BTC - Time to be Greedy or Fearful?
Bitcoin has held up comparatively well against its pre-covid levels. Prior to COVID, BTC was at ~10K. After a huge market sell off BTC stands slouched at 20K, up 100% still!
This leads to the question of should you buy or not? I don't believe the current economic landscape provides the evidence needed to support a crypto bull market inception but, I certainly believe that it could be time to buy the dip for a counter trend rally with targets of 25K and 30K. However, the glaring elephant in the room for all crypto bulls is that 20K support level. If a strong support level like 20K were to break, we would see major capitulation and a nasty selloff. Using 20K as a stop, there is roughly a negative 10% risk. With a target of 25K, you would risk 1 dollar to make 2, if you target 30K, you would risk 1 dollar to make 5.
Why am I bullish on BTC?
1) 20K is very strong support, there will certainly be more volume here.
2) Relatively low risk
3) Real Interest Rates look to be declining for a bit.
Look at the relationship between Real Interest Rates (Inverted) and BTC..... When real rates drop, BTC rises. I believe Real Rates will fall in the short term due to a rise in inflation expectations.
BTC and Nasdaq:
Expect for Nasdaq to outperform in the medium-long term as, it is less risky and therefore more attractive in high rate environments. However, BTC was down 75% from its high vs. Nasdaq which was down only 35%. There will be more room to run for BTC and in turn short term outperformance relative to Nasdaq.
Additional Notes:
BTC has 2017 support and the Inverted graph of BTC actually looks more bullish. Sometimes it helps to flip the chart.
Real Interest Rates: Nominal Rates - Inflation Rate (Expectation)
Using the Ten Year Treasury Yield: US10Y as the Nominal Rate.
And the 10Y breakeven inflation rate: T10YIE this represents inflation expectations in 10 Years.
By taking US10Y - T10YIE, we can find the real rate of a 10 Year US Treasury Bond.
Disclaimer: I don't trade crypto however, all financial markets are interconnected and dictated by liquidity. I am predicting a general counter rally in all risk assets unless, another sell off occurs.
This leads to the question of should you buy or not? I don't believe the current economic landscape provides the evidence needed to support a crypto bull market inception but, I certainly believe that it could be time to buy the dip for a counter trend rally with targets of 25K and 30K. However, the glaring elephant in the room for all crypto bulls is that 20K support level. If a strong support level like 20K were to break, we would see major capitulation and a nasty selloff. Using 20K as a stop, there is roughly a negative 10% risk. With a target of 25K, you would risk 1 dollar to make 2, if you target 30K, you would risk 1 dollar to make 5.
Why am I bullish on BTC?
1) 20K is very strong support, there will certainly be more volume here.
2) Relatively low risk
3) Real Interest Rates look to be declining for a bit.
Look at the relationship between Real Interest Rates (Inverted) and BTC..... When real rates drop, BTC rises. I believe Real Rates will fall in the short term due to a rise in inflation expectations.
BTC and Nasdaq:
Expect for Nasdaq to outperform in the medium-long term as, it is less risky and therefore more attractive in high rate environments. However, BTC was down 75% from its high vs. Nasdaq which was down only 35%. There will be more room to run for BTC and in turn short term outperformance relative to Nasdaq.
Additional Notes:
BTC has 2017 support and the Inverted graph of BTC actually looks more bullish. Sometimes it helps to flip the chart.
Real Interest Rates: Nominal Rates - Inflation Rate (Expectation)
Using the Ten Year Treasury Yield: US10Y as the Nominal Rate.
And the 10Y breakeven inflation rate: T10YIE this represents inflation expectations in 10 Years.
By taking US10Y - T10YIE, we can find the real rate of a 10 Year US Treasury Bond.
Disclaimer: I don't trade crypto however, all financial markets are interconnected and dictated by liquidity. I am predicting a general counter rally in all risk assets unless, another sell off occurs.
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