A thought on #bitcoin $BTC

Wanted to put out an article but no time. So I’ll try like this. Within my trading methodology we have left Bull market territory and are now in between. I called that consolidation in my trading article (bit.ly/3yg5bkQ).

What does that mean?
It means that consolidations have started to drift downwards instead of up and while a return to new highs is definitely possible, it is now 50/50 that we enter a full Bear market first. We have established an early pattern of a lower high and a lower low as well.
There are strong fundamental headwinds for $BTC to consider now:

1) Inflation is showing up everywhere and the labor market seems okay in the US. New debt issuance will exceed Fed purchases for the first time in a while soon and the Fed is likely to begin looking at a taper.
Comments from FOMC members have generally leaned that way recently and that is how the Fed typically prepares the market for a slow and controlled change of pace. This is highly relevant for $BTC, because, in the “free” world, its only use is being a vacuum for liquidity.
That liquidity is still expanding but at a lower pace and it may decrease net of treasury issuance soon. So the prime (and currently only) use of #bitcoin will be greatly diminished.

2) $BTC energy use has long been its actual achilles heel in my view.
It really does not matter if it is all renewable energy (it isn’t) in locations that don’t use any other energy/where it does “not matter” that energy is used in large quantities because any way you look at it:
A clearing system / database for transactions consuming as much energy as a Top20 country is simply not a good/sustainable idea, especially if that is the consumption at a level where it is far from universally adopted and it could easily grow twentyfold or more.
In comparison to the banking system (est 7x as much energy as $BTC) and Gold (approx 2x) #bitcoin may still be smaller but let’s not forget that SWIFT does 170x as many transactions as BTC/day and the energy calculation includes bank branches etc as well.
So make no mistake BTC energy usage is crazy high and inefficient. This is much more of a problem as its main usecase is reduced in importance.

Now, Elon may be inconsistent and mad, but the $TSLA reversal on $BTC stance is extremely relevant.
Even if you don’t believe the above, many financial institutions that would be buyers of #bitcoin may now think twice about it. They all follow some (useless IMO) ESG standards these days and you can bet a decision to invest into $BTC will now be questioned under that standard.
So it will net/net reduce potential demand.

3) Finally, market sentiment is still, IMO, too euphoric. Dog coins still carry huge prices and people immediately bet on every drop with leverage. The $BTC leverage premium is rarely negative, futures are still in contango.
All that even after a 30% drop, which tells me we may not have seen real long-capitulation.

These three headwinds stand in the way of $BTC climbing to new highs. They may not be enough, but they make it at least a plausible scenario that the top is in. Especially for #bitcoin.
A strong counterargument is that #DeFi IMO is just getting started and is here to stay. I can’t really imagine autocompounding yields not being “the next big thing in finance” and I think the #blockchain will disintermediate industries and replace clearing houses.
However, different from earlier in #crypto, nowadays you do not need to buy $BTC before you can buy $ETH or $SOL. You can buy all of #DeFi with fiat. So we may, for the first time, truly see btc-alt correlations come down sustainably. This will be super interesting to watch.
As for $BTC as an inflation hedge - I don’t buy it.Or rather,I do buy it,but just like for Gold the function as a “liquidity vacuum” has been so much stronger that the demand as inflation hedge won’t be enough to balance Fed liquidity reduction IMO, unless we see hyper inflation.
TL;DR: #bitcoin currently has heavy headwinds like reduced market liquidity, no usecase, persistent market euphoria & energy use awareness to deal with. #DeFi may or may not be able to de-couple.

After turning Bullish #crypto in July 2020 I am now neutral. Not advice.
Let me be really clear: “Neutral” means I think a lot of money can be made long or short specific #cryptos. It does not mean $BTC will now fall off a cliff. It just means making money will be harder going forward for a while and potentially for longer than we like.

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More from @dkcrypto13

15 May
Okay, another thread on #tether.

When they announced their pie chart to the #crypto world, everyone (incl me) was like "Okay, they are backed, great - let's move on".

The thing is - I don't think we can move on actually...
I have written before (cutt.ly/pbZKGiC) the main issue is not that #tether is backed with something these days, but what that backing is and whether that means $USDT should trade as a stablecoin pegged 1-1 to the USD.

Their publication actually means they should not...
Let's look at their breakdown of assets and believe it without a second thought.

You can see that the #tether reserves consist of a grand total of 3.87% in actual cash. All else are instruments that any company might use to park their cash in, however there are some problems...
Read 18 tweets
26 Mar
Just thought of some #crypto personalities:
- @TheCryptoDog: The Warren Buffet of crypto. Always friendly, loves what he buys, finds value, never sells
- @AltcoinPsycho: The Jim Simons of crypto. Quant trading, options, return, but good person.
- @CryptoDonAlt: George Soros of crypto. Will speculate against the crowd, remains a good person with sound advice.
- @SalsaTekila: the Jesse Livermore of Crypto. "Colossal gains and colossal losses" sounds like his twitter feed.
- @woonomic: Ray Dalio of crypto. Best at macro.
- @edwardmorra_btc: William Gann of crypto. Purely technical analysis trading.

This was fun. I am sure there are loads of others out there.
Read 4 tweets
26 Mar
Disbelief levels as measures by leverage premium continue to look good now. In order for me to actually believe #tether is done extracting $, I want to ideally see both dotted blue lines hold on an hourly closing basis. #bitcoin

Not advice
And in a truly perfect world, someone other than Michael Saylor or Elon Musk announces they bought all the spot $BTC that left Coinbase in the last 2 days.

Larry Ellison? A friend of Elon, big Tesla stake and definitely on the crazy side of executives plus a billionaire...
So far so good. Both levels tested, both held for now 💪🏻. Not advice

Now - can we get Larry to announce please?

#bitcoin
Read 4 tweets
17 Mar
My read on #Fed press conference is broadly Bullish risky assets including #bitcoin. Points JP made that leads me to thsi conclusion:
- Unemployment rate understates problem as labor participation rate is lower
- Economy is 9.5m jobs below pre pandemic
...
- we will aim for inflation higher than 2% for some time
- We are looking for broad based and inclusive labor market improvement
- We won't taper asset purchases before economy has made "substantial progress towards max employment and inflation expectation firmly at 2%" ...
- We want to give notice WELL in advance of actual tapering of the asset purchases (meaning they won't just reduce them next meeting out of the blue)
- Talked down moving of rate projections of some slightly upwards in 2023 by reaffiriming stance on asset purchases and rates...
Read 6 tweets
17 Mar
The thing with #crypto and #bitcoin is that right now practically everything that’s out there is built on the same “usecase” - speculation, casino and pyramid schemes (#Defi). So that is exceptionally vulnerable to Fed moves. However, there are now so many smart & motivated...
... people working in #crypto & on making the #blockchain a useful tool in our lives that betting against that innovation is now pretty poor risk reward. There are thousands of usecases that may or may not require a token, but they will be built:
- identity on chain makes identity theft impossible & where would you store it if not on the most decentralized one (ie $BTC)
- voting will be done on chain, instant results no fraud
- clearinghouses will disappear as the #blockchain replaces settlement (albeit a centralized one)
Read 7 tweets
4 Mar
The fact #bitcoin isn‘t getting completely obliterated given Powell just basically said „Yes we still need to print now but before anything happens with inflation we‘ll hit the breaks hard“ is certainly a silver lining.
It will depend a lot on how markets read the Fed‘s communications tomorrow, when the dust settles, but in case they go with „ok it‘s confirmed, the Fed will be less expansive soon to avoid inflation“, I think $40k is totally doable here. #bitcoin $BTC

Not advice.
FWIW the likeliest outcome is investors decide tomorrow not so much changed after all & all those tech stocks seem quite a bit cheaper now.May see a good reaction in $BTC as well. Just definitely a warning:we‘re much closer to the end than the beginning & the end may have started
Read 5 tweets

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