J.P. Morgan Private Bank releases 2024 Global Investments Outlook

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J.P. Morgan Private Bank released its 2024 Global Investments Outlook, After the Rate Reset: Investing Reconfigured, which defines five important considerations for investors as they navigate the dynamics of today’s new interest rate environment.

“Markets have entered an entirely new interest rate regime,” said Grace Peters, Global Head of Investment Strategy at J.P. Morgan Private Bank. “Three years ago, nearly 30% of all global government debt traded with a negative yield. It seemed the era of super-low interest rates might never end, but it did.”

“As we head into a new year, it’s time for investors to think about their investing goals and how they must adapt to – and even capitalize on – this market environment,” said Clay Erwin, Global Head of Investments Sales & Trading at J.P. Morgan Private Bank. “The rise in global bond yields is not just historic—it may mark a once in a generation entry point for investors that might not be available a year from now.”

To harness the new dynamics of a 5% rate world, J.P. Morgan Private Bank’s 2024 Investment Outlook explores five important themes.

Inflation will likely settle – you should still hedge against it.

“Compared to this time last year, the inflationary outlook is far less bleak. However, we think that 2% mandate will become the inflation floor, not the ceiling. Therefore, investors still need to prepare for a higher inflation world, just not as high as we’ve experienced recently,” said Erwin.

To grapple with the prospect of more meaningful inflation in 2024 and beyond, investors might first look to equities. Public companies may continue to maintain both pricing power and their margins.

Moreover, while investors used bonds to help insulate portfolios from slower growth in the previous cycle, the 2024 Outlook notes that investors should consider an allocation to real assets as an inflation hedge for the cycle ahead.

The cash conundrum: the benefits and risks of holding too much.

Low volatility and 5% yields on cash have been a magnet for J.P. Morgan Private Bank’s clients, who are holding significantly more cash than they did two years ago, having added at least $120 billion more in more in short term money market funds and treasury bills. This trend is global, but particularly powerful in the U.S. where clients have over twice the allocation to short-term treasuries and money markets as their peers outside the U.S.

“It feels good to hold cash when rates are high and other markets are this volatile,” said Jacob Manoukian, U.S. Head of Investment Strategy at J.P. Morgan Private Bank. “Cash works best relative to stocks and bonds in periods when interest rates are rising quickly, and investors question the durability of corporate earnings growth. But we think this is as good as it gets for cash.”

Bonds are competitive with stocks – adjust the mix according to your ambitions.

While there has been a painful stretch for bondholders this year, the new rate regime represents a reset in bond market pricing, and core bonds may now be poised to deliver strong forward-looking returns. Relative to stocks, bonds haven’t looked this attractive since before the Global Financial Crisis. Despite this, four out of every five J.P. Morgan Private Bank clients have not materially increased their allocation to fixed income over the last two years.

“We look to bonds to provide stability and income. Given the recent increase in yields, from our view bonds are now well positioned to deliver on both fronts,” added Manoukian.

With AI momentum, equities seem to be on the march to new highs.

Equities offer the potential for meaningful gains in 2024. Even as economic growth slows amid higher rates, large-cap equity earnings growth should accelerate and may propel stock markets higher over the next year.

“We believe the U.S. large-cap corporate sector has gone through an earnings recession already, with eight of the eleven major sectors in the S&P 500 having reported negative earnings growth for two or more consecutive quarters over the last two years. These companies have emerged leaner and resilient to potential challenges that 2024 could present,” noted Christopher Baggini, Global Head of Equity Strategy at J.P. Morgan Private Bank.

Investors don’t seem to have missed the valuation opportunity. While the S&P 500 trades at an above average valuation, there is a substantial discount to be found in U.S. mid and small-caps as well as European and emerging market stocks. Additionally, the promise of artificial intelligence and the potential upside in the stocks of drug makers with a growing share of the weight loss market also provide an attractive opportunity for investors looking into next year.

On regional opportunities, Alex Wolf, Asia Head of Investment Strategy at J.P. Morgan Private Bank, considers Indian equities a bright spot for 2024.

“In India, corporate earnings have kept pace with GDP growth – a rarity in emerging economies. Indian company profits, and thus stock returns, have tended to grow in line with nominal GDP,” notes Wolf. “Data over the past twenty years show that India has one of the closest relationships between economic growth and market returns.”

Pockets of credit stress loom, but they will likely be limited.

The next year could see stress in certain sectors of the credit complex. For example, commercial real estate loans, leveraged loans, and some areas of consumer credit – like autos and credit card – and high yield corporate credit could be vulnerable.

“An inescapable fact of the business cycle is that higher interest rates make credit harder to come by. We think these stresses will be manageable, and not enough to cause a recession in 2024,” added Peters.

Learn more about J.P. Morgan Private Bank’s 2024 Global Investments Outlook and download the full report here.

iBusiness Funding Unveils a Collection of AI Chatbots Transforming SBA Lending for Banks and Credit Unions

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iBusiness Funding announced the launch of LenderAI Prodigy which introduces an innovative collection of AI chatbots inside their flagship end-to-end SBA software solution, LenderAI.

The first chatbot iBusiness Funding has implemented helps users navigate the SBA’s Standard Operating Procedures (SOP) quickly and accurately. A user can ask the chatbot any SBA-related question, and the bot will respond with the correct answer as per the SOP.  It also cites the specific section it is referencing in the SOP for the user. Originally developed for and successfully utilized internally by iBusiness Funding, it is now available to all LenderAI clients within the new Prodigy feature.

This functionality showcases iBusiness Funding’s expertise with AI as well as their commitment to testing and refining technology internally before bringing it to the market, the firm said.

“The SOP chatbot was a game changer for our internal teams, enabling us to navigate the complexities of the SBA’s SOP with ease. Seeing its impact, we knew it was essential to adapt and offer this powerful tool to our clients,” said Justin Levy, CEO of iBusiness Funding. “You can ask the bot things like ‘How do I release collateral in loan servicing,’ ‘Please chart the maximum rates of SBA loans,’ or a myriad of other questions that commonly come up when processing SBA loans and get an accurate answer instantly.” With its ability to provide fast, reliable answers, this tool significantly reduces the time and effort it takes financial institutions to find information. It is also updated frequently to reflect any updates or changes to the SOP.

First in Market and Future Developments

As the first AI tool of its kind in the market, LenderAI Prodigy underscores iBusiness Funding’s role as an innovator in the financial technology and artificial intelligence spaces. The next chatbot to be released will provide lenders using LenderAI with a customized chatbot reflecting their own specific credit policies and guidelines that their staff can use internally. This will make it easier than ever for lenders to ensure their employees can quickly and easily understand their own guidelines and policies by relying on a single source of truth. Additional chatbots are in development, promising to further enhance LenderAI’s capabilities.

“Our goal with the first chatbot inside the Prodigy feature is to empower banks and credit unions with a tool that not only saves time but also ensures accuracy and compliance with the latest SOP updates. Our chatbot is future-proof and updated as changes are introduced to the SOP, ensuring our clients have peace of mind knowing that the answers they receive to their questions are always correct,” added Mr. Levy.

H.I.G. Capital Completes Acquisition of Mainline

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Boreal Capital Management Roberto Vélez Miami

H.I.G. Capital announced that one of its affiliates has completed the acquisition of Mainline Information Systems, a leading IT solutions provider. Mainline’s management team, headed by CEO Jeff Dobbelaere, will continue to lead the Company.

Headquartered in Tallahassee, FL, and with revenues in excess of $1 billion, Mainline is a leading, diversified IT solutions provider serving the infrastructure needs of blue-chip enterprises. Founded in 1989, the Company designs and implements custom IT solutions for enterprises and provides associated professional and managed services. Mainline has leveraged its technical data center expertise, diverse partner network, and consultative customer-centric approach to become a leading provider of enterprise server, hybrid cloud, cyber storage, and network & security solutions.

“Over the past 30 years, Mainline has developed strong and enduring relationships by providing our customers with some of their most complex and mission critical infrastructure solutions. Mainline has become a clear industry leader and is incredibly well positioned to continue to drive business outcomes for our clients as the technology landscape evolves,” said Jeff Dobbelaere. “I am very excited to partner with H.I.G. and look forward to investing in the significant growth opportunities which can take the company to new heights.”

Aaron Tolson, Managing Director at H.I.G., commented, “Mainline’s technical expertise, its status as a trusted advisor for its customers, and the value it brings to its Original Equipment Manufacturer partners are unmatched in the IT industry. We have been very impressed by what Jeff, and the rest of the management team have built and look forward to helping the Company further accelerate its significant growth potential through organic initiatives and acquisitions.”

H.I.G. was advised by Guggenheim Securities LLC, UBS, and Latham & Watkins LLP. The Company was advised by Highlander Advisors and King & Spalding.

The End of Declining Capital Intensity

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Photo courtesyRobert M. Almeida, Global Investment Strategist at MFS

The inflation ambush of 2022 ended a decades-long downward trajectory for interest rates. While rates may fall a bit as the effects of tight financial conditions weigh on aggregate demand and economic growth, we don’t believe the cost of capital going forward will resemble anything like the levels of recent years when central banks artificially set market prices via quantitative easing. Just as water ultimately finds its own level, in my opinion, interest rates will find their own, higher level.

As a result of higher capital costs, companies will find it challenging to meet investor expectations. In past notes, we have argued this is part of a large paradigm shift from high and easy-to-earn returns on capital to something lower and harder. While higher borrowing costs are the most notable change, they are not the only factor driving the paradigm shift. This note focuses on one of the other factors: a secular increase in capital expenditures and what this may mean to profits.

Falling capital intensity was the past

Globalization, in particular China’s emergence on the global scene in the mid-1990s as the low-cost manufacturer, was game changing. While it catapulted China from economic dormancy to the world’s second largest economy, its impact reached far beyond China as it allowed developed market companies to become de facto asset-light businesses by outsourcing their manufacturing to lower-cost locales.

Companies no longer needed to rebuild tangible capital because China, and Asia more broadly, did it for them. As a result, capital intensity (capital assets compared with revenues) steadily declined, as depicted below.

This matters because there is a long-term and inverse relationship between capital spending and return on capital. When capital intensity falls, all else equal, returns rise because less capital was deployed. Tangentially, the outsourcing of production also pressured operating expenses due to reduced need for human capital.

The combination of financial leverage by way of artificially-suppressed rates and falling fixed investment drove historic returns for shareholders. But that came at the expense of savers and labor, and exacerbated income inequality. Both trends have ended.

Rising capital intensity is the future

The pandemic, followed by the Russia-Ukraine war, exposed the risk of not having goods available for sale when customers want them. To make a car requires thousands of parts, but it only takes one missing part to halt production. For companies, having a product available on the shelf at a lower margin has become more important than an empty shelf at peak margin. While the building of semiconductor and electric vehicle factories has captured the bulk of the media attention, reshoring and added capacity has extended across electrical goods, chemicals, medical equipment and more. Companies outside of technology and the automotive industry are spending money too.

A brewing cold war between the US and China, and more recently a war in the Middle East, have made this risk even more acute. While the magnitude is uncertain, we can expect deglobalization to divert capital — which in recent years was returned to shareholders via dividends, stock buybacks and acquisitions — to fixed investment. That will likely become a drag on future returns.

Why this matters

While in the short run, trading impulses, such as monthly labor or inflation data, drive asset prices, in the long term, it’s return on capital that matters. Looking ahead, the shift from supply chain efficiency to resiliency will mean that companies that are short of tangible capital will need to make capital investments that will negatively impact returns.

Much like investors, companies are capital allocators. Their stock and bond prices are scorecards, voted on by the market. We’re exiting an environment where the consequences for bad decision-making were blunted by the tailwinds of artificially suppressed rates and globalization. And we’re entering one with a reduced margin for error.

Returns may prove resilient for companies led by great decision makers who understood that COVID-era cheap capital and stretched supply chains were unsustainable. However, companies with high capital needs and elevated debt burdens may disappoint. Since returns drive financial asset prices, this should also bring a paradigm shift in the importance of security selection and active management.

KKR Announces Promotions: 8 Partners and 33 Managing Directors Elevated

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KKR, a global investment firm, has marked the beginning of 2024 with significant promotions within its ranks. The firm announced the elevation of 8 of its members to Partner status and 33 to Managing Director positions, effective from January 1, 2024. This move underlines KKR’s commitment to recognizing and nurturing talent as part of its growth and evolution strategy.

Joe Bae and Scott Nuttall, Co-Chief Executive Officers at KKR, expressed their pride in this new chapter, highlighting the company’s nearly five-decade legacy of strengthening businesses and delivering consistent results to investors. They emphasized the importance of the firm’s culture and people, acknowledging the newly promoted individuals as embodiments of KKR’s values and dedication to client and portfolio company support.

The new Partners at KKR, recognized for their exemplary contributions, include Anne Arlinghaus from Capstone in New York, and James Gordon from the Infrastructure sector in London. Joining them are Franziska Kayser and Varun Khanna, both from London, with expertise in Private Equity and Credit & Markets, respectively. Keith Kim from Seoul, specializing in Infrastructure, and Prashant Kumar from Singapore, focusing on Private Equity, are also among the newly elevated. Completing the list of Partners are George Mueller from Credit & Markets in New York and Kugan Sathiyanandarajah from Health Care Strategic Growth in London.

In addition to the new Partners, KKR has also promoted a substantial number of professionals to the role of Managing Director. This diverse group brings expertise from various sectors and global locations, reflecting the firm’s wide-reaching influence. Among them are Mohamed Attar from Global Client Solutions in Dubai, Jonathan Bersch in Corporate Services and Real Estate from New York, and Rami Bibi from Global Impact in London. Also elevated are Ben Brudney, Zac Burke, and Daniele Candela, each with a strong background in Real Estate Equity, Global Macro, Balance Sheet & Risk, and Credit & Markets, respectively, all based in New York or London.

The promotions also span across various global locations such as Dublin, Houston, Tokyo, Sydney, San Francisco, and Mumbai, with professionals like Myles Carey, Todd Falk, Andrew Jennings, Gene Kolodin, Kensuke Kudo, and many others being recognized for their significant contributions to KKR’s diverse sectors including Infrastructure, Technology, Finance, and Real Estate.

This strategic move by KKR not only strengthens its global leadership but also signifies the firm’s dedication to fostering talent and expertise within its ranks. The promotions are a testament to the individual achievements of these professionals and KKR’s commitment to excellence in the investment sector. As KKR continues to navigate the complex global investment landscape, these leaders are poised to play pivotal roles in the firm’s ongoing success and growth.

Insigneo Has Successfully Completed the Acquisition of PNC’s Latin American Brokerage and Advisory Business

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Insigneo has successfully completed the acquisition of the Latin American consumer brokerage and advisory accounts of PNC Investments, PNC Managed Account Solutions, and PNC Bank.

This strategic move, initially announced on August 22, 2023, represents an important milestone for Insigneo, as it expands its Mexican client base as well as its geographic footprint by establishing new offices in Texas.

This transaction underscores Insigneo’s commitment to international wealth management.

Insigneo has been gaining significant ground by emphasizing client service, leveraging state-of-the-art technology, and focusing on continuous innovation. Clients who were part of PNC’s Latin America brokerage and advisory business will now enjoy all the benefits of Insigneo’s focused global wealth management approach and international capabilities.

Raul Henriquez, Chairman, and CEO of Insigneo Financial Group, expressed his enthusiasm about the successful completion of the transaction, stating, “The acquisition of PNC’s Latin American brokerage and advisory business underscores Insigneo’s commitment to global wealth management. We recognize the importance and relevance of the Mexican market and see this as a strategic move to immediately establish a relevant presence in that market, while positioning Insigneo to harness new opportunities in the region.”

The closing of this transaction solidifies Insigneo’s leadership in the global wealth management industry. The company remains focused on its alternative business model while driving growth through successful strategic M&A activities, a commitment further underscored by the recent appointment of Carlos Mejia as Head of Mergers and Acquisitions.

Javier Rivero, President, and COO of Insigneo Securities and Insigneo International Financial Services, added, “Both parties worked diligently and efficiently during this time focused on a smooth transition. Insigneo welcomes all incoming employees, investment professionals, and their clients to our growing firm.”

Model Providers Look to Stand Out in a Sea of Sameness

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In an increasingly overcrowded market, model providers are vying for shelf space. To succeed, providers will need to consider how their products are differentiated to fit into platform product lineups and whether they can deliver solutions at scale, according to The Cerulli Report—U.S. Asset Allocation Model Portfolios 2023.

81% of model providers indicate the most important criteria for selecting platforms and model marketplaces through which to distribute models are the placement and visibility for their strategies on the platform.

Given that overcrowding is a major issue, strategy placement and visibility are key factors in the success of a model on a platform. However, limited shelf space is overwhelmingly the most substantial barrier to placing models on distribution platforms, according to 48% of model providers.

“Models can be viewed as highly commoditized, particularly in target-risk/target-allocation products,” says Matt Apkarian, associate director. “In general, home offices do not like hosting substantially similar products on platforms and take only as many products on the platform as they can find gaps in the lineup needed to meet the portfolio objectives of their clients.

This creates extreme competition between model suites and a need for differentiation to achieve placement,” he adds.

At the same time, model providers selecting platforms must consider whether have they have the resources to deliver solutions at scale. Ongoing management of models on platforms can be an onerous process for model providers, as processes for model updates across platforms lack uniformity and create operational overhead for providers. For instance, the task of updating tickers and weights for each model is one of the top pain points listed by several model providers that discussed difficulties in working with various platforms.

Cerulli recommends model providers think strategically about the platforms they are considering and whether their solutions are aligned with the needs of advisors. “Even with proper placement, models do not sell themselves, so distribution efforts are essential to grow model assets under management,” says Apkarian. “Model providers should prioritize platforms preferred by advisors as a top priority for product placement.”

IFC & T. Rowe Price to Create First Blue Bond Strategy to Support the Sustainable Blue Economy across Emerging Markets

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IFC, a member of the World Bank Group, and T. Rowe  Price announced plans to create a pioneering global blue bond strategy to increase access  to finance for blue projects in emerging markets and help improve market standards for the  nascent blue bond market. 

The proposed T. Rowe Price Emerging Markets Blue Economy Bond Strategy (T. Rowe  Price Blue) is expected to mobilize international capital from eligible investors to support blue labeled investments in emerging markets globally through blue bonds issued by financial  institutions and real sector companies.  

“The investor capital deployed into blue bonds through T. Rowe Price Blue will make a vital  contribution to furthering a blue economy,” said Makhtar Diop, IFC Managing Director. “This  first-of-its-kind strategy with a dedicated vehicle for blue investment will also be critical in  promoting sustainable capital markets in emerging markets and developing economies.”  

Blue investments seek to provide competitive returns while supporting the health, productivity,  and resilience of the world’s oceans and water resources, which are vital for sustainable global  development, especially in the face of climate change, overfishing, and pollution. Momentum is  growing for blue finance, with interest from both investors and issuers in blue bonds and loans  that fund ocean-friendly projects and safeguard clean water resources.  

“We are proud to partner with IFC to further the blue economy,” said Rob Sharps, CEO and  president of T. Rowe Price. “We’re gratified that our emerging markets investment experience  can be leveraged in such a meaningful, innovative, and important way, providing opportunities for 

positive investment returns while supporting sustainable capital markets and preserving valuable  water resources for generations to come.” 

The proposed T. Rowe Price Emerging Markets Blue Economy Bond Strategy will draw on  IFC’s leadership in the blue bond market. Since 2020, IFC has invested and mobilized more  than US$1.4 billion through 12 blue bonds and loans issued by private sector financial  institutions and real sector corporates across emerging markets and developing economies.  

To bolster the supply of blue bonds issued by real sector borrowers, T. Rowe Price Emerging  Markets Blue Economy Bond investment activities will be complemented by a Technical  Assistance Facility, or TAF, managed by IFC, designed to increase the quality and quantity of  blue bond issuance in emerging markets. 

By partnering on this innovative strategy, T. Rowe Price and IFC are sending a clear message  to the market on the importance of mobilizing capital needed to make meaningful progress  towards achieving the Sustainable Development Goals. Specifically, UN SDG 6 “ensure  availability and sustainable management of water and sanitation” and SDG 14 “conserve and  sustainably use the oceans, seas and marine resources”.  

To ensure that the mobilized resources achieve the desired impact objectives, IFC and T. Rowe  Price have jointly developed Blue Impact Investment Guidelines that will be implemented  specifically for this strategy. These guidelines are aligned with IFC’s Guidelines for Blue Finance  which were published in January 2022 to guide IFC’s own investments in support of a  Sustainable Blue Economy. 

Fidelity International Announces Anne Richards to Transition to Vice Chair in 2024

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Photo courtesyAnne Richards

Fidelity International has announced that Anne Richards, who has been CEO of Fidelity International for the past five years, will be stepping down from her full-time executive position. However, she will remain involved with the company in the capacity of Vice President.

In her new role as Vice Chair, Richards will focus on nurturing key external relationships and strategic partnerships, leveraging her extensive experience and insights. The transition will be managed over the coming months under the guidance of the Fidelity International Board. The organization is yet to announce details regarding her successor as CEO.

Reflecting on Anne’s tenure as CEO, Abby Johnson, Chair of Fidelity International, highlighted her significant contributions. “Anne has been instrumental in driving our organization forward, particularly in expanding our capabilities and services across various markets. Her leadership in sustainability has set a solid foundation for our future endeavors,” said Johnson. She also credited Anne for her efforts in fostering a diverse and inclusive workplace, introducing enhanced parental and carers leave policies, and advocating for dynamic working environments.

Fidelity International stands as a testament to long-term, purpose-driven investment strategies. Serving over 2.9 million customers worldwide, the organization manages $714.3 billion in total assets. With operations in more than 25 locations, its client base ranges from central banks and sovereign wealth funds to private individuals. Fidelity’s dedication to investment solutions and retirement expertise is evident in its comprehensive approach, including investment choices, administration services, and pension guidance.

The organization emphasizes that it offers information on products and services but does not provide investment advice tailored to individual circumstances, except under specific conditions by an authorized firm. Fidelity International operates as a collective of companies outside North America, focusing on delivering quality investment management services globally.

As Anne Richards prepares to transition to her new role, Fidelity International continues its commitment to building better financial futures for its clients, employees, and communities worldwide. The organization upholds its legacy of thinking generationally and investing for the long term, evident in its approach to asset management and solutions for workplace and personal investing.

Will Crypto Spring Ever Come?

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While cryptocurrency used to make headlines for its radical performance, these days it’s often in the news because of lost fortunes, exchange bankruptcies and business fraud, said a Morgan Stanley report.

As investors monitor the crypto market, now is a good time to search for insights from past cryptocurrency trading cycles to understand what may lie ahead, the wirehouse added.

How “Halving” Affects Crypto Supply

Bitcoin is the leading cryptocurrency, accounting for about 50% of total digital assets by market capitalization, and, in many ways, acts as a proxy for the overall crypto market. One unique aspect of bitcoin is that it is designed to go through a process called “halving” that creates scarcity, so that bitcoins can maintain their value. Specifically, every four years, the number of bitcoins created every 10 minutes is cut in half. Eventually, when there are 21 million bitcoins in existence, no more bitcoins will be mined.

By intentionally limiting the supply of new bitcoin, the shortage caused by the halving can affect the price of bitcoin to potentially spur a bull run. There have been three such runs on bitcoin since its inception in 2011, each lasting 12 to 18 months after the halving.

The four-year cryptocurrency cycle roughly corresponds to the four seasons of the year:

Summer: Historically, most of bitcoin’s gains come directly after the halving. This bull-run period starts with the halving event and ends once the price of bitcoin hits its prior peak.

Fall: Once the price surpasses the old high, it tends to attract interest from the media, new investors and businesses, which can then drive prices even higher. This period represents the time between when bitcoin passes the old high and reaches a new one, which signals that the bull market has run its course.

Winter: In previous cycles, the bear-market decline has come when investors decided to lock in their gains and sell bitcoin, causing prices to drop while scaring off new investment. This period takes place between the new peak and the next trough. There have been three winters since 2011, lasting about 13 months each.

Spring: During this period preceding each halving, the price of bitcoin generally recovers from the cycle’s low point, but investor interest tends to be weak.

Is Crypto Spring Here?

Just as a farmer avoids planting seedlings in the winter or too late in the spring, crypto investors want to know when crypto spring has arrived to maximize their investment “growing season.” Here’s what to consider when trying to determine whether crypto spring is truly here, or if the market is still in the midst of crypto winter:

Time since the last peak: The trough of bitcoin in previous crypto winters has historically occurred 12 to 14 months after the peak.

Magnitude of bitcoin drawdown: Previous troughs were about 83% off their respective highs.

Miner capitulation: When bitcoin has neared the trough of past cycles, many bitcoin miners shut down their operations because they were losing money. When a miner shuts down, it makes it a little easier for the remaining miners. A statistic called “bitcoin difficulty” measures how easy or hard it is to mine bitcoin. When difficulty decreases, it is a sign the trough may be near.

Bitcoin price-to-thermocap multiple: “Thermocap” measures how much money has been invested in bitcoin since its inception. A lower bitcoin price-to-thermocap multiple indicates a trough, while a higher multiple indicates a peak.

Exchange problems: When the price of crypto drops, it tends to impact the viability of some crypto exchanges. Bankruptcies, bad news or new regulations may all indicate a trough.

Price action: A 50% increase in price from bitcoin’s low is typically a good sign that the trough has been achieved, although there have been examples of such a gain being followed by significant declines.

Estimates of when exactly the next halving will occur vary, but history indicates it has the potential to occur sometime around April 2024.1 Based on current data,1 signs indicate that crypto winter may be in the past and that crypto spring is likely on the horizon. However, keep in mind that there have only been three crypto springs to date. In other words, there is still a lot to learn.

One key thing to keep in mind: As with any investment, past performance doesn’t indicate future results. Potential risks such as encryption breaking, software bugs, recession or coordinated government action could emerge before the expected halving and disrupt the cycle.

While no one can tell you if now is the right time to buy or sell cryptocurrency, today is the right time to learn more about the crypto market’s cyclical tendencies so that you can ask questions, monitor trends and determine for yourself if the cycle will repeat a fourth time and whether to invest.

To read the full article click on the following link.