All in good time.
Bitcoin seems to be fully decoupled from the stock market right now. Stonks have to worry about things that Bitcoin doesn't seem to have to worry about. Take the banking contagion for example. It feels like crypto was specifically targeted within the context of a shadow Operation Chokepoint 2.0. Crypto didn't care. The market pumped in spite of losing access to banks. Classic example of the fact that crypto is its own decentralized banking solution.
As more evidence comes out about Signature bank it appears a greater likelihood that crypto is indeed being targeted. Signature bank was just recently bought out by Flagstar, but Flagstar will not accept any of the liability from $4B worth of crypto deposits, even though they are buying out $38.4 billion worth of other assets. Seems odd, does it not? Rather than being accepted by Flagstar, those depositors will simply be made whole via FDIC and have to find another banking solution (if they can find it).
The greed index is higher than ever.
People are rooting for the banks to fail because they see a correlation between bank failures and number going up. I'm not so sure this is actually what's going on. A lot of these banks were crypto banks... so if you are a crypto company with money tied up in these banks... where are you going to put your money now that these banks are no longer affiliated with crypto? Probably into Bitcoin, right? This banking contagion could be a one-off event that doesn't escalate further like many assume it will. Of course I'd like to be wrong and instead come to find that legitimate adoption of crypto occurs within the eye of the hurricane. That would be pretty cool.
Breaking below $30k was a crucial breakdown when considering this bear market. This happened in summer 2022 when 3AC and UST were collapsing to zero from insolvency. Foolishly I once again put my faith in the doubling-curve "support", which I have subsequently downgraded to the doubling-curve "trendline". At the time this line was at $30k, but today it towers above $60k.
The curve works very well as support as long as the legacy economy is doing well, but tends to break down when shit hits the fan like COVID, supply disruptions, proxy wars, sanctions, and the FED increasing rates faster than ever before. Live & Learn.
Peaks and troughs
We can clearly see that the $30k line might be a trough just like the FTX contagion. If we're being honest the FTX contagion should have turned out much worse than it did. We got off easy, as the market was already scraping rocks at that level. I expect the same thing to happen on a macro level with this $30k resistance line. Once we get above $30k the market will pump hard all over again, although it could take a while for that to happen just like it took us a month to crack through $25k.
FOMC meeting tomorrow
In 24 hours the mighty Powell will tell us the magic number that the fund rate will be manipulated. All guesses are centered around +0 points and +25 points. +0 was favored in the middle of the banking contagion, but now that the backstops are in place and the situation seems more handled the guesses are centered around a quarter percent increase. The broken backstop that allows banks to borrow against their own failed investments at full value would theoretically allow this to happen without the contagion spreading.
Personally I don't think it matters what the FED does anymore, but I guess we are going to find out tomorrow what kind of short term chop we can expect. Fund rate go down: market rips and FED loses credibility. Fund rate go up: banks struggle even more and people have even more reason to enter Bitcoin. It might be a win/win at this point. The FED is finally trapped within their own web. Especially true considerin more than half of the hikes haven't even cycled through the economy yet as this requires 9-12 months.
Seeing that today is the New Moon and 25 points is likely and the greed index is high and we are sitting on resistance... I have to assume Bitcoin will crash to $25k and confirm support at that once 'uncrackable' resistance line. That would be a very healthy confirmation.
We can also infer from a move like this that Hive would crash another 10% as well, hopefully confirming 37 cent support but there is a strong buffer all the way down to 35.
As if the situation wasn't crazy enough, XRP has spiked 20% today.
This is the signal we've been waiting for. Does someone know something? Is this insider trading? Is Ripple going to win the lawsuit against the SEC and catapult the entire cryptoverse into a massive 3-month mega-rally? Definitely could happen.
Imagining the best case scenario...
What happens if:
- the banks continue to collapse and more money pours into Bitcoin?
- Ripple wins the lawsuit?
- the FED pauses or even lowers the fund rate?
As I've posited before, we are on the precipice of a perfect storm for crypto. Even if the doubling-curve trendline is acting as resistance right now BTC could still spike up to $70k in the summer before retracing. How wild would that be? It's hard to imagine, and yet if the doubling curve is the metric we are trusting it that wouldn't even be the bullish scenario; simply a return to the mean average. Wild.
What about CBDC?
What about it? Again as I've stated before time and time again: CBDC empowers the crypto narrative. For years the narrative has been that crypto is worthless and that we should just trust the banks. Now people know they can't trust the banks. They said crypto was for criminals. Now they know crypto is for everyone. They said crypto "wastes resources". Democrats are still struggling with this latest piece of woke ESG propaganda, but they'll figure out that it's bullshit as well eventually.
If CBDC becomes a thing the narrative suddenly becomes: yeah we were lying the entire time crypto actually does have value. That's not a bad thing. We should cheer when that happens, but again it's not going to happen because it undercuts the entire retail banking sector. JP Morgan and Bank of America will not let CBDC happen... the only way it can happen is if the entire retail banking sector implodes with no way to salvage it. Not saying it can't happen but I feel like the chances are pretty slim considering the circumstances. They haven't even tried bail-ins yet.
Conclusion
There's a lot going down in crypto and we are living through an exciting time in history. The foundation of the entire banking sector is showing cracks and faith in Bitcoin is just as high today as it was at $69k. Probably higher honestly. "Chancellor on the Brink" is a much stronger argument than "laser eyes".
In the short term we should expect pretty high volatility starting tomorrow. Most likely a dump that hopefully settles around the previous resistance at $25k over the next few weeks. However, I still think there may be like a 20% chance that the hyper-bullish scenario plays out and we crack this $30k resistance without even trying. It's a glass ceiling just waiting to be shattered either way. Only a matter of time now. Doesn't really matter if we have to wait another month.
The ultimate play is still conservative with a wait-and-see attitude. All signs point to a summer rally and a repeat of the 2019 four-year cycle. Be mindful of BTC dominance. There's a very solid chance BTC will continue to outperform for the rest of the year. Hopefully alts can catch a bid but no promises. BTC stronk.
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