‘May the Fourth Be With You’- our Lord and Saviour Satoshi
Bitcoin exchanges hands at $38,800 at the time of writing as markets await a rate-hike queue from the US Federal Reserve on May 4th.
Standing on a knife-edge and at a standstill at macro support, this week may be a do or die moment for Bitcoin (relatively speaking).
Let’s dig in.
The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Monday and Wednesday. I am not perfect and this is not a science — nor is this newsletter a signals service. While I cannot promise perfection I do my best to be honest and transparent.
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BitMEX Founder Arthur Hayes Explains $1 Million BTC price Is Inevitable
Bitcoin has entered an area where value buyers are stepping in. The founder and former CEO of Bitmex, Arthur Hayes, is one such person who has called for a $1 million Bitcoin by 2030 despite recent troubles stemming for macro-economic global conditions.
Read the full article here!
Is Bitcoin Setting up for Relief Rally?
Bitcoin/Dollar exchanges hands at $38,800 at the time of writing, down -2% on the week amidst an onslaught of negative sentiment and doom-porn prognoses.
Weekend trading constituted of typical stop-hunts, which saw prices traversing between $37,400 and $38,600.
BTC/USD closed the month below $40,000 at $37,650. The full-bodied candle indicates unrelenting sell-side pressure in the month of April within a macro ranging market structure.
Technically, the key liquidity area of $36,600 has not yet been tested as prices seemingly await macro-economic conditions to improve or worsen the landscape for risk-assets. BTC/USD has so far failed to experience an accelerated expansion downwards though, partly due to the robust high-value order-block price currently finds itself in.
As noted in a previous analysis, Bitcoin is flowing to high conviction buyers of last resort who are the least likely cohort to sell by definition. At the time of writing, price is above the macro — range point of control (POC), which stands at $38,800. This is the level with the highest-traded volumes, meaning there is a vested interest in defending the general vicinity from remaining market participants.
Price-dynamics currently resemble previous bottoming processes too, yet this by no means negates the possibility of more downside before a sustained relief rally materialises. If anything, the prevailing negative sentiment and market-wide expectation of a total collapse in prices (after a 52% drop) shows that the crowd is selling/has sold at these levels. Retail has disappeared too, so sellers are in dwindling supply. And despite the market woes, BTC/USD still trades 17% higher than its January 2022 lows. The Nasdaq — to which Bitcoin is correlated (for now) — is -1% lower in that same time-frame.
While arguments for a meltdown are all over the place and arguably with a technical tailwind, Bitcoin/Dollar is showing relative strength compared to other risk-assets. Money flows for Bitcoin — a mere $1 trillion asset class are outperforming traditional tech stocks.
However, the FOMC meeting on Wednesday has the potential to cause a major rally or drop in prices regardless. Currently, probabilities for the Fed rate hike on May 4th are skewed to a 75–100 basis point hike at 99.8% probability. This is up from last week, and means that hikes are already priced in. Any announcement lower than 75 basis points would be well received — bearing in mind that markets hang on macro support all across the board. On top of that, the DXY (USD index) is sitting at a multi-year inflection point.
The US economy (GDP) figures also fell 1.4% for the first time since galaxy brain-level lockdown policies were implemented when many expected growth. If the Fed’s mandate is to prevent a financial crisis, then do aggressive rate hikes sound like the path of least resistance?
Another point to consider is this: how often has the market crashed when everyone and their mum, dog and cat said it was going to crash?
Now is the time to be a contrarian. May the fourth be with us all.
p.s. This is my opinion. It is not financial advice.
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Originally published at https://mailchi.mp.