China’s Coming to Crypto
Disclaimer: Your capital is at risk. This is not investment advice.
ByteFolio Issue 135;
As Bitcoin flirts with $100k, we should remember that big round numbers are often a stalling point. Bitcoin challenged:
- $10 in June 2011, with consolidation until November 2012.
- $100 in March 2013, with consolidation until October 2013.
- $1,000 in January 2017, with consolidation until March 2017.
- $10,000 in November 2017, with consolidation until October 2020.
$100k is upon us and a break seems inevitable, but don’t be surprised for this level to face resistance. That means even after the breakout, $100k will be revisited at a later date, perhaps next year. Still, the trend is strong, and the environment is positive, so a break of the $100k level seems to be inevitable.
One macro consideration is the dollar. The recent strength since the Trump victory, has been surprising, as the likelihood of higher rates for longer in the US has increased. I highlight the three dollar bull runs since 2013, and Bitcoin didn’t perform well during those times.
Bitcoin and the Dollar
The dollar has rallied from the bottom of the range (100) to the top (107), which is above the 2023 high. I highlight the dollar because continued strength would pose a risk for Bitcoin, but I do not think a surge is likely unless interest rates rise, rather than hold firm. Scott Bessent, hedge fund manager, has been appointed as Treasury Secretary, and is deemed to be pragmatic. It means that US policy will be less frightening than feared, and if so, the US will see rate cuts alongside Europe.
A dollar slide would be super bullish, and the crypto boom would be back on track. It is also worth remembering that the dollar is rich versus other currencies, and when rate cuts come, it could slide.
Dollar Purchasing Power Parity
A few weeks ago, crypto breadth was on the floor and has since improved. This means hardly any tokens are falling in price (red has receded), and many are rising (blue expansion).
Crypto Breath in USD
That said, very few projects are beating BTC, yet the number underperforming (red) is declining. This makes tokens more attractive as they are less likely to lag Bitcoin from here.
Crypto Breath in BTC
If I only had one chart for tokens it would be this. The ByteTree Crypto Average (BCA) is back to a 5-star trend. It means the average token is going up, and if you only ever invested in crypto (ex-Bitcoin) when this happened, you’d do fine!
ByteTree Crypto Average 5-star Trend
ByteFolio Performance in USD
