Bloodgood's Notes #118
Bitcoin and Ethereum both above major levels, ETF flows coming in at a record breaking pace, Blackrock submits a new filing with SEC and more
Fundamental Overview
Bitcoin ETF flows are still coming in at a record-breaking pace, even hitting the first $1 billion net inflow day yesterday. Beyond that impressive milestone, one interesting development is that BlackRock submitted a new filing to the SEC regarding its Global Allocation Fund, which has almost $18 billion in assets under management. As you might be able to guess, BlackRock stated that it plans to buy shares of “a Bitcoin exchange-traded product” (most likely its own $IBIT ETF) for the fund. While inflows from this particular fund aren’t likely to do much by themselves, this is a very important step in making Bitcoin ETFs more mainstream for non-crypto-specific funds that hold a diverse array of assets. In other words, capital from people who might not have any specific interest in crypto (but who simply have some of their capital in a fund like Global Allocation) will start flowing into Bitcoin as well.
As for macro and TradFi, stocks are still stubbornly grinding higher in spite of the headline CPI print coming out at 3.2% (expected 3.1%). Normally, inflation being higher than expected would be bad news for risk-on assets, but on the other hand, this is the fourth consecutive CPI that’s above estimates—not to mention it’s only by 0.1%—making it much less of a surprise. Additionally, other economic data seems to be right in the Goldilocks soft landing zone, so a tiny CPI miss isn’t that concerning.
Bitcoin
New week, new All-Time-High for Bitcoin!
As discussed last week, the breakout above $60k stuck and we teleported to the ATH in a matter of days. Now traders want to see the breakout above ATH sticking as well. If you take a look at the daily chart you can see a clean breakout and a clean retest of the ATH level with continuation. Still, be careful as volatility is high and the BTC halving is in 35 days. There is a time when it's smart to be aggressive and there is a time to be patient with the leverage slider.
In any case, if you’re impatient and looking to enter, I highly suggest placing a stop loss below the previous ATH as there is a chance for a bigger retrace and open interest flush there.
Lately, I have the feeling that in every issue I send, there is a new major level breakout. Good times.
SPX, Gold, and DXY
SPX bounces back and teases new highs.
The trendline works like a charm and once again defends SPX from breaking the stairway pattern. Traders are looking at the possibility of a new ATH, while some mentioned that a double top pattern could offer a great short opportunity.
Gold continued to push higher since the previous newsletter and it managed to make a new All-Time-High at $2195. At the time of writing it has taken a breather and retested the wick from December 2023, which could be a great opportunity to buy with a tight stop loss.
The U.S. Dollar Index has finally broken below its magic 103.5 level as crypto took off. The next level that will interest us is drawn on the chart, namely 101.6, while 103.5 became resistance. For now further downside is expected here, but I will keep monitoring as we go along.
Ethereum
Ethereum follows Bitcoin and breaks its critical $4000 level.
Both assets are correlated and above a major level, which is a double whammy on the bullish side. This could be a great buying opportunity, but don’t forget that we could still easily see a 10%+ correction—bull markets typically give even a few 20-30+% dips for re-entering and compounding if you have the patience. Either way, we’ve got some exciting times ahead.
ETH/BTC is still fighting the 0.055 BTC level which tells me that Bitcoin remains fully in control here and it is not yet time to fully ape into ETH. I will let you know when that time comes.
Blood’s content recap
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Concluding notes
When it comes to more crypto-specific things, there’s a lot of attention on the Dencun hard fork which just went live on Ethereum. The most important upgrade that it brings is EIP-4844, i.e., the introduction of “blobs'' as a new way of temporarily storing data on the blockchain. The technical details of this are interesting, but the key takeaway for users and traders is that it drastically decreases gas fees on Ethereum layer 2 networks, with some estimates going as far as a 98% reduction. Unfortunately, this won’t drastically change gas fees on layer 1 just yet, but it should help make rollups more accessible, especially for new retail users that join in as Bitcoin’s ATH brings more people to the space.