2021.13 - Flat
TLDR:
I hope you’re comfortable with your stack at this point. You’ve had plenty of time to accumulate below $60k and you may even get a chance at a dip. This is the quiet before the storm, once we take out $60k, look out above.
THE STANCE
My personal opinion on where the ball might be heading.
Some Bitcoiners are joking we’ll be stuck at $58k forever.
I’ll be the first to admit I’m surprised we haven’t gone higher yet given the amount and magnitude of bullish news I’ve seen recently, particularly regarding adoption
But price discovery is a process and one of its key ingredients is time. The more time Bitcoin spends around a particular price level, the stronger the “floor” supporting the price becomes:
Each candle in the chart represents a 4-hour period
A quick look at the chart below shows a couple of things:
Bitcoin has spent over 50 days above $40k
A full 28 of those days have been above $50k, 24 of them above $55k
The chart suggests that we should have a break (up or down) by or around the 12th.
Now, I’ll be the first to admit I’m not a “chart guy”, but I’ve learned not to ignore them.
Looking at the Monthly chart below, we see that Bitcoin has never printed 7 monthly green candles in a row. Will this time be different?
Each candle in the chart represents 1 Month — click to expand.
LONG BITCOIN
Recent news that keeps me bullish on Bitcoin —"long / bullish" means you have the expectation something will rise in value.
Blackrock GUNNING FOR BTB?
My favorite bit of news this week had to do with BlackRock’s Bitcoin allocation. The world’s largest asset manager had already announced they would be “dabbing in Bitcoin” weeks ago.
A recent SEC filing revealed their initial allocation consisted of $6.15M in Bitcoin futures.
While $6.15M is a minuscule amount for them, it begs the question of whether the amount was intentional —the number 6.15 was imbued with meaning in 2020 when American Hodl turned it into a popular meme:
Many eyes are on how BlackRock will operate in the Bitcoin space, whether this was sheer coincidence or masterful trolling, they seem to be off to a good start.
Goodbye Gold, Hello Bitcoin
The team at MorningBrew —a daily newsletter offering “top business news from Wall Street to Silicon Valley”—decided to freshen up their Markets section by adding Bitcoin and taking out Oil and Gold.
“We think our Markets section will be more relevant with bitcoin in it.”
This adds even more strength to the growing narrative of Bitcoin displacing Gold in portfolios:
Bitcoin on Balance Sheets
Square’s support of Bitcoin extends well beyond allowing people to buy it on CashApp.
In addition to putting 5% of their cash reserves in Bitcoin and abolishing transaction fees for Bitcoin on CashApp, they have been supporting developers through a series of grants and recently announced a $10M initiative to fund clean-energy mining.
So this latest announcement by their CFO was not surprising, but it is still timely and welcome:
The normalization of corporations allocating to Bitcoin in their balance sheets will be a huge driver for growth in the coming years. The realization that early adopters will benefit disproportionately could lead to wild corporate-grade FOMO later in the year. Buckle up.
Paypal Delivers
A few months ago, when it first rolled out support for crypto, PayPal announced it would eventually allow users to pay for their purchases from their crypto balances. They kept to their word and launched the functionality last week:
Users will not actually be paying with crypto —PayPal will automatically convert from crypto to fiat— but I see it as a positive step for Bitcoin in the payment space.
Micro Futures
CME’s upcoming Micro Bitcoin Futures product is significant because it will allow positions 1/50th the size of their current product.
This should significantly increase the number of retail users that can participate in these instruments.
Miners Hoarding
A new market dynamic seems to be gaining strength: some miners are not selling their Bitcoin.
I first heard of this trend from Michael Saylor in this excellent conversation with Saifedean Ammous.
Wrestling Bitcoin
It’s very encouraging to see traditional finance institutions, especially “venerable” ones like Bank of NY Mellon document their process for trying to make sense of how to value Bitcoin.
And it’s fun to see some of their wildly bullish price predictions:
BNY Mellon did not put forth a price projection as such, but rather they describe some of the different frameworks they are using to make sense of Bitcoin’s price.
Big G Energy
There are plenty of “Big Names” when it comes to traditional finance, but few are as big and storied as Goldman Sachs.
Their recent announcement —they will be offering access to Bitcoin and other digital assets to their wealthiest clients— lost some of it thunder to a Bitcoin promo-stunt from (checks notes) the Teletubbies.
Bitcoin, so hot
Like them or not, celebrities are here to stay. It’s always tricky when a celebrity endorses Bitcoin because more often than not they will immediately start shilling some shitcoin. So, I’ll save my applause for the end, but just for informational purposes, here are some recent “celebrity endorsements” for Bitcoin:
IPO Good to Go
It seems all systems are go for Coinbase to go public.
Coinbase is not exactly the most beloved company in the space, but their success is hard to argue with. For good or bad, their IPO will cement their place as the household-name in crypto.
CRYPTO WARS
crypto- | ˈˌkrɪpˌtoʊ | concealed; secret.
The monopoly over fiat money will not be given up without a fight.
Brain Drain
This is not discussed often in the news, but institutions in traditional finance are not only feeling pressure to jump into Bitcoin from customers, but also internally. Their best and brightest are leaving:
Tracking YOU
Make no mistake about it, your Bitcoin transactions are being tracked.
Learning how to acquire and use Bitcoin more privately should be high on your list of things to research.
SHORT FIAT
Recent news that makes me bearish on the legacy financial system —"short / bearish" means betting it will go down in value.
ArcheWho?
I’d never heard of Archegos before (had you?), according to Bloomberg it is “a family investment office specializing in public equities primarily in the United States, China, Japan and Korea.”
That doesn’t sound like a market-shaking titan to me, but apparently they kind of became one when some of their leveraged plays went bad.
“Archegos was able to borrow so much that its failure created shockwaves large enough to ripple across Wall Street — and impact everyday Americans' retirement accounts.”
This is a perfect example of the rampant systemic risk that most people are —willingly or not— ignoring in traditional markets; this unknown firm is likely to inflict losses on giants like JPMorgan, Credit Suisse and Nomura to the tune of $10 Billion or more.
How many Archegos do you need to trigger a full meltdown? My guess is, not that many.
The traditional financial system is brittle, choose wisely.
PRICE DISCOVERY
This is the section where I talk about price with an updated weekly price chart. If this is your first time here, there’s a “how to interpret” guide below the chart.
Last Call?
It would seem the days of sub-$60k Bitcoin are coming to an end.
We may get some last minute fire-sales before popping up, so if you like fishing for dips this would be a good time to cast your nets. The chart suggests that somewhere around $52,500 would be a reasonable bet.
If the price “falls off the board” we could theoretically fall all the way to $32,700 —I don’t see it happening, but I don’t call the shots here.
Each Candle in the chart represents 1 Week — click to expand.
Volatility GOOD
It’s common to be concerned about Bitcoin’s volatility at first, but remember: volatility means the market is allowing the price discovery process to function. No “circuit-breakers”, no “plunge protection team”, no bailouts. A lack of volatility often means something is horribly wrong.
How to interpret the Bitcoin Surfing chart:
Think of Bitcoin's price-action as a kite-surfer:
Bitcoin uses its board to stay above water and wants to catch some air.
When it catches air, it tends to keep rising but if it rises too fast (it's feet no longer touch the board) it can stumble.
If it falls off the board, it tends to keep falling until it regains its footing (may need to touch water or sand for that).
Water and sand arrest the fall and help it push itself back up.
If it goes up so much that it gets close to (or into) the Stratosphere, it will probably crash down all the way into the sand and may need to tap the bedrock level before pushing up again.
QUESTIONS?
What’s the ONE question about Bitcoin you’d like answered?
NEED to understand Bitcoin?
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