs. Do you think we are in the early days of a full bull run? What has changed in the market that allowed for the current price action? Is it the bitcoin Spot ETF or the US Federal Reserve hinting at a losing policy or the next Halving? What is the big narrative that will continue in 2024?

JJ:

I believe we are entering a new bull market, but that being said, there will always be leverage twists and sell-offs. Keep that level in mind. Between $28,000 and $32,000, I think it will be as good an entry as any if we have that opportunity in 2024.

Every time we see those big breakouts that we saw in October, it's very typical of bitcoin to come back and retrace them. But the first thing you want to do is generate liquidity. So you have to realize that the people who paint these charts are very sophisticated and they want to get you in at suboptimal prices and sell at suboptimal prices. So how they do it, they convince you to buy for $40,000. (They make you think) It will never come down again. And then the next thing you know, you're holding those purchases and they're at $28,000 and you're forced to sell.

I think this (rally) is very different. Basically, if you look at 2021, we had (Michael) Sailor and Tesla from Microstrategy buying (btc), but outside of that, as we know, there was a lot of influence for (investors) like Three Arrows Capital, Grayscale, the Digital. Monetary Group that was overlooking it. All of these people were getting access to massive amounts of leverage because of how cheap it was to borrow dollars at the time, because interest rates were zero, they were using that to leverage themselves and basically pump up bitcoin artificially. And then we all saw that failure last year and unlike what we see now, this is a real institutional buy.

So there has been no question that I am sure that BlackRock, Fidelity, etc., they are not buying now, they were buying below $20,000, they were buying throughout the $20,000 range. They do not buy above $35,000 to $40,400. So we see a little more strength at the bottom of the market, which will form a better base for 2024.

But having said that, there will always be ups and downs, but I think in the long run, the fact that we've seen that capitulation from a kind of leverage worthy of the institutional actors that know how to organize and manage these exchanges more efficiently, I think that I think that is very bullish for bitcoin and definitely for a regime change.

I think it's forming. I mean, as of now, the future is kind of unpredictable, but from what I see, we have this ETF on the way. Do I think the moment it is approved, bitcoin will just take off? No, there are many complications with that. Like the Grayscale btc trust, I believe they have over 600,000 btc that will need to be distributed. I'm not sure there is enough demand yet to absorb all the supply that will hit the market. But as we move forward a few months later, these ETFs are working. BlackRock has a team of thousands of advisors selling this because they are incentivized to do so. And at the same time we have “The Halving” where the supply reduces the amount of emissions that miners can easily sell as supply.

Then you will have this massive influx. It is very difficult to overstate the amount of new demand that will emerge thanks to the ETF. At the same time, we have “The Halving” event which will reduce the amount of supply available for sale. I think that's like forming a perfect storm in itself. And then you look at the dollar, the DXY index, this is something I refer to a lot in my articles and in the videos we do on YouTube, and you see that (the DXY) has been in a downtrend throughout 2023. It looks like it's getting worse in 2024.

We just had the Fed indicate that they are thinking about rate cuts, which is usually as good a sign as any that those rate cuts are coming. Then the dollar will be weakening. At the same time, we have this massive new demand for bitcoin. At the same time, the supply of bitcoin is falling. So you can see that all the stars are aligning to reach new all-time highs, over a hundred thousand goals. But the road there will be complicated.

As I said, I think we'll inevitably get back into that $28 to $30k range, and then probably in the second half of the year we'll really see it defy expectations to the upside.

Q: Last year we talked about the most resilient sectors during crypto Winter. Which sectors and currencies are likely to benefit from a new Bull Run? We are seeing the Solana ecosystem flourish alongside the nft market; What trends could benefit in the coming months?