Empowering your financial freedom

Learn more
Back to the Academy
SwissBorg MacroScope - November 6th

SwissBorg MacroScope - November 6th

The stars are slowly getting aligned for a new bull market.

National debt
National debt

What were our top readings in the past 2 weeks?

  • Deficit is destiny: why interest rates need to move higher by Ecoinometrics
  • The Periphery by Arthur Hayes
  • Capriole Fund Update #7 by Charles Edwards
  • Sizing the Market for a Bitcoin ETF by Galaxy
  • VanEck’s Base, Bear,Bull Case: Solana Valuation by 2023

Our View

LONG TERM HOUSE VIEW (As a function of cycle)

Our View of where we are in the Cycle: "Pre Bull Market"

  • We expect to see BTC > $100k and ETH > $10k as new ATH in the next leg of the cycle: bull market
  • For the bull market to happen Central Banks, in particular the FED, must invert the trend to a more dovish stance.
  • The magnitude of the bull market will be influenced by additional positive news flow, such as the green light for an ETF. Nevertheless, the sequence of events is key and interest rate policy is the key factor to transition from ranging to bull market according to our view.
  • The long term trends that influence crypto adoption are increasingly positive. Besides monetary debasement, AI is one of them.
  • We believe in ETH as the superior asset for the next decade.
  • Our favourite altcoins thematics for the next upleg are Socialfi, Gamefi, AIfi & Infrastructure for scalability.

SHORT TERM VIEW (What might happen in the next 2 weeks?)

  • Last week, Bitcoin broke out from a 7 month consolidation with a lot of strength.
  • While this doesn’t necessarily mean that a new bull market has started, this move can be interpreted as a shift in market psycholog.
  •  We shift from a neutral stance to a bullish bias for the short term: If the breakout holds, it could propel bitcoin to the $40K levels. 
  • However, we still expect another phase of consolidation until a proper catalyst arises that would signal the start of a bull market.
  • Geopolitics tension is still to be monitored as it can influence market expectations in the short term. Nevertheless, we are noticing something unique: as global tension arises, Bitcoin price goes up while US Treasury Bonds are going down. It is too early to call it a new Paradigm but is BITCOIN the new “fly to quality” asset?

Content Analysis

Deficit is destiny: why interest rates need to move higher by Ecoinometrics

Major Takeaways

  • In the last few years, the US government has issued massive debt at really low interest rates.
  • But as the principal of the debt needs to be repaid, the US government needs to issue new debt to roll over the existing debt and pay for the interests. For instance, there is roughly $ 7.4 trillion in 2024 from the COVID stimulus that needs to be refinanced in 2024.
Why interest rates need to move higher
Why interest rates need to move higher
  • Before, it used to go in the open market and sell out without any struggle (investor would queue to buy the risk free asset of the world at the rate they offered).
  • But right now, it struggles to find natural buyers because for different reasons, China, the Fed, or Oil producing countries are not net buyers anymore. Hence Investors want greater compensation (in the form of higher yields).
  • This is a complicated situation as higher yields implies that the US will struggle even more to repay its debt in the future.
  • As the demanded interest rate is higher than GDP growth and because Debt to GDP is higher than 100%, more than all of the growth of the economy would be required to repay the debt.
  • This situation is unsustainable and the Fed will inevitably need to step in at some point  to monetise the debt. But the Fed buying treasuries and adding it to its balance sheet will increase the money supply drastically leading to monetary debasement.
  • This is bullish for crypto and other asset classes in limited supply (stocks, gold etc…).

Source: https://ecoinometrics.substack.com/p/bitcoin-never-goes-up-in-a-straight  

The Periphery by Arthur Hayes

Major takeaways

  • Different forces threaten the stability of the US Treasury market.
  • This situation is dangerous because all countries own US Treasuries and see them as the risk free asset of reference, hence, instability in this market can cause a ripple effect on the world economy. 
  • First, there is a bear steepening happening in the US Treasury market. This is a relatively rare event where yields increase generally with the long-ends rising more than the short-end.
  • A bear steepening implies that there is a lot of selling pressure on long term bonds (as price is inversely related to yield) and this can create a debt spiral:
    - Bear Steepening increases book duration
    - The increase in book duration means that banks are not properly hedged anymore
    - As a results, they increase their short position in long term bonds to adjust
    - This implies that long term yield rises
    - And this goes on & on and can create a debt spiral
  • This situation can lead to a financial blow out.
  • One way to limit this scenario could be to continue the rate hike (to limit the bear steepening). But this will have a lot of other implications (see the previous article).
  • US banks are also sitting on close to $USD 700 billion of unrealised loss in US Treasuries. As long-term bond prices are still decreasing (and yields are rising) this situation is getting worse.
Unrealised gains on investment securities
Unrealised gains on investment securities
  • Further, the recent geopolitical conflict worsens the situation as this could increase government borrowing drastically. As a proxy, the conflict in Afghanistan necessitated over $USD 8 trillions.
  • Therefore, long-term bonds are selling off and yields continue to rise as the market is pricing increasing probability of future US expenditures and wartime inflation. This threatens even more the stability of US Treasuries.
Debt spiral
Debt spiral
  • Ultimately, the only way out of this situation is more money printing. 
  • Here again, This is bullish for crypto

Our view:

  • The two previous articles put forward different scenarios for the future but they reach the same destination: more money printing and monetary debasement in the near future.
  • While we don’t know how the Fed will deal with the situation, we agree with the fact that printing money is inevitable if the US wants to avoid a sovereign debt crisis.
  • This could trigger a lot of reaction in the crypto market and ultimately be the catalyst for a new bull market.

Source: https://cryptohayes.substack.com/p/the-periphery

Capriole’s Update #7 by Charles Edwards

Major takeaways

  • The halving is just 5 months away. Historically, there is no better time to be long Bitcoin than around halving date.
  • Bitcoin de-correlation from risk assets continues. Further, Bitcoin has rallied strongly with Gold. In the past, when the two moved strongly together, this was usually really bullish.
  • Larry Fink went up on the news to describe bitcoin as a “flight to quality assets relevant for the current environment”. This signals that the perception of Bitcoin by traditional investors is evolving.
  • There is increasing evidence that we are really close from seeing the approval of the first spot ETF.


  • Bitcoin has broken from a 7-month price range with a sharp rise in price. This signals a change in market psychology where bulls might continue to dominate in the short to mid term.
  • The two most probable situations in the short term are either a rapid continuation to mid-range ($43k) or a consolidation around the current level.
  • For this shift in market psychology to be confirmed, the breakout needs to hold. Hence, it is important for Bitcoin to stay above the key resistance level of the previous range ($28k-$30k) in the coming few weeks.

Potential cause of concern

Potential cause of concern
Potential cause of concern
  • The increase in price coincides with an increase in miners selling pressure.
  • This could put a cap on bitcoin price action in the short term and make it more prone to stay around the current price levels.

Source: https://capriole.com/update-7/?utm_source=brevo&utm_campaign=Update7&utm_medium=emailading=h.eartly4mmrh8

Sizing the Market for a Bitcoin ETF by Galaxy

  • The approval of a US Spot Bitcoin ETF will be one of the most powerful catalysts for the adoption of Bitcoin (and other crypto as an asset class).
  • A Spot ETF will be better suited for investors wanting a safe exposure to bitcoin as there will be clear regulatory control, better liquidity, and greater convenience. Hence it could trigger a new wave of adoption.
  • Galaxy estimated an inflow of $14.4 bn in Year 1 based on conservative estimate that 10% of addressable AUM will allocate 1% to BTC over the next three years.
Illustrative Bitcoin Spot ETF Market Sizing & Inflows by year
Illustrative Bitcoin Spot ETF Market Sizing & Inflows by year
  • This could trigger a 74% price increase in Bitcoin its first year only.
Estimated year one ETF inflows impact on BTC price
Estimated year one ETF inflows impact on BTC price

Our view on this

  • While it is hard to draw a precise estimate on the impact of the ETF, we believe that +74% is a conservative estimate and that Bitcoin could actually get a way bigger price appreciation. For instance, Cathie Woods expects a x15 increase.

Source: https://www.galaxy.com/insights/research/sizing-the-market-for-a-bitcoin-etf/

VanEck’s Base, Bear, Bull Case: Solana Valuation by 2030

Major takeaways:

  • Solana has optimised every component of its Blockchain to be hyper-efficient. It is far ahead of its competitor regarding processing capabilities.
  • It is the more capable blockchain in terms of “data throughput” (how fast can a blockchain ingest, process, and order data on the ledger).
Data throughput comparisons MB/S
Data throughput comparisons MB/S
  • Further, Solana is built to welcome many apps. In Ethereum, one heavy usage of an application can congest the whole network and slows other applications. In contrast, Solana solves this problem with “Local Market Fees” allowing for many applications to have access to Solana even if one is experiencing heavy usage.
  • This feature alongside high data throughput makes Solana the most probable blockchain to host the next “killer apps”
  • But despite its potentials, VanEck believes that Solana’s likelihood of hosting the majority of crypto transactions by 2030 is lower than Ethereum’s.
  • One of the drawbacks of Solana is its network fragility. While Solana has had 100% uptime since march 2023, it has had a lot of issues in the past with the most recent of these outages lasting nearly 19 hours.
  • Moreover, Solana lacks adoption momentum by crypto users and developers. It retains a small share of total TVL and daily user is relatively niche,
  • Taking into account all of this, the VanEck team’s model still produces a base case for the SOL token of $335 by 2030 and believe that a meaningful weight for SOL in investor portfolios is justified.
Solana valuation scenarios overview
Solana valuation scenarios overview Source: https://www.vaneck.com/us/en/blogs/digital-assets/matthew-sigel-vanecks-base-bear-bull-case-solana-valuation-by-2030/#solanas-approach-usability

Chart of the week

Bitcoin dominance
Bitcoin dominance
  • Bitcoin dominance is a metric that quantifies the ratio of Bitcoin market capitalization to the total crypto market capitalization.
  • It has hit its highest level in over two years.
  • This trend signifies that right now Bitcoin is leading the market and overperforming the majority of altcoins.
  • This rise in dominance could be due to the speculation around the ETF approval or simply reflect the small risk appetite of crypto traders right now.
  • As the bull market develops itself, we expect this dominance to stabilise and fall, implying that money is increasingly flowing into altcoins as risk appetite and speculation increases.

Disclaimer: The information contained in or provided from or through this article (the "Article") is not intended to be and does not constitute financial advice, trading advice, or any other type of advice, and should not be interpreted or understood as any form of promotion, recommendation, inducement, offer or invitation to (i) buy or sell any product, (ii) carry out transactions, or (iii) engage in any other legal transaction. This article should be considered as marketing material and not as the result of financial research/independent investments.
Neither SBorg SA nor its affiliates (“Entities”) make any representation or warranty or guarantee as to the completeness, accuracy, timeliness or suitability of any information contained within any part of the Article, nor to it being free from error. The Entities reserve the right to change any information contained in this Article without restriction or notice. The Entities do not accept any liability (whether in contract, tort or otherwise howsoever and whether or not they have been negligent) for any loss or damage (including, without limitation, loss of profit), which may arise directly or indirectly from use of or reliance on such information and/or from the Article.

Discover SwissBorg