Every month we write a short update on the market. We try to time this around pivotal moments for Bitcoin.
It can be hard to time a newsletter around a market top, as Bitcoin dumps quickly. A lot has happened in the last few days and this -22% flash crash represents a huge opportunity.
It's a bull market, so sometimes these updates can sound repetitive, but as we have talked about in prior issues, dips are generally for buying this year.
And this one happens to be very special.
Bitcoin holds its correlation with the markets and the S&P has printed fresh new all time highs this week. Generally speaking, this is a positive for Bitcoin.
Systematic risk, and opportunity, remains tied to the traditional markets in the short-term. As we have written about before, keep an eye out for any major changes to macro-economic policy or other major risk/volatility factors in the stock market.
The Fear and Greed index printed 80 today, suggesting high levels of greed in the market. Values greater than 80, and less than 20, suggest significant correlation with Bitcoin.
In other words, expect any substantial upside or downside in stocks over the next 1-2 weeks to be reflected in Bitcoin.
This last week has seen some significant events for Bitcoin.
The Coinbase IPO on 14 April marked the local top at $65K. Many were debating if this would be a “buy the news” or “sell the news” event. In hindsight the obvious answer was sell.
But what happened over the last 5 day period?
Bitcoin dropped -22% over the period of 4 days, with the collapse bottoming on the news of the hash rate collapse (point 7).
As of writing, Bitcoin is trading at $55.2K and the fallout of the flash crash has left some prime entry opportunities:
The Mayer Multiple is the lowest it has been since $19K (December 2020).
These are the 10 largest banks in the US. We have collated their latest public view on Bitcoin loosely grouped as BULL, BEAR and NEUTRAL based on their most recent announcements, investments or services:
JPMorgan Chase & Co. ($3T Assets): BULL
Bank of America Corp. ($2.3T Assets): BEAR
Wells Fargo & Co. ($1.8T Assets): NEUTRAL
Citigroup Inc. ($1.7T Assets): BULL
U.S. Bancorp ($0.54B Assets): NEUTRAL
Truist Bank ($0.5B Assets): NEUTRAL
PNC Financial Services Group Inc. ($0.46B Assets): NEUTRAL
TD Group US Holdings LLC ($0.4B Assets): BULL
Bank of New York Mellon Corp. ($0.39B Assets): BULL
Capital One Financial Corp. ($0.36B Assets): BULL
Institutional adoption is well underway this bull-run.
But as you can see, just 40% of major US banks are pro-Bitcoin (“BULL”).
[Reminder - we are an algorithmic investment manager - the below provides us insight but charting is not used in our investment strategy]
The topic of this month’s technicals is the beautiful RSI diagonal retest we are currently forming. There is some chance this retest could test lower over the next 12-24 hours, but continuation up is more likely. It has a great track record over the last 1 year plus of identifying bottoms for Bitcoin (examples below).
The key is to look for at least two peaks forming an approximately 45 degree downward line. Three or more peaks which form the trend line is even better. Ideally RSI has also penetrated sub-30 (it did last week). Great buy zones are then identified after the “Test” shown below. This is happening as of writing on the current 4HR candle.
The current flash-crash and liquidation run is a Bitcoin bull-run gift.
Onchain fundamentals are pointing to the current price being a great buy opportunity and institutional banking adoption is still relatively low.
RSI is confirming a local buy opportunity.
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