Bloodgood's Notes #114
Bitcoin rejects $50k as CPI comes in higher, probability of a March FOMC rate cuts halves, spot Ether ETFs make headlines again and more
Fundamental Overview
The CPI came in a bit hotter than expected today, with headline inflation at 3.1%, while estimates were at 2.9%. Unsurprisingly, this led to a dip in risk-on assets, as the probability of a rate cut for the March FOMC almost halved to 8.5%. All in all, this changes nothing in the big picture, especially since we have another, much more important halving on the way, namely one in the supply of an asset that institutions can now allocate their money to more easily than ever before.
Speaking of ETFs, ARK 21Shares filed an amendment for their spot Ether ETF application, which would allow them to stake a portion of the ETH held by the fund. This is something I mentioned a while ago, back when the BTC ETF still had a long way to go to get approved, and now it looks like it could become reality very soon. It might not happen in the first batch of Ether ETFs that will be approved, but overall it’s just too appealing not to be implemented sooner or later. When it happens, institutions will be able not just to diversify their ETF holdings into the second-largest crypto asset, but also earn some passive yield on top—a prospect that will become even more enticing when Treasury bills are no longer offering much passive income in a low-rate environment.
Bitcoin
Bitcoin breaks above the $47k level and makes a new high above $50k.
We talked about Bitcoin ranging between $40k and $47k, but then we got 8 consecutive green daily candles. Moreover, a 15% percent green weekly candle managed to break out above the range high straight into the $50k level.
The $50k level is a nice round number and it is expected that traders will take some profit there, however there’s also a technical level slightly below $52k. But let’s not get ahead of ourselves; for now, bulls will want to see this current breakout hold.
In the short to mid-term, it is important to keep your eyes on $47k if the retest happens. If the level is defended we long, if it’s broken we short the retest from below
SPX, Gold, and DXY
SPX broke above 5000 and made a new high.
Since there are no technical levels as we are in price discovery, we can only guess that round numbers will act as support/resistance. Similarly to BTC, we could see some selling pressure here.
Gold is still not moving and remains trading inside the $1981-$2000 range for now. Although, the recent CPI data seems to have made an impact and gold dropped to the range low.
Since BTC and Gold has taken some selling pressure we see DXY pump higher. A strong signal for traders as DXY could easily reach 105.
However, DXY being above support and both of the mentioned risk-on assets trading below resistance gives me a reason to think that we could see a retrace soon. For now, I will not trade purely based on this hunch, but I will keep monitoring technical levels.
Ethereum
Ethereum trades above $2500!
The first breakout was rejected back in the beginning of January and at the time of writing a new breakout is in progress.
Failed breakouts rarely occur twice in such a short time span, but it’s still possible. To be on the safe side I suggest waiting for weekly confirmation before rushing in.
The next major resistance lies above $3000, which is my next target if the breakout sticks.
ETH/BTC remains below the 0.055 level, which is a clear sign that Bitcoin is still very much in control.
Blood’s content recap
Losing millions cause of stupidity will haunt you
“I have met lots of crypto millionaires during my time here.
Most of them lost everything in 2023.
Taking profit early can make you feel bad cause you missed on more gains.
But loosing millions cause of stupidity feels worse, trust me.
Play this bull smart.”
2024 will be crazy, mark my words.
“$BTC at 50k
$ETH at 2600
And halving isn't priced in.
And ETF's aren't in full effect.
And fresh Retail isn't here yet.
2024 will be really crazy.”
Concluding notes
Taking another look at Bitcoin ETF flows, it’s easy to see what justified the optimism that is clearly visible on the charts. Grayscale outflows are now barely a blip on the radar, while net inflows have been in the $400-550m region in the last three trading days. All in all, we can safely say that the interest in ETFs is sustained and we’re likely to see more of it, which will bring even more money into the space when a spot Ether ETF is also launched. Don’t forget that the total market cap of the entire crypto market is 30% less than that of Apple, which means it doesn’t take that much institutional money flowing in to make a difference. We’re getting a taste of that right now with Bitcoin breaking two-year highs, but once BTC is in price discovery and ETH is also trading in the form of a yield-baring spot ETF, that’s when things will really get wild.