This Is The Year Of Bitcoin, Not Ethereum
Also Good Performance For The Miners And The US Economy Keeps Humming Along
Welcome to the Friday edition of the Ecoinometrics newsletter.
Every week we bring you the three most important charts on the topics of macroeconomics, Bitcoin and digital assets.
Today we'll cover:
This Is The Year Of Bitcoin, Not Ethereum
Good Performance For the Miners
The US Economy Keeps Humming Along
Each topic comes with a small explanation and one big chart. So let’s dive in.
In case you missed it, here are the other topics we covered this week:
And here is our new Bitcoin Market Monitor where we have extracted only the most important, high signal charts to understand the Bitcoin market so that you can get the full picture in a few charts and a couple of minutes:
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This Is The Year Of Bitcoin, Not Ethereum
Bitcoin is approaching $100,000. What a time to be alive.
From the 2023 bear market bottom, Bitcoin has rallied almost 500%. Breaking the $100,000 mark will likely have a significant psychological impact on investors.
After 15 years and a $2 trillion market cap, even Bitcoin's strongest critics will struggle to maintain their Ponzi scheme arguments.
Our simulations from last month show an expected price of $130,000 in 2025, assuming the bull market continues. Of course it could go higher than that, checkout the distribution of returns over here . If conditions remain stable, there's still considerable upside potential.
But this rally belongs to Bitcoin, not to crypto as a whole.
Look at Ethereum, for example. While Bitcoin and Ethereum typically move together on a daily basis, Ethereum has missed several key Bitcoin rallies. This has left ETH significantly behind BTC.
The main reason? Bitcoin now has successful spot ETFs driving strong institutional demand. This has become the primary force behind Bitcoin's price movement.
Ethereum lacks this advantage. The financial tools exist, but they haven't created the same momentum we see with Bitcoin.
Is Ethereum finished? It's too early to tell. When crypto investors start taking profits from this Bitcoin rally, more cash will flow through the system. Historically, this leads investors to consider riskier digital assets. This pattern is typical in bull markets.
For now, though, Bitcoin leads the way.
Good Performance For the Miners
This is a follow up on our main side bet for this bull market.
Last year during the bear market rally we looked into the past performance and future growth potential of the Bitcoin mining stocks.
Our conclusions were that:
The mining stocks have a lot of growth potential left into them.
Depending on which stocks 10x to 30x growth was possible in the upcoming bull market.
There was a good likelihood they could significantly outperform Bitcoin over the same period.
So far we haven't seen that prophecy being realized. Yes, some miners have outperformed Bitcoin over short periods of time but nothing like in the bull market of 2020/2021.
But things are starting to go in the right direction in this rally. The average return of all the Bitcoin mining stocks is now closely following BTC itself.
The miners' recent performance suggests that institutional investors are getting more comfortable with mining stocks as a leveraged Bitcoin play, similar to how gold miners often provide leveraged exposure to gold prices.
If there is no massive Bitcoin correction in the meantime, we expect the miners to outperform in the coming months.
The US Economy Keeps Humming Along
Take a 20-year view of US retail sales. Remove the Great Recession and COVID period. What emerges is a remarkably consistent growth trend.
This makes retail sales an excellent gauge of US economic health.
Think of it this way:
A recession shows up as falling retail sales
High inflation appears as soaring sales (in non-adjusted USD)
Outside these extremes, growth stays notably stable
For those worried about a recession (including my own concerns about the Fed's soft landing), current retail sales should be reassuring. The trend matches the stable growth pattern of the past 20 years.
Some see this strength as a negative for Bitcoin. Their logic: A strong economy means the Fed won't return to quantitative easing (QE), removing ideal conditions for Bitcoin growth.
But hoping for a recession just to trigger QE makes little sense.
What we're seeing now is more promising: Investors recognize that government debt concerns persist regardless of economic conditions. They're choosing Bitcoin as a hedge against future currency debasement, and they're doing it early.
This might be the best scenario we could hope for.
That’s it for today. I hope you enjoyed this. We’ll be back next week with more charts.
Cheers,
Nick
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Hey - big fan, long time reader. Can you do a follow up piece on the lag between BTC and the Alts over time? What typically is the amount of time considered to be as “the lag”?