A Golden Bull

Compass 138

Bitcoin is Ready, Are You?

• Last week, the bulls seemed like they had taken a hit, but in this market, the bears won’t stop being the cannon fodder to drive new rallies. At first glance, the inflation data seemed to predict the worst for the Fed’s maneuvers, but it’s always essential to fully digest the data before making decisions.

• It was no surprise that we suddenly saw the bears rejoicing. Following the release of the FOMC minutes, Fed officials focused on inflation and employment as the two key factors that would dictate the pace of interest rate cuts. So, an unexpected data point just created a delay in the price action that is to come, not more, not less.

• In other words, we need to pay attention to the fact that inflation numbers didn’t drop as much as expected, which doesn’t mean they increased. Seeing the bigger picture, we have crossed a long and winding road to fight inflation, and the Fed is watching that. Of course, we also can't fall into triumphalism like JPMorgan claiming that the soft landing is achieved.

• Last week, we faced macroeconomic pressure and FUD spread by elements endogenous to the crypto ecosystem, but nothing has transcended beyond that.

• This week is lighter on fundamentals; we only need to pay attention to the beginning of the Earnings season, which could trigger reactions in the TradFi market. We remain dependent on macro fundamentals, but once Bitcoin gets activated, the Golden Bull will show its full force.

• Swissblock’s risk signal has remained at zero, fundamentals continue to strengthen, and today's V-shaped recovery will likely reflect further improvement in the coming days. Let's take a closer look at what's working in our favor.
  

Speedometers indicating the current state of BTC. The full dot represents the current reading and the white dot represents one week ago.

Wind of Change.

• Sentiment deteriorated last week following the green light from U.S. authorities for the sale of Bitcoin holdings in the government's Silk Road stash, and regulatory hurdles that have been a constant during 2024. There is no clear indication that the current administration would want to sell in the short term, but following the pattern of their behavior and their aversion to Bitcoin and the crypto ecosystem, it wouldn't be surprising to see movements in the wallets.

• The increase in FUD was noticeable but temporary, forcing more than $190 million in liquidations. Our Risk Index remained at zero, standing firm against this rise in fear and uncertainty, which, in the end, had little substance.

Current US Government BTC Holdings from Silk Road seize. Source: Arkham 

• We are seeing a gradual shift in attitude toward Bitcoin from many institutional authorities. SEC Commissioner Uyeda's criticisms align with what could be a shift in direction from an authority that, under Gary Gensler's leadership, has been unyielding toward anything related to digital assets. If Commissioner Uyeda has spoken out, it's because a change on the board is imminent, and he has raised his hand.