The Crypto Comms #13
Bitcoin is ready to rally to $30,000-$35,000 as buyers find their footing amid depressed macro-economic conditions. Meanwhile, the Fed is expected to hike rates on July 27th. But the ECB has opted for a BoJ-style strategy that may spell doom for the Euro’s purchasing power.
In this issue:
- Bitcoin analysis
- Macro update
- Latest happenings
- Listening material
After taking out the steep downtrend last week, Bitcoin continued higher, pushing 6.2% week on week. Price surged above prior weekly highs ($21,600) and the coin currently exchanges hands at $22,100.
BTC/USD appears to have picked up the pace on its long-overdue relief rally, and could be on the precipice of a ‘disbelief’ turbo thrust to $30,000 — $35,000 in July.
If the top crypto can hold the D1 trend (20-ema), a mean reversion to the CME gaps is on the table. Assuming BTC is exiting this range, pivotal moving averages should begin to act as support when tested.
On lower time-frames (H4), BTC is above the 200-ema (blue), 50-ema (orange), and 20 ema (white dotted). Successful retests and bounces off these averages would provide clues on the probability of a higher-time-frame breakout.
The line in the sand for bullish moment is $20,700, presently. Should prices print below that level, a sweep of $17,600 is in the cards.
Following last week’s CPI data on July 13, BTC/USD prices fluctuated widely, but ultimately resolved higher breaking the down trend discussed in last week’s newsletter.
The next FED policy meeting due July 27th will likely induce similar volatility on the day. CME traders weight a 0.75% rate hike with a 66.8% probability, and a 1% hike with a 33.2% probability presently.
Fed chairman Jerome Powell will have a greater ‘mandate’ to act aggressively given the 9.1% inflation figures last week and strong employment data the week before. Once the US enters a technical recession (2 quarters contracting GDP), the Fed’s priorities will shift from inflation to the contracting economy (and in all likelihood inflation would not be 2%).
The Dollar Index lost steam at 109.2 last Thursday and is currently cooling off. A cooling DXY is a signal for risk-assets to rally, and crypto has responded well to this situation so far. A move to 103 may provide further impetus for risk, and a fall below 101 opens the door to a larger rotation of capital into Bitcoin and crypto.
Meanwhile, the SPX appears structurally ready to have a substantive reversal. If price reclaims 3,860, a thrust to the 4,194 pivot is next. As discussed last week, even ‘bear markets’ have rallies. This is not to say a mean-reversion rally cannot evolve into a bull market. Once the FED pivots on monetary policy (flat or declining rates), risk assets would benefit from massive inflows.
Across the North Atlantic, the ECB is opting for a BoJ-style ‘yield curve control’ program, which it calls a ‘transmission control mechanism’. This means money printing and further increases in the central bank’s balance sheet.
- ECB Bond Buying Tool Will Have No Limits on Purchases.
- US Inflation Hits 9.1% for June as Fiat Currencies Debase Worldwide.
- CoinShares Report: Institutional Inflows Highlight Interest in Shorting Bitcoin.
Michael Saylor: The future of Bitcoin.
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 or financial advice. While I cannot promise perfection I do my best to be honest and transparent.
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