With the Federal Reserve lowering rates by 50 bps as well as other major central banks lowering rates, global liquidity is accelerating. The Fed has unleashed QE every time markets got into trouble such as in Mar-2020 to address COVID and in Mar-2023 to address the banking disaster. Meanwhile, stealth QE remains alive and well due to massive debt interest and other unfunded liabilities.
China also announced a series of easing measures designed to stimulate the world’s second-largest economy to try to get growth back to the 5% target, including cuts to interest rates, mortgage rates, and down-payments for house buyers. Going all in on stimulus sent Chinese stocks 4% higher.
China's central bank:
- Lowered policy #interestrates and signaled more cuts are coming.
- Cut rates on over USD 5 trillion in #mortgages.
- Eased rules for second-home purchases.
- Lowered the required reserve ratio for banks, freeing up fresh #liquidity
- Pledged over USD 100 billion in equity market support.
- Stated policymakers were studying a stock market stabilization fund.
This set of measures is astonishing in itself, but the fact that China opted to announce them all at once is a significant deviation from previous years. All this means China is (again) unlikely to stay within its budget #deficit target of 3% of GDP and unleashes a massive slew of liquidity that will be felt globally as it was in early 2023. This is outright bullish for stocks, cryptocurrencies, real estate, and gold. It will also push inflation higher in China which has hovered just above zero for months. Note the yellow line which represents global liquidty.
This all bodes well for both cryptocurrencies as well as stocks, gold, and real estate. Bitcoin is trading sideways but watch for a breakout to the upside in the coming days to weeks.
With the cycle potentially renewed, cryptocurrency sectors and names likely to outperform have not changed from the prior cycle that started in late 2023 when fresh global liquidity began to accelerate, sending Bitcoin to new highs of 73,777 in Mar-2024.
If a name is not mentioned below that is still on the crypto list, consider it still viable. In general, focus on coins with market caps above $100 mil. Under $100 mil market cap coins should be considered crap shoots so if you must buy such a coin, keep your exposure to a minimum.
Layer 1:
SOL (new) and SUI (new) - with their high transactions/sec and low fees will spur decentralized cloud storage and decentralized AI such as AKT among other decentralized platforms.
BTC (new) - the magna carta of code. This moves more slowly but with less volatility than the alt coins.
AI (incl DEPIN):
FET - AI for blockchains. Building the autonomy of things. Fetch.ai breathes life into machines, data, services and infrastructure by using digital representatives called Autonomous Economic Agents that can trade autonomously and unsupervised. Fetch.ai delivers a unique, decentralized digital world that adapts in real-time to enable effective, friction-free value exchange. Powered by innovations such as the world’s first smart ledger, Fetch.ai is the missing critical infrastructure for tomorrow’s digital economy.
AKT (new) - decentralized compute power for AI (crowdsourced GPU power).
AIOZ (new) - AI storage, streaming, AI DEPIN (decentralized physical infrastructure)-- applies to many networks
HNT (new) - decentralized wifi. With a Helium Hotspot, anyone can earn cryptocurrency by building a wireless network in their city.
RNDR - rendering the metaverse- distributed GPU rendering on the blockchain. cloud-based rendering service for 3D graphics revolutionizing the digital creation process.
Gaming:
SUPER (new) - SuperVerse is an authentic and irreplicable web3 network of highly-passionate partners and players. We have built-in reach for any title to be successful. Connects the biggest web3 community to the best crypto games.
BEAMX - infrastructure play that hits all right points - pure gaming infrastructure play. Big advantage due to their SDKs which help devs ship games faster by abstracting out a lot of the grunt work, partnered with IMX (Immutable X).
AVAX - layer 1 for gaming.
Memecoins:
BONK (Solana's community token of web3) and FLOKI are two of the stronger coins. Both are new to the crypto list. DOGE and SHIBA should also correlate but may move more slowly due to their sheer size.