The Breakdown - November Was BTC's Biggest Monthly Gain Ever

Episode Date: December 3, 2024

In dollar terms, Bitcoin was up more last month than any in it's history. NLW discusses what's going on in the Bitcoin space, as well as why alt season appears to be on the horizon. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Monday, December 2nd. And today we are talking about the hot November we just experienced and weather, alt season is on the way. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Hey, hello friends. Hope you are coming off of a wonderful weekend. For those of you in the U.S.,

I hope the Sunday Scaries post- Thanksgiving didn't hit you too hard. But boy, if you are in this space, I got to think you were just excited to come back, if anything at all. Bitcoin just closed its largest ever monthly candle. November saw $26,000 added to the price of Bitcoin, beating out the previous record of 18,600 set in February around the launch of the ETFs. In percentage terms, this was a 37% gain, which did fall short of the 43% from February. Overall, November was the fourth largest percentage gain since October 2021, the peak of the last cycle. This was also the highest monthly close in history surpassing the $71,000 set in March by 35%. Still, despite the historic gains, the entire space is focused on one question. When will we hit $100,000 per BTC?

Travis Kling of Aikai Capital headlined his November report, undoubtedly one of the most positive months in crypto history with Bitcoin knocking on the door of 100K. Material indicators wrote, I view the fact that we haven't broken the mystical 100K level yet as a positive for the strength and sustainability of this run. It will be interesting to see if 100K comes as a Christmas gift or if the gift comes in the form of a correction that gives the market a Bitcoin flash sale.

As another sign of how strong the anticipation is, CME Bitcoin futures have gone above 100K three times in the past week, and are consistently trading above spot prices. Technical analysts seem very optimistic about the setup heading into December. Bitcoin has made multiple higher lows over the past few days and didn't trade below $95,000 since Friday. Crypto McKenna tweeted, interim trend consolidation before we blow past the 100K psychological level and put in a local top at 120 to 130K. Analystskew wrote, Bitcoin 4-hour, developing uptrends so far, higher lows, sustained systemic uptrend, momentum reset, and monthly open pump. Going into next week and weekly open, we have a lot to play.

with. Higher high above 98.5k would be a trigger to push 100K supply once again. Put more succinctly, there's a sense that the end of the month has reset the playing field for another push higher. Monthly options have matured and futures open interest is near a two-week low. Meanwhile, spot accumulation is running at a tremendous clip. Exchange supply continues to tick lower, reaching fresh cycle lows of 2.27 million Bitcoin. Analyst Willie Wu tweeted, If you want some situational awareness of what's going on, take a look at the Bitcoin reserves on exchanges, nothing short of a supply shock. I don't know who is buying, but short-term traders are selling their coins into a Bitcoin vacuum cleaner. As an aside, one obvious answer might be micro-strategy,

with Michael Saylor hinting at another big purchase on Sunday. Still, others urged a brief moment to recognize how far Bitcoin has run already. Corey Clipson, the CEO of Swan Bitcoin tweeted, as we close out November 2024, lean back, take a breath, and enjoy the fact that we just saw the largest monthly price rise in Bitcoin history, up $26,000 in 30 days. It's a new ballgame. With 100K Bitcoin feeling inevitable, many are turning their attention to figuring out where we are in the cycle. The wave of adoption in 2021 was large, with many left feeling they had bought the top and were forced to hold through the painful crypto winter. That means there is a big cohort of investors moving into their second cycle and looking for a roadmap for the next year of price action. Charles Edward of Capriol Capital is keeping it simple, tweeting,

This is where we are in the Bitcoin cycle. Every time a monthly all-time high has been broken with strength, we have seen at least four massive monthly candles over the following months, just warming up. Edward is clearly referencing the start of parabolic moves in late 2020. After a strong recovery coming out of the March lows, Bitcoin struggled throughout the summer. A strong October led to a 42% gain in November, with the monthly close jammed up against the psychological barrier of 20,000. That December saw 48% gain as Bitcoin moved into price discovery with seasonal tailwinds. The rally continued into March with another pair of 30% moves on the monthly time frame. At this point, sentiment topped out. Coinbase had its IPO and Bitcoin was a major topic across the financial

press. And the point here isn't that history will necessarily repeat. It's simply that psychological barriers can often act in counterintuitive ways. $20,000 Bitcoin felt unfathomably expensive to many in November of 2020, especially no coiners without they had missed the rally. Four months later, Bitcoin was trading at $60,000. A big part of the story in early 2021 was social proof that the trade wasn't over. When Elon Musk bought Bitcoin for Tesla's balance sheet in early February, it demonstrated conviction that there was plenty of room left to run. Now, that narrative arc ended pretty poorly, but at the time, it was strong enough to help drive a doubling in price from an already extended level. In other words, normal investors need a reason to believe that 100K Bitcoin

is still cheap. Unit bias is a powerful force. And this time around, it feels like Bitcoin needs a larger narrative than a billion dollar buy from Elon. Sailor has been on the bid for multiple billions every week and it's barely moving the needle. There isn't a crypto IPO that will be anywhere near as important as Coinbase, and Bitcoin is already becoming a normal part of the financial landscape. Then again, we could see some truly gargantuan catalysts over the next few months, the sort that Bitcoiners have been dreaming about for a decade. Microsoft's shareholders are set to vote on Bitcoin adoption next week. There's persistent rumors of nation-state adoption, particularly in the Middle East.

And then, of course, there's also the U.S. government's strategic Bitcoin Reserve. In other words, there is much to be excited about in the months to come. Today's episode is brought to you by Bitkey, the hardware wallet built for Bitcoin. Made by the team behind Square and Cash App, BitKee makes securely managing your Bitcoin absurdly simple. BitKee is integrated with partners like Cash App, Coinbase, Robinhood, and blockchain.com so you can easily compare prices across exchanges before you buy or sell. And their app works like the money apps you already use because simplicity is the best form of security. Send, receive, and track your wallet value over time all in one place. Time magazine named BitKee

one of the best inventions of 2024. Their simple three-key approach to self-custody replaces complex features like seed phrases that make traditional wallets hard to use and easy to lose. Give the gift of simplified self-custody to the Bitcoin person in your life, and if that's you, get BitKee and sit back and relax while the sats stack. For a limited time, you can get BitKee for $99. That's $51 off the normal price. Get yours today online at Amazon, Best Buy, or Bitkey. That's B-I-T-K-E-Y. World. Another important signpost, though, for where we are in the cycle, is the recent movement in altcoins. In the past few weeks, as Bitcoin momentum stalled, we've seen a dramatic repricing

in most major altcoins. None was more dramatic than Ripple. XRP has more than quadrupled in price since October. A 25% move on Sunday pushed the token above its April 2021 high. XRP also has a larger market cap than Salana for the moment, once again making it the third largest cryptocurrency. There's ostensibly a narrative driver for the price action with New York regulators expected to approve Ripple Staplecoin in the coming days. There's also a lot of attention around the idea of launching a top 10 or top 20 crypto index fund with mass market availability. However, for Bitcoiners, the more interesting point is what big alt-coin moves say about the Bitcoin cycle. During the last cycle, there were two major

kinds of all-coin season. The most notable one came in summer 2021, when random coins popped off 100x as Bitcoin's price stalled out. This was clearly a rotation of capital as Bitcoin and Ethereum wealth headed further down the risk curve. Chris Berniske of placeholder ventures seems to believe that's where we are, tweeting, let the hot ball of money roll. The other possibility is that this moment is closer to the summer of 2020. The ICO mania of the previous cycle had left a ton of altcoins dead, with basically zero volume, no interest, and prices down 99%. Once Bitcoin had demonstrated it wasn't going to zero in the first part of the year,

there was a halo effect on the rest of the crypto industry. Projects came back to life with new enthusiasm, volume returned, and prices went up by multiples, with even a few 10x pumps. That price action is now impossible to see on the chart, eclipsed by what came in 2021. But at the time, it played an important role in bringing people back to the space. The first-time traders who had ground their accounts into dust by the end of 2018 were suddenly recapitalized. The bags of shame that they had written off years ago gave them another reason to get interested in crypto. This all came while Bitcoin's price slowly ground higher, rather than

during a drawdown like in 2021. To put some numbers around it, an investor who bought $1,000 worth of ripple near the top in 2021 would have seen their portfolio drop to $200. Assuming they logged off for the last two years, those bags are now worth $1,600, turning an embarrassing loss into a very tidy gain. Zooming out, the total crypto market cap is up almost 10% in the past week, while Bitcoin has remained relatively flat. Bitcoin dominance is down by 5% point since mid-November, its largest two-week decline since 2022. For some, this will be a clarion call to get interested in crypto again, with the bias towards the sort of people who bought large-cap altcoins during the last cycle looking for the quote-unquote next Bitcoin. This could kick off a strong

wealth effect across the crypto ecosystem, with many choosing to roll windfall gains back into Bitcoin. Raul Paul, the CEO of Real Vision, captured the current mood, tweeting, Dear XRP Jedi Warriors, you were right, I was wrong, well done. Dinosaurs still roam the earth. I just want everyone to make money and you guys have walked through hell to get here. I still own some XRP from the delisting, but you guys and girls deserve everything. Another interesting signpost is the recent outperformance of ETH ETFs. The funds saw record inflows of $330 million on Friday, outpacing the Bitcoin ETFs.

Trader Edward Mara wrote, ETH-ETF flows flipped Bitcoin ETF flows for the first time. Keep hating on ETH while this is the most obvious catch-up trade of this cycle. And this is broadly the thesis, that Bitcoin has run so far that Ethereum becomes an obvious play. Joel Kruger, market strategist at Elmax Group said in a Friday note, we believe the improved outlook for the defy space, former regulatory climate with incoming U.S. administration, is a main driver behind the shift in sentiment, as market participants can now see a clearer path towards investment in Ethereum. At this stage in the Tradfi capital allocation most market participants are only just dipping their toes in a Bitcoin allocation. If we continue to see

a strong rally from Ethereum, then the logical conclusion will be that it makes sense to hold some alongside a Bitcoin position. In general, these broad-based rallies are only good for Bitcoin adoption. There is an argument to be made that the conversation around whether to buy Bitcoin or ETH is more compelling when it comes to financial managers than simply being told to buy Bitcoin. Paradoxically, Ethereum's recent outperformance could also serve to validate Bitcoin's current price. Until now, Bitcoin was an outlier, a dislocation from the the rest of the crypto market. Now it's starting to look like the justified market leader and somewhat less risky than every other token on the board. In other words, Bitcoin isn't moving lower.

The rest of the crypto market seems to be repricing around it. As one example of this kind of phenomenon, Purple Hat tweeted, I was thinking about rotating someone by Bitcoin back into ETH, but with XRP flipping everything, it's clear that this market is all a joke and it's safest to just stay with the king. Another sign of the market coming alive is NFTs coming back from the dead. The Cryptopunk floor price is up by 60% over the past two weeks, with bored apes and pudgy penguins not far behind. It's difficult to over state how beat-up top NFT collections were over crypto winter. At their peak in late 2021, a floor crypto punk was worth $350,000. After a long and painful multi-year drawdown, the bottom seems to have finally come in in August with a floor

price around $60,000. Floor puns are back to being worth more than $150,000 a piece now. And whatever's going on seems to be pretty widespread, affecting a wide range of collections. According to data company crypto slam, NFTs recorded 560 million in sales in November, the highest total since May. Coin market cap has the total NFT market at $42 billion, more than double the low water mark in August. Andrew Kang of Mechanism Capital channeled last cycles NFT traders tweeting, I'm about to walk into the most abundant and plentiful NFT bull market we have ever had. I am not an idiot for holding NFTs for all these years. I am a long-term investor with conviction. Moon Overlord thinks there's another explanation, commenting,

Magic Eden AirDrop is in nine days. I think smart money started doing the math and realized how big the airdrop is going to be at these pre-market prices. Big money is going to the top NFT and Rune traders. Whatever the actual reason is, a spike in NFT prices serves a very similar purpose to the jump in XRP. It brings a lot of dust wallets from the last cycle back to life, and gives traders a reason to return to crypto with a capital injection.

For a huge segment of the class of 2021, NFTs were crypto. The resurgence gives yet another reason to catch up on everything else that has been happening in the industry over the last few years. Some might even consider trading in their board ape for a Bitcoin, recognizing that they could have bought several at the peak of the last cycle. The big takeaway and the reminder here is that there are many, many ways to get into crypto. Almost no one comes into the space as a fully formed Bitcoin Maxi. Far more common is the path of the all-coin speculator or the digital art enthusiast. There are millions of people who came in through those doors during the last cycle. For them,

crypto winter has been extra long and is only just starting to thaw. Some will, yes, immediately go back to flipping monkey pictures, but there's also a portion who will decide to buy Bitcoin for the long term. The rejuvenation of the broader market is a perfect trigger for that realization. Many bagholders will be seeing their altcoin holdings finally breaking even and realize a Bitcoin allocation would have been much better. There's also a powerful wealth effect when the entire market is up only. Capital is more available for all sorts of projects and companies. Entries are much more forgiving for new traders and investors. The industry takes on a more optimistic vibe and an abundance mindset. The TLDR is this. For most of the year, crypto markets have been Bitcoin only with

nearly everything else being supremely risky with no apparent future. However now, with big runs in multiple segments, it's starting to feel like a Bitcoin first industry where multiple success stories are possible at the same time. That's going to do it for today's breakdown. Appreciate you listening as always. Welcome to December, one of my absolute favorite months of the year. Until next time, be safe and take care of each other. Peace.