The best analysis combines fundamental factors in its outlook.
+ bonus points for a holistic world-view
#Bitcoin & #crypto
/thread
+ bonus points for a holistic world-view
#Bitcoin & #crypto
/thread
/2.
Case-Study
March of 2020 (pre-covid crash & around time of last $BTC halving) : hype was ~ATH, no one would have thought to call for a ~$4k price just 2 days after.
The unthinkable happened, world markets experienced a liquidity event, & that impacted the crypto market.
Case-Study
March of 2020 (pre-covid crash & around time of last $BTC halving) : hype was ~ATH, no one would have thought to call for a ~$4k price just 2 days after.
The unthinkable happened, world markets experienced a liquidity event, & that impacted the crypto market.
/3.
No amount of TA could have predicted this -
Markets tend to move together, and crypto in 2021 is no different - many of the same holders of crypto (funds, retail, c.o's) also hold equities.
Because of this, bringing a world / macro view into the equation is critical.
No amount of TA could have predicted this -
Markets tend to move together, and crypto in 2021 is no different - many of the same holders of crypto (funds, retail, c.o's) also hold equities.
Because of this, bringing a world / macro view into the equation is critical.
/4.
Moving into Q3, liquidity will become tight across global markets (contrary to popularly thought), at a time when leverage debt is @ ATH.
Global Debt to GDP is also highest on record
Acting as a net on sustained inflation, resulting in a shorter term deflationary tailwind.
Moving into Q3, liquidity will become tight across global markets (contrary to popularly thought), at a time when leverage debt is @ ATH.
Global Debt to GDP is also highest on record
Acting as a net on sustained inflation, resulting in a shorter term deflationary tailwind.
/5.
We can start to see this in many areas:
- Reverse repo facility passing $1T
- Chinese tech stocks, massive R.E. etfs (chart)
- Eviction moratoria ending, increasing housing supply net net, placing downward pressure on values
- Cessation of stimulus programs (neg for incomes)
We can start to see this in many areas:
- Reverse repo facility passing $1T
- Chinese tech stocks, massive R.E. etfs (chart)
- Eviction moratoria ending, increasing housing supply net net, placing downward pressure on values
- Cessation of stimulus programs (neg for incomes)
/6.
Any one of these factors taken alone should give one pause, but let's dig a bit further into the first item - Reverse Repo.
(Banks use rev. repo in order to avoid penalization / avoid becoming a systemic risk to global financial system post '08, by size of their accounts)
Any one of these factors taken alone should give one pause, but let's dig a bit further into the first item - Reverse Repo.
(Banks use rev. repo in order to avoid penalization / avoid becoming a systemic risk to global financial system post '08, by size of their accounts)
/7.
Just passing $1T for the first time ever, this facility is acting in complete contrast to ' QE ', by trapping / sucking bank reserves away.
Chillingly, top analyst on the repo market Zoltan Pozsar had predicted this weeks earlier, & predicts further utilization up to $2T+.
Just passing $1T for the first time ever, this facility is acting in complete contrast to ' QE ', by trapping / sucking bank reserves away.
Chillingly, top analyst on the repo market Zoltan Pozsar had predicted this weeks earlier, & predicts further utilization up to $2T+.
/8.
What does it mean?
More drain on bank reserves = More deflation - at a time when liquidity is already becoming tight.
What does it mean?
More drain on bank reserves = More deflation - at a time when liquidity is already becoming tight.
/9.
There are also a few potential ' Black Swans ' that could negatively affect sentiment (globally & crypto-specific) going forward in the short-term :
- Tether D.O.J. litigation / insolvency
- Forced-tax KYC compliance (US Intrastructure Bill)
- Delta strain / supply-chain
There are also a few potential ' Black Swans ' that could negatively affect sentiment (globally & crypto-specific) going forward in the short-term :
- Tether D.O.J. litigation / insolvency
- Forced-tax KYC compliance (US Intrastructure Bill)
- Delta strain / supply-chain
/10.
Sentiment (& anything that could impact it) is important to pay attention to -
All it takes is one significant hit to sentiment to positively or negatively influence group psychology.
Sentiment (& anything that could impact it) is important to pay attention to -
All it takes is one significant hit to sentiment to positively or negatively influence group psychology.
/11.
Group psychology right now of many in the crypto market - from an objective observer point-of-view is clear :
- Many are ' All in '
- Many believe remainder of 2021 must only be a bull market (4-year cycle theory)
- Many are very hopeful
- Hype & Excitement is very high
Group psychology right now of many in the crypto market - from an objective observer point-of-view is clear :
- Many are ' All in '
- Many believe remainder of 2021 must only be a bull market (4-year cycle theory)
- Many are very hopeful
- Hype & Excitement is very high
/12.
While history has upheld the 4-year cycle to-date, we (as the crypto market) are also as connected as ever to other global markets, as our maturity & liquidity has increased substantially.
While history has upheld the 4-year cycle to-date, we (as the crypto market) are also as connected as ever to other global markets, as our maturity & liquidity has increased substantially.
/13.
To quantify this in real-terms, all one needs to do is turn to the ' Buffet Indicator '
Market Value to GDP ratio recently reached 235%, never before in history has the market been this stretched from its historical trend line.
To quantify this in real-terms, all one needs to do is turn to the ' Buffet Indicator '
Market Value to GDP ratio recently reached 235%, never before in history has the market been this stretched from its historical trend line.
/14.
Regardless of whether or not you think the crypto market will continue a bull trend through year end, it's important to have a hedge.
Easiest way to do this is simply to keep some cash on side (25-50%).
So no matter what happens, you can feed yourself / family, pay debts
Regardless of whether or not you think the crypto market will continue a bull trend through year end, it's important to have a hedge.
Easiest way to do this is simply to keep some cash on side (25-50%).
So no matter what happens, you can feed yourself / family, pay debts
/15.
Rather than remain myopic to the crypto sandbox -
It is important to keep macro risks in mind.
Formulate any risk strategy with an overlay of the current psychological landscape, as well as a view to global macro market risk.
It's always a good idea to have a hedge.
Rather than remain myopic to the crypto sandbox -
It is important to keep macro risks in mind.
Formulate any risk strategy with an overlay of the current psychological landscape, as well as a view to global macro market risk.
It's always a good idea to have a hedge.
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