The Weekly Close

After a false breakdown below our $100k Range Mid over the weekend, Bitcoin closed its weekly candle just under $101k. This continues to look like a shakeout before Bitcoin heads higher into Q3. This week’s price action will be crucial to see whether we see continuation to the downside or if Bitcoin will confirm the false breakdown by holding above the $100k support level this week. I expect quite a bit of chop and volatility with all the narratives and fear surrounding what’s happening with geopolitics.

Market Sentiment

After spending some time in the Neutral region, market sentiment has now dipped into Fear. We can officially say that market sentiment has now fully been reset and all the Greed we saw a few weeks ago is completely gone. It’s amazing that a 10% pullback is now enough to take the market from Greed all the way back to Fear. I don’t expect this dip into Fear to last long, so all we have to do is manage our emotions in the meantime.

The Global Liquidity Index

The GLI continues to chop around near its recent highs. It’s too early to know whether this is the start of a new downtrend or some chop before continuing its grind higher. The GLI’s next trend will have a large impact on what I expect for Bitcoin in Q4 of this year. For now, we should have the required backdrop for Bitcoin to rally through August thanks to the roughly 75 day lag between Bitcoin and the GLI this cycle.

Macro

This week we will be receiving an update to Core PCE. This is the FED’s preferred measure of inflation and it has been heading in the right direction over the past few months. The market is expecting a slight increase to 2.6% for this reading. As always, we want to see inflation come in at or below expectations because an upside miss would likely spook markets into pricing in more inflation and less rate cuts.

The Bigger Picture

Bitcoin is still following our Early Cycle scenario quite nicely and if this does end up being a quick pullback, I wouldn’t be surprised if we see new highs quite soon. I am still open to the possibility of summer seasonality playing out resulting in chop and consolidation over the next few months, but it feels as though we have already done enough consolidating in Q1 and Q2. I still believe it is unlikely that the cycle is over, but I like having it on the chart as a reminder that unlikely doesn’t mean impossible.

What I’m doing with my portfolio

No changes were made to my portfolio this week. My positions are still close enough to my targets so that I don’t feel the need to make any changes. Although everyone is distraught over this pullback, it’s important to remember that Bitcoin is barely down 10%. You would think we were down 30% by looking at the current state of market sentiment. Taking those profits at the highs now allows us to remain calm and collected at the lows.

P.S. If you made it to the end of this report, thank you for reading and I hope you got some value from it. If you’d like to learn more, early bird pricing with lifetime access for the Crypto Enjoyers program is still available as I finish building out the Mental Models course. You can learn more about it here:

I hope you have an amazing week and the future looks bright. 🤝