Bloodgood's Notes #120
Bitcoin back above $70k, strong words from Powell move markets, the recent selloff liquidates overleveraged traders and more
Fundamental Overview
The FOMC last Wednesday went by largely as expected, with interest rates staying unchanged. While no one was expecting any surprises from the rate decision itself, it was Powell’s comments that made more of an impact on the market, specifically his statement that the Fed still expects three rate cuts this year. This dovish tone, especially given that the last CPI print was a bit above analyst forecasts, was enough to give some bullish momentum to risk-on assets. As for the next FOMC on 1 May, the market is currently pricing in only an 8% chance of a cut, meaning that we’ll probably have to wait at least until summer for rates to start moving down.
Meanwhile, there are bullish news for crypto from the institutional side as well, with BlackRock recently filing with the SEC to launch a tokenized asset fund on Ethereum and seeding a wallet for this fund with $100k USDC, with on-chain degens unsurprisingly proceeding to send a vast assortment of memecoins to the wallet. That will definitely make for some interesting conversations over at BlackRock, but in any case, what matters in the long run is that the world’s largest asset manager is committed to doing stuff on-chain. Along with spot ETFs, this is the kind of development that will bring the crypto space attention and adoption from sectors that previously wouldn’t even have considered it.
Bitcoin
Bitcoin teases the $70k level once again.
The dip towards $60k was bought with force and pushed the weekly close back above $67k. We are in a weird spot right now; slightly above the 2021 ATH, but slightly below the current high. I remain patient and will wait for more signals which will show me the direction we are headed. A weekly close above $70k would be a good start, a weekly close above the current high would be extraordinary.
Looking at the daily chart we can see that the downtrend was broken after 9 days. The $68k level is definitely one to look at in case a retrace happens and bulls will want to see a bounce here. If the bounce doesn't happen, this will be considered a lower high.
SPX, Gold, and DXY
Stocks keep climbing without any struggle, as Powell’s dovish comments gave fresh fuel to the rally.
Gold hasn’t moved much since the previous week and it remains trading inside a tight range. A breakdown from this range could lead to a bigger dump towards the $2k level.
DXY takes a breather after 2 bullish weeks.
We are at an important level where a breakout will lead to expansion and a breakdown will lead back to the 100 mark. However, a higher low was printed here and we could see DXY go higher, which would end up badly for crypto.
Let's see what this week brings us.
Ethereum
Ethereum tries to follow Bitcoin’s bounce, but without too much success.
Either way, the primary target for ETH is to get a weekly close above $3600 and then it will have a chance of reaching $4000 in no time. The talk about a spot Ether ETF has quieted down, hence there is not much momentum right now.
The ETH/BTC pair is breaking down and is barely above the 0.05BTC level.
It doesn't look promising, but if the bounce will ever happen, it will happen here.
Blood’s content recap
Thoughts on recent correction
“We are here. At the same spot as in November 2020.
ATH breakout and re-test before Bitcoin printed a real rally.
Stop creating so much drama. “
Another profitable public call. Want more?
“$FTM already 70% up since my tweet.
The $1 level was broken, next target $1.65.
I shared two coins and two printed nice profits.
When you look at the fundamentals, it all makes sense.
Want me to share more of these?”
Comment here.
Concluding notes
As mentioned in the previous newsletter, the recent sell-off managed to shake out a lot of overleveraged traders, and the fear was even further increased by the fact that we had a whole week of net negative spot BTC ETF flows. This, however, was driven largely by GBTC outflows—BlackRock’s IBIT, for example, may have slowed down with the inflows, but it didn’t come close to being negative—and the net flows flipped back positive yesterday. Coupled with some overblown bearish regulatory news, namely the Ethereum Foundation getting a voluntary request for information from a state entity (which could turn out to be completely trivial) and the EU implementing some stricter rules on anonymous transactions (which they were going to do anyway), it’s fair to say that a lot of weak hands were shaken out.
This doesn’t necessarily mean that BTC will go up in a straight line, but the important thing is that it doesn’t have to: during the correction, funding rates were reset across the board and a lot of open interest was wiped out on altcoins. In these conditions, BTC deciding to do nothing for a while would create some absolutely amazing opportunities for alts.