Bloodgood's Notes #115
ETF flows continues, Crypto stocks are on fire, Risk management warning and more
Fundamental Overview
The ETF flows continued at a mindblowing pace last week, which was clearly visible by Ether starting to outperform: given that we’re a few months away from potential spot ETF approvals for the second-largest crypto asset, the market is starting to price in what a supply shock of that magnitude would to to something with only a third of the market cap of BTC. As for the orange coin, the best way to really appreciate the extent of the inflows is to consider that the BTC holdings of all ETFs minus GBTC have surpassed those of MicroStrategy. In other words: all of Saylor’s buys since 2020 were surpassed by the ETFs in just over a month. If that isn’t bullish, then I don’t know what is.
Unsurprisingly, crypto stocks have also been having a good time, with Coinbase beating earnings last week and reaching its highest level since April 2022. MicroStrategy also put in a 60% pump this month, even though its main use case—that of essentially being a Bitcoin ETF substitute before the spot ETFs were launched—has now obviously become redundant for investors who just want exposure to Bitcoin.
Bitcoin
New week, new Bitcoin high.
This time BTC briefly broke through the $52k level and at the time of writing it is fighting the resistance which lies a bit below $52k. Our plan here is simple: if BTC is rejected at current levels, we are bidding $47k, otherwise we are going straight to high 50s.
If Bitcoin manages to break above $52k, there is only one more major level before all-time-highs. I don’t know about you, but it sure feels good to say that.
The daily shows a clearer picture of how bulls and bears are fighting over this level, with dumps that were bought up and pumps that were sold into. I don’t suggest trying to predict the direction in the middle of the chop here. Instead, wait for a clear signal and then trade it.
Either way, the monthly close is near and we want to see the candle close above $50k.
SPX, Gold, and DXY
SPX prints a reversal signal.
As discussed last week, there are no clear levels here (a high has formed now) and it’s hard to predict where the bottom will be if this is indeed a reversal.
The previous all time high is a good level to be monitoring, as closing below it is dangerous and could result in a selloff.
Gold managed to bounce from its range low after a hotter-than-expected CPI print last week and continued its ping pong game inside the range.
DXY printed a shooting star pattern on the weekly chart.
A shooting star is a bearish pattern and the fact that it happened on the weekly timeframe means we should take it seriously.
As always, remember: DXY down, risk-on assets up.
Ethereum
Ethereum reaches $3000!
If bulls celebrated ETH trading above $2500 last week, they should be extra excited this week.
A powerful breakout above $2500 is a good sign for alts as the Bitcoin halving gets closer. I expect some ping pong between $2500 and $3000, however as long as this structure holds the bull trend is intact.
Even ETH/BTC woke up and pumped back above the 0.055 BTC level, but let’s wait until the end of the week to see the candle close and then see what’s going on.
Blood’s content recap
Patiently waiting on Monthly close
“If a monthly #BTC candle closes above 50k usd.
We will see a powerful Altcoin season in March.
What a time to be alive 🚀”
More content coming Soon!
“I almost forgot how it is to invest small portion of porfolio and make insane gains.
That's why I teach, to not forget how I got here.
Nowadays I only swing trade with a size and even 20% gains brings me annual sallary of some random CEO.
So back to the roots, I'll show you how to spend as little capital as possible and change it to 6figures.”
Concluding notes
Although crypto is now having its well-earned moment in the sun—one that’s only a foreshadowing of what’s to come—it’s crucial to pay attention to risk management, especially since the market will continue to be influenced by stocks, dollar liquidity and the global macro outlook. In case you haven’t noticed, stocks have been up-only for a while, spurred on by the expectation of rate cuts and an all-out AI frenzy. If there are any changes here, you can definitely expect the shockwaves to spread throughout crypto as well.
While the AI bubble can go much higher—both with stocks and tokens—the volatility in the meantime will relentlessly shake out overleveraged traders. RIght now is an important time to be careful, as NVIDIA will release its earnings after the NY market closes today. If their numbers are anything less than mindblowing, that could easily lead to a lot of margin calls by the end of the week, especially against the backdrop of last week’s hot CPI that has already shaken things up quite a bit.