Bloodgood's Notes #145
Trump wins the election, Bitcoin makes new ATH, Ethereum follows
Fundamental Overview
The U.S. elections delivered the outcome that was almost universally considered the most bullish for equities and, especially, crypto: a red sweep, with not just a Republican president, but also a Republican Senate and (almost certainly) House majority. In other words, it’s not just that President-elect Trump promised to fire Gensler and bring much more favorable crypto regulations (partly because he’s launching a crypto project himself), but also that he’ll have zero obstruction from Congress in the process. As expected, this led to a rally in crypto and equities, but interestingly, while Tesla was the stock that everyone expected to outperform the most—and it did post a 15% gain the day after the election—Coinbase had double the gain at just over 30%. This is, of course, partly due to Bitcoin’s rally, but also in large part because of the expectations of better crypto regulation.
The election was followed by another important headline, namely the FOMC meeting yesterday, where the Fed announced a single 25 bps cut, in line with most expectations. Powell’s tone was less confident about inflation being on the right track, at least compared to previous meetings, but this didn’t have much of an impact on the markets as it paled in comparison to the election.
Bitcoin
Bitcoin reaches a new All-Time High!
Some may say that Trump winning the election was the reason Bitcoin broke out and reached a new ATH, which is partially true, but BTC's ATH was inevitable—Trump just sped up the process. If you’ve been following my analysis, you could clearly see the macro structure shift from bearish to bullish with a series of higher highs on the weekly timeframe.
Referring to the latest issue (#144), scenario #2 played out perfectly: we first tested the ATH, got rejected, and then retested the breakout area, which was our entry point. It doesn’t get easier than this, fam.
Now, as we enter price discovery, the only level to keep an eye on is the previous ATH. We’ll want to ensure we keep making higher lows on the weekly timeframe.
SPX, Gold, and DXY
Stocks explode with a more than 5% green weekly candle. Stocks have been in “up only” mode for quite some time, and I don’t expect that to change soon. Gold seems to have found a local top for now and is taking a breather.
DXY is also on a roll, continuing its upward strength and peeking above the 105 level.
Ethereum
Ethereum charges above $2,800 following Bitcoin’s strength.
Interestingly, Ether seems to be stronger than Bitcoin in this latest push (based on the ETH/BTC chart). The next target for Ether is to break above the $3,000 level for bulls to regain confidence.
The macro structure remains bullish with a series of higher highs and higher lows, so further upward movement is expected.
Concluding notes
In this kind of an environment, it makes sense to expect decent Bitcoin ETF flows, but what happened yesterday was even more than that, namely an all-time record with almost $1.4 billion of net inflows. The Ethereum ETFs were far less impressive in terms of numbers, but one important bit of good news was the fact that the state of Michigan submitted a filing disclosing its purchase of ETH ETFs, making it the first U.S. state to own Ethereum. All in all, crypto has come a long way, and it looks like we’re entering a period of upside acceleration in terms of regulation, which will inevitably lead to a similar trend with prices.