Bloodgood's Notes #122

SPX breaks the trendline, all eyes on tomorrows CPI and more

Fundamental Overview

The recent macro environment is like a pendulum, constantly oscillating between hope for the Goldilocks scenario of a perfect soft landing and fears of inflation picking up again and forcing more hawkish monetary policy. Right now sentiment seems to be swinging a bit in the bearish direction with stocks having an unusual dump on Thursday, although much of it was retraced by the weekly close. In any case, all eyes are on tomorrow’s CPI release, and the consensus forecast is at 3.5%. Given that the market is terrified of the possibility that the Fed may have acted too soon with dovish signaling—although there’s still no clarity on when the rate cuts will finally come—any surprises in terms of hotter-than-expected inflation would have an outsized impact on the market. Needless to say, caution is advised especially if you’ve got any leveraged positions open.

Bitcoin

Bitcoin successfully closes the weekly candle above the key level.

I am seeing a lot of indecision lately as neither side is managing to follow through after a break in either direction. However, we are still slowly drifting upwards and printing higher lows, which gives me confidence that bulls are still in control here. The big test will come at the current All-Time-High which is slightly above $73,700.

Apart from BTC reclaiming the $70k level, not much has changed. Times are uncertain as we are about to have a BTC halving right after making a fresh ATH—which isn’t how cycles typically look—so we’re definitely in uncharted territory.

SPX, Gold, and DXY

SPX breaks a 3 month long pattern, what’s next?

SPX has broken below its multimonth trendline and unsuccessfully tested it from below. Remember what we discussed a few weeks ago: staircase patterns tend to be fun as long as they are on their way up, but once that pattern breaks, things can get very messy, and fast.

For now, the focus is on seeing if bulls will manage to bring it back above the trendline by the end of the week.

Gold is simply not stopping.

New week, new all time high. There is not much you can do right now but watch it fly.

DXY continues on its way down, without any sign of stopping.

The first level where a bounce could happen is 103.5, which will still be a higher low in the big picture. Likewise, a higher high was printed as well, which means that the structure is still bullish and that’s something to keep in mind regarding risk-on assets.

Ethereum

Ethreum has been bouncing back and forth between $3000 and $3600 for the last three and a half weeks.

While ETH/USD remains boring, we can see some movement on the ETH/BTC chart as it tries to get above the green level again. With ETH spot ETF deadlines approaching fast, along with some potential relative weakness on BTC if there’s a halving selloff, maybe Vitalik’s coin could finally have its chance to shine. But then again, ETH/BTC is still an incredibly cursed chart, so there’s that to keep in mind.

In any case, I’m staying patient for now.

Blood’s content recap

Sorry for being Away.

“Been away for a while - sorry about that.

Meanwhile I became a Father to my firstborn Son.

Never been so proud in my life. “

Concluding notes

Apart from a bitcoin ATH before the halving, another thing that makes this cycle unusual is that memecoins are capturing so much attention—and so persistently—when BTC is barely above the previous ATH. While some see this as a top signal, I think it’s got more to do with the “normie-friendly” nature of memecoins. Instead of having to understand complex technical details of a project and worrying about when and how VCs will dump their bags, many new entrants to the market find it much easier to speculate on something based on how funny and catchy it is. Of course, this is still largely just gambling, as there are countless rugs for every memecoin that pulls 100x, not to mention that even the ones that pump most often end up teaching the few people that got in early some hard lessons about liquidity and sustainability. That being said, there are still technically impressive projects that are doing great, and I do believe that capital will start to rotate more and more to these tokens later in the cycle.