Buy The F****** Dip – Crypto Piece
Bitcoin Made History
Just this week Bitcoin briefly crossed its previous all-time high before having a sharp pullback, which got bought up very quickly. BTC has shown incredible strength during its run up from the $50k region to the $69k region, something that we did not expect to happen so quickly, especially before the halving that’s scheduled for mid-April 2024.
This is the first cycle since Bitcoin’s inception, where a new all-time high was seen before the halving instead of after it. Something is truly different about this cycle. It might be the ETF-approval or could be the smart money playing with people’s expectations based on past cycles. However, the bigger question is whether this is a left-translated cycle or a Supercycle? In a left-translated cycle, the strong price action tends to happen in a shorter period but more aggressively, whereas, in a Supercycle, strong price action tends to happen in a longer period while remaining aggressive throughout that period. The latter would of course be a better outcome for any bull!
Bitcoin’s recent rally from $50k region to new highs has diverged from a lot of different data points that showed that a local top + deep pullback was coming around the $50k region. We highlighted a lot of the indicators in a previous Crypto Piece that can be found here.
Even the Bitcoin Total Supply in Loss, an on-chain indicator, added confluence of a local top around the $50k region. Upon the first touch of the green dashed line which marks about 1.2 million coins in loss, it has marked the mid-top in every previous cycle, except this one (in hindsight).
However, price action is king. Getting through the 0.786 level (around $57.5k) was the line in the sand for us to switch our local top bias (as mentioned here), and Bitcoin did that with style. Hereon, any dips are for buying, especially given the confirmations provided by different inter-market dynamics.
Intermarket Analysis – USD, Gold, Market Breadth
The Dollar Index ($DXY) just broke below its mid-range level, indicating that a visit to the range low is very much on the table. Given the inverse correlation between USD and BTC, a declining Dollar would be a tailwind for BTC.
Gold and Bitcoin have shown a positive correlation since 2023. Recently Gold broke above $2075, a key level for the precious metal. Gold is very close to making new all-time highs, which confirms the similar strength that’s being seen in Bitcoin. As a side note, our next Commodity Piece will be focused on Gold and Oil, both showing upside potential.
Moreover, even the stock market has shown incredible strength. Stocks above their 200-day moving average is at 74.3%. Whenever this market breadth indicator consistently stays above 50%, it has coincided with strong run ups in Bitcoin.
Bitcoin VS Ethereum
Even though we missed part of the recent Bitcoin runup, expecting a local top, we were on the right side of Ethereum and altcoins. ETH had been a lagging coin for most of the initial stages of the Bitcoin runup. However, now the tides seem to be changing and ETH presents a better risk-reward for the rest of the bull run.
Even in the most recent liquidation event, while Bitcoin and Ethereum both showed quick initial recovery, ETH was able to set a higher high unlike BTC. This indicates that Ethereum has started to become more aggressive than Bitcoin to the upside.
Ethereum sliced passed the $3300 to $3550 resistance zone like butter. The next resistance level is around the $4000 region and a break above that would put previous ATH around $4870 on the table. While pullbacks to the resistance zone (now support zone) is likely after the current move loses steam, it should present a welcomed buying opportunity for ETH + altcoins.
For our paid members, we are going to cover a couple of attractive altcoin setups with stop-loss and take profit levels, along with the Cycles Forecast. We’ll also be going over a couple of Bitcoin miner setups and their Cycles Forecast that are nearing a very attractive period. This would be a big money-making opportunity and a higher beta play to Bitcoin during its runup. We’ll also highlight which of the 2 Bitcoin miners are more attractive for this cycle.