Disclaimer: Your capital is at risk. This is not investment advice.
It’s going to get ugly out there, but there is no evidence that Bitcoin is the problem. It trades at fair value, halving is just eight months away, and if the Fed balls this up, which they will, they’ll print their way out of trouble. What matters is that if the financial markets fall, Bitcoin is no worse. If that happens, perceptions will change for the better in the next cycle.
Analysis of Technical, On-chain, Macro, Investment Flows and Crypto Stocks.
|Investment Flows||The Reawakening|
|Crypto Stocks||PayPal launches a stablecoin|
The charts are cooling off, and this feels like the year that the Fed doesn’t come to the rescue… that is, until they ball things up. Bitcoin in USD is now 2 of 5 on ByteTrend, with the only positive being the rising 200-day moving average, with the price above.
BitUSD - Bitcoin in Dollars - ByteTrend Score 2 of 5
It’s a slightly better picture against the technology sector because, unlike the dollar, tech is sliding too, albeit early days. The 200-day moving average is still positive (slope), which reminds us that Bitcoin may be no worse than tech should financial markets slide. It remains my longer-term view that Bitcoin will leave the Nasdaq for dust over the next decade.
BitDAQ – Bitcoin in Nasdaq - ByteTrend Score 2 of 5
Versus gold, Bitcoin is strong as gold feels the full force of rising bond yields. Bitcoin should be more resilient under current conditions because it responds positively to higher rates and inflation. The uptrend in gold looks good, but if the going gets tough, gold will likely prove to be more resilient. Not only is it defensive in equity bear markets, but the upward pressure on rates will inevitably cool, paving the way for a gold relief rally.
BitGold – Bitcoin in Gold- ByteTrend Score 3 of 5
According to the MicroStrategy Premium, which is over 60%, sentiment is bullish. Too bullish, perhaps, but Saylor will keep issuing new shares and buying BTC, so long as that remains. The message from the market is that Bitcoin is not currently a contrarian trade.
This is also confirmed by Grayscale, where the discount has narrowed from 50% to 25%. Still a discount, but the point here is that the market has shortened the odds that the US ETF will get regulatory approval. And they should.
They say Bitcoin is volatile. I show the Magnificent 7, the Top 7, the tech bubble or however you describe these madly overhyped stocks. Bitcoin is marginally more volatile than Google and Microsoft, generally considered to be high-quality equities. Yet it is less volatile than Tesla, Amazon, Nvidia, and Meta. Does this surprise you?
The Big 7 and Bitcoin Volatility – Past Year
A coincidence, and temporary, I hear the cynics say. I believe it is structural, as the volatility has been falling since 2020 (and 2010). Furthermore, the devastating 2022 Bitcoin bear market saw volatility broadly in line with 4 of the Top 7 stocks. That is not something to fear.
The Big 7 and Bitcoin Volatility – Past Five Years
The regulators and the traditional investment community have got Bitcoin completely wrong. It is not ultra-high risk, but at most, medium-high risk and on its way to medium. Could the forthcoming mayhem be a period where Bitcoin makes its name? I certainly hope so. When it does, expect several hundred billion dollars to be invested in a Bitcoin ETF near you.