Bitcoin vs Systemic Risk
Bitcoin, has this market developed enough to efficiently arbitrage any TA gains? I'm leaning yes, but the jury seems still out. Are you really seeing actionable anomalies that can hint at future price swings such as Bitcoin failing to regain the 200 W moving average? Does that beat the oversold RSI? Perhaps, the RSI has a bounce and has another swing down with positive divergence? Does the 200 W moving average hold more weight? Perhaps the RSI will be stuck in the bearish control zone for quite some time. Anyways, the historical TA correlations seem suspect as these anomalies/correlations are widely known with many trading on them. Their usefulness decays over time and the market arbitrages them away as it becomes more efficient. I feel as they won't act the same this "cycle".
Idiosyncratically, Bitcoin is looking like it may have formed a low or has another swing down to a final low. However, when combining the idiosyncratic risk with systemic risk the risk profile becomes much more unfavorable in my opinion.
Systemically, we are seeing Macro deteriorating factors and Bitcoin has become highly correlated with equities for the time being. The feds are hiking rates, inflation is running hot, and the yield curves are inverting. Furthermore, the AAII asset allocation is showing there has not been much selling yet relative to other major selloffs in equities. The only major bull case I can make for equities and Bitcoin is the public sentiment. Sentiment seems very low for both markets, so perhaps, there is a bounce for a few months and the selling resumes in the winter?
What to watch out for? Watch out for the weakest link in our economic system to break as the Feds hike rates as in 2008. This will cause major panic in equities and, therefore, Bitcoin if their correlation still holds. This will most likely be the final capitulation in both equities and Bitcoin and will be the best time to buy.
In this scenario, there seems to be a support zone from 8.3k - 11.5k & if the bottom really falls out look for a 6k support zone. I think a fall to the 3.6k - 4k support zone seems unlikely w/ today's information, however, within the realm of possibilities.
Personally, I will start buying around the 11.5 resistance if Bitcoin prints to these levels.
This is all assuming Tether or USDC do not become insolvent. If so, the market becomes very unpredictable.
Idiosyncratically, Bitcoin is looking like it may have formed a low or has another swing down to a final low. However, when combining the idiosyncratic risk with systemic risk the risk profile becomes much more unfavorable in my opinion.
Systemically, we are seeing Macro deteriorating factors and Bitcoin has become highly correlated with equities for the time being. The feds are hiking rates, inflation is running hot, and the yield curves are inverting. Furthermore, the AAII asset allocation is showing there has not been much selling yet relative to other major selloffs in equities. The only major bull case I can make for equities and Bitcoin is the public sentiment. Sentiment seems very low for both markets, so perhaps, there is a bounce for a few months and the selling resumes in the winter?
What to watch out for? Watch out for the weakest link in our economic system to break as the Feds hike rates as in 2008. This will cause major panic in equities and, therefore, Bitcoin if their correlation still holds. This will most likely be the final capitulation in both equities and Bitcoin and will be the best time to buy.
In this scenario, there seems to be a support zone from 8.3k - 11.5k & if the bottom really falls out look for a 6k support zone. I think a fall to the 3.6k - 4k support zone seems unlikely w/ today's information, however, within the realm of possibilities.
Personally, I will start buying around the 11.5 resistance if Bitcoin prints to these levels.
This is all assuming Tether or USDC do not become insolvent. If so, the market becomes very unpredictable.
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