Dec 4, 2023

How to Grab The Bitcoin Bull By The Horns

Bitcoin Macro

Recent trends suggest that we are in a Bitcoin bull phase, where Bitcoin is performing exceptionally well, and only a small percentage of other crypto assets are outperforming it. This trend may continue either until Bitcoin reaches a major peak and corrects or until it achieves new all-time highs (ATHs).

For investors entering the market now, it's important to recognize that they have missed out on some initial gains. However, the long-term outlook remains optimistic, with potential for substantial growth ahead. The current bull market in crypto is distinct from previous ones, particularly the 2019-2022 cycle, which was marked by dramatic capitulation. Currently, the alignment in the crypto market is far more favorable than in the previous cycle, with signs pointing to a strong upward trajectory. It's crucial not to be deterred by the thought of missing early gains, as the market still holds considerable potential.

For traders, monitoring specific resistance levels is essential. For Bitcoin and Ethereum, the short-term resistance levels are at 42k and 2270 respectively (both have already been tested), with upcoming key levels at 45.5k, 49.5k, 53k, and 56k, and at 2320, 2480, and 2630 respectively. In the event of a substantial Bitcoin rally by mid-January, the peak might be around 53-56k. At some point from 45k up to 56k, a 25-35% correction is anticipated. After that, a significant rally could occur, with various models indicating a potential top major local top at the $90-130k range, a range in which we will potentially get a massive alt season. Before Bitcoin hits new ATHs and stabilizes, we will probably have a few weak alt seasons, but nothing major.

Regarding Bitcoin's valuation, the 'fair value' has increased from the previously estimated range of 35-40k to around 45-50k. As Bitcoin approaches key resistance levels and shows signs of being overbought, there may be opportunities for altcoins to gain momentum. This is particularly true when Bitcoin dominance (BTC.D) has rallied significantly and appears to have peaked along with Bitcoin's price, potentially leading to increased volatility and investment flow into altcoins. Overall, we could see Bitcoin reach incredible highs, as 70% of its supply hasn't moved for a year or more. When it had reached 42k in January 2021, that percentage was 58%. Not only that, but BTC supply on exchanges is down 28% since then, while stablecoin supply in the market is up 320%. Essentially, even without the upcoming ETF approval or Bitcoin halving, the market could be trading much higher simply by adjusting for the current supply/demand conditions. Based on the conditions in the derivatives market, we haven't seen anything extreme yet, and the market still looks like it is in the very early stages of a bull market, without being frothy.

Traders should exercise caution with long positions at this time. With BTC and ETH reaching critical target levels of 42k and 2270 respectively, and considering the broader macroeconomic environment's instability, it's advisable to be cautious with new long positions. The recent price actions of metals and stocks, along with the U.S. dollar's strength amidst potentially bottoming bond yields, suggest potential challenges ahead in the market. In our opinion, precious metals might have topped and could go sideways for a while. Stocks might have room for a 5-10% increase before potentially topping, as we think major indices might make new highs before topping, but we doubt that the market is ready for consistently rallying above its ATHs without having another major correction.

Bitcoin Macro

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