Bitcoin - Backdrop of Macroeconomics and Geopolitics
Something in the back of my mind through the past few months was how other markets performed compared to Bitcoin and Crypto.
It appears to me (admittedly not an economist) that crypto was quick to begin correcting after the November statements by the FOMC that tapering would begin in Q1 2022. Not all markets priced the news in at the same pace and despite the higher volatility of crypto, I think this was more a sign of maturity than emotional volatility.
In Papi's opinion crypto is maturing rapidly this cycle, as if COVID 19 was a catalyst for crypto to begin its final journey towards legitimization. And past two quarters are arguably some of the most significant in it's history, as it drives further into unprecedented territory in terms of it's pattern, price action, and growing trust and acknowledgement.
On the chart is a recap of the past two quarters and some of the significant events, and Bitcoin/crypto market reactions:
Now some analysts argue that news is irrelevant, you can see all and predict all in the charts. But as the Russia conflict shows us, or COVID 19 showed us, you might get a partial answer from the chart- but (in my opinion) you can't account for 100% of the story without following news, and you certainly can't perform higher timeframe analysis without also understanding geopolitical and macroeconomic factors at play and incorporate that into your forecast.
It appears to me (admittedly not an economist) that crypto was quick to begin correcting after the November statements by the FOMC that tapering would begin in Q1 2022. Not all markets priced the news in at the same pace and despite the higher volatility of crypto, I think this was more a sign of maturity than emotional volatility.
In Papi's opinion crypto is maturing rapidly this cycle, as if COVID 19 was a catalyst for crypto to begin its final journey towards legitimization. And past two quarters are arguably some of the most significant in it's history, as it drives further into unprecedented territory in terms of it's pattern, price action, and growing trust and acknowledgement.
On the chart is a recap of the past two quarters and some of the significant events, and Bitcoin/crypto market reactions:
- Crypto markets are SIGNIFICANTLY more mature now than in earlier cycles. This is very evidenced by the fact that crypto influencers, crypto Twitter, and other social media like Discord or Reddit are very tuned into important events like the FOMC or Fed Chair's nomination. Traders are entering or exiting positions based on real economic matters, not just the small bubble or echo chamber that some think crypto traders live in.
- Crypto markets began to price in the tapering earlier than some other markets, and looking at other factors like no significant selloff, inflows or increased supply of Bitcoin, the rising floor on the macro pattern, we find that crypto might be better positioned for a short term rally in H1 2022 than other markets.
- 2022 started with a series of extremely significant events that appeared to validate the utility of Bitcoin. With the conflict in Russia we saw that citizens could move their ruble to Bitcoin as a way to protect the value of their money, we saw Ukraine raise funds for it's military/defense using crypto, we saw an executive order from the most significant economic power in the world basically legitimizing crypto and asking government departments to further research how to integrate it, and we saw one of the richest oil nations and business centers (UAE/Dubai) signal a massive support for Bitcoin.
- Compared to every cycle before it, the 2020-2022 cycle is unique and this is best visualized by the macro rising support, versus a steep drop from the peak of the market. This may also represent lengthened cycles or something else, but its clearly indicative of a rising support and trust in the space.
Now some analysts argue that news is irrelevant, you can see all and predict all in the charts. But as the Russia conflict shows us, or COVID 19 showed us, you might get a partial answer from the chart- but (in my opinion) you can't account for 100% of the story without following news, and you certainly can't perform higher timeframe analysis without also understanding geopolitical and macroeconomic factors at play and incorporate that into your forecast.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.