Bitcoin Leverage Reset Complete - $120K Breakout Now Inevitable
Leverage flush clears path for Bitcoin's next major surge
The Great Unwinding
Market makers finished purging excessive leverage from derivatives markets this week - removing the final barrier to Bitcoin's next leg up. The reset triggered liquidations worth billions but created the cleanest technical setup since the 2021 bull run.
Institutional Accumulation Accelerates
While retail traders panicked about temporary price dips, smart money piled into spot BTC ETFs at discounted levels. BlackRock's IBIT saw record inflows during the volatility - because nothing says 'confidence' like billion-dollar institutions buying the dip while mom-and-pop investors sell.
Technical Breakout Imminent
With leverage normalized and funding rates reset, Bitcoin faces zero technical resistance until the $120,000 level. The chart pattern mirrors the 2017 and 2021 breakouts that preceded parabolic moves.
Wall Street's latest attempt to 'tame' crypto volatility just created the perfect storm for the next massive rally - because when traditional finance tries to regulate decentralized markets, the market usually wins.
Image source: Getty Images.
100% tariffs
It all started in late September, when President Donald Trump threatened 100% tariffs on branded and patented drugs that WOULD take force on Oct. 1 (he had been talking about new tariffs on drugs for months, even saying they could be as high as 250%).
And then on Sept. 30, pharmaceutical giant(PFE -1.72%) struck a deal with the administration to offer drugs to Americans at lower prices. As a result, the company won a three-year hiatus from tariffs. Pfizer also agreed to invest $70 billion to expand its U.S. manufacturing capacity.
Soon thereafter, other big drugmakers started scrambling to make deals with the WHITE House. Several have already committed to investing billions of additional dollars into U.S. facilities and manufacturing to remain on good terms with Trump; these include(JNJ -0.24%),(MRK -1.71%), and(LLY -2.60%). Combined, these companies have already committed some $350 billion to increasing domestic manufacturing.
And the Oct. 1 deadline for new tariffs on drugs came and went, as the White House pursued negotiations instead. Commerce Secretary Howard Lutnick said the administration will let negotiations "play out" before imposing any new tariffs. So it started to look like the threat of 100% levies on drugs was merely an opening bid by the White House.
New investments
This is all very good news for drug companies and their shareholders, as it looks like deals will be struck and the most egregious tariffs on medications avoided. Investors who believe that's how it will play out may want to invest in the pharmaceutical industry now.
And the VanEck Pharmaceutical ETF is a great way to do that. The fund has $545 million in assets and holds 26 different stocks.
Its biggest holdings are:
- Eli Lilly, which accounts for about 19.6% of the fund
- Novartis (NVS -0.79%), 9.7%
- Novo Nordisk (NVO -2.96%), 8%
- Merck, 7.2%
- McKesson and Pfizer, 4.9% each
Other than those companies, no stock accounts for more than 5% of the fund, making it relatively diversified. The ETF is also geographically diversified -- while U.S. companies account for about 62% of assets, there are a healthy number of shares from companies in the U.K., Switzerland, Denmark, Japan, and a few other nations.
And the fund is inexpensive. The management fee, which covers operational costs and is paid by investors, is a low 0.36%. That puts it in the lowest quintile among its peers, according to Morningstar.
So for the moment at least, it seems that drugmakers are off the hook and, for now, back in the good graces of the White House. That could always change, as Trump's decisions are both malleable and mercurial. But if the administration's policies result in cheaper drugs, with more of them made in America, it could be a very good thing not only for people who need medicine, but also for companies in the industry and the investors who own shares in them.
