BTC (+SPX) BOTTOM SOMETIME IN Q4?

2023年4月21日

Hey TV fam ---

I know I provide the same update regarding BTC and SPX; I want to explore something a bit deeper.

If you are reading this, you know BTC follows SPX nearly 1:1 in movement. You can refer back to my previous descriptions as to why, but the short-winded answer is that we all know there are multiple BTC derivatives on the open market, thus BTC will never decouple from SPX in either a bull or bear market (i.e. BTC will never go to 100k as SPX is correcting down and vice versa).

Chart Analysis
If we know BTC follows SPX in direction (regardless of magnitude of price movement) and you overlay a Fib channel at the start of the bear market correction from Q4 2021 to the recent local BTC swing low, and capture the liquidity in candles that needs to be consumed in the sub-12k price range (as noted in yellow on my weekly chart), you can see the Fib channel shows a confluence period around Oct-Dec 2023 (Q4 bottom).

I call this the "bottom" based on the SPX March 2020 swing low with the January 2022 swing high as this shows a normal, healthy .618 support level retrace correction.

Pre-COVID, Post-COVID Markets
At this time, I cannot confidently call the "deep bottom" using the March 2009 swing low (from the last GFC) with the January 2022 swing high, as this does not take into consideration Biden's 5T stimulus. I believe this is the plot twist that most are not accepting --- or understand how much money this actually is.

To put it in perspective, it is approximately the size of the entire economy of Japan, which is the world's 3rd largest economy. Another way to look at it is that in the financial world, 5T is also significant because it is the approximate daily trading volume of the foreign exchange market, which is the largest financial market in the world. This means that on any given day, approximately, 5T worth of currencies are bought and sold by traders, banks, and other financial institutions. Effectively, we have added 1 full day of global trade volume to be mismanaged.

Overall, 5T is a staggering amount of money that has far-reaching implications for the global economy and financial markets and fundamentally, changed market dynamics and efficiency: there is now a line drawn in the sand for the market pre-COVID and after in terms all honest/pertinent information available to a stock's price + the powerful influence of social media.

Social Media Influence, Crypto
Yes, social media existed pre-COVID. So, how is social media different post-COVID? One word: crypto. It has evolved into a behemoth of technology (and software). Outside of the trading aspect which has greatly influenced retail traders' appetite for risk (and greed).

For example, Memecoins are creating a fanbase, and the likes of Dogecoin/Shiba Inu/Saitama/Pepe are now mini ecosystems within the financial sector. The 5T that was injected by the Biden administration has, in some way or another, migrated to this ecosystem, amongst many others (DeFi, Metaverse etc). Crypto has changed the global economy whether we want to believe this or not.

We need to flush out the extreme greed in markets and rebase market sentiment as this will support re-normalization of the global economy for the next face-melting bull run.

Until next time, trade safely, and stay out of trouble with your wife or girlfriend. When she asks you to do the dishes, do them (don't argue like I did and had to sleep on the couch last night). My neck hurts.