Ray Dalio says to Minimize Cash and Bonds Exposure, and Increase inflation-hedge Assets like BTC
Billionaire investor Ray Dalio has warned about holding cash or bonds, and recently changed his tune on bitcoin and cryptocurrencies after having been convinced by bitcoin’s monetary properties.
Meanwhile, BTC/USD has entered a weekly downtrend, but even downtrends have mean reversions and retests. And when it comes to bitcoin, every downtrend eventually ends in an uptrend.
Let’s dig in.
Ray Dalio says to minimize Cash and Bonds Exposure, and Increase inflation-hedge Assets like BTC
Hedge fund manager and CEO of Bridgewater Associates Ray Dalio warned against holding cash and bonds, noting that inflationary hedges such as bitcoin are useful additions to an investment portfolio.
However, the veteran money manager, who is worth $17 billion, also warned that crypto could be banned by certain overbearing governments like China in the future.
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Bitcoin Breaks the Weekly Trend
Bitcoin closed below $45,500, ending the week on a bearish note.
The crypto closed below the weekly super-trend, flipping the indicator into a sell signal and opening the door for a prolonged period of consolidation before bulls can find their footing to reclaim all time highs again.
As such, the general area of interest for bulls to hold has shifted towards the $30,000 — $40,000 range.
The first noteworthy level that may offer support is the monthly 20-day simple moving average at $35,600. The second area of support is the monthly super-trend which currently sits at $29,530.
Due to Bitcoin’s persistent weakness, the likelihood of at least one of these levels being hit in the coming months has increased, and rallies up to $60,000 are still within ‘bearish retest’ territory until proven otherwise. Basically, BTC/USD can bottom for two weeks, a month, perhaps more while remaining in a bearish posture.
In other words, bulls have their work cut out for them in the months ahead.
The current popular consensus of certain high profile (OG) traders is that BTC/USD will likely range between $60,000 and $30,000, in what could be an agonizing first half of the year for bulls who bought the top.
Regardless, the current price-action means that a market rotation of investors is underway. In this situation, hyped tokens and coins without fundamental value tend to lose out the most, while majors like bitcoin, in my opinion litecoin (more so than ethereum) bleed the least.
A Relief Rally is coming
That said, a relief rally is probably close, partly because sentiment is as bad as it has ever been.
From a technical standpoint, even weekly down-trends have uptrends, mean reversions and bearish retests too. At the time of publishing, both the Bitcoin stochastic RSI and RSI are oversold. A buy signal has flashed on the daily relative strength index, which means selling pressure is on a timer.
In the event that the market unwinds further, then bulls (whoever is left) will aim to buy an acceleration of price-action to the downside, i.e. (liquidations). And indeed, this isn’t guaranteed to happen in light of the fact that the market hasn’t tested upside liquidity during this ‘elevator down’ sell-off.
At $40,850, BTC/USD is oversold and above what’s arguably psychological (round numbers) support in the immediate short term. However, it’s prudent to be skeptical of price rallies when they materialise.
Liquidations in the making?
Notably, the open interest/market cap ratio remains at a consequential level. One side or another is setup to unwind soon and it’s anyone’s guess which is more likely.
The lower and faster price falls, the better the risk/reward for buyers. It’s only a seller’s market for so long and when it’s all said and done, conviction creates market bottoms.
p.s. This is my opinion. It is not financial advice.
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