The Weekly Close

After a bounce off of our $100k psychological support level and Range Mid, Bitcoin closed its weekly candle just under $106k. Bitcoin finds itself at an interesting crossroads here because it’s too early to tell whether this will be a bounce into a lower high that’s followed by a deeper drop or if Bitcoin can reclaim the $109k Range High this week and confirm the end of this pullback. I am leaning towards this being a lower high before we briefly revisit lower prices, but I’m happy to let the market prove me wrong.

Market Sentiment

Market sentiment remains quite comfortably in the Neutral region. This continues to look like a healthy sentiment reset before Bitcoin’s next move higher. If we do end up seeing that deeper pullback lower, that would likely take sentiment back into the Fear region. That revisit of the Fear region would be the perfect fuel to send Bitcoin higher once shorts begin piling in and everyone starts declaring that the cycle is over.

The Global Liquidity Index

The GLI is still slowly grinding its way higher. This further strengthens my conviction that the top for this cycle is not in yet. It does seem like central banks globally have no option but to keep increasing liquidity and that should be a bullish tailwind for Bitcoin. All we can do for now is keep an eye on this metric and be on the lookout for a new downtrend forming.

Macro

We will be receiving updated CPI data this week. The market is expecting a slight increase in the year-over-year reading from 2.8% last month to 2.9%. The labor market’s resilience has brought attention back to inflation once again and I expect Wednesday’s CPI print to have a large impact on FED rate cut expectations. Ideally, we see this data point come in below expectations, but an inline print shouldn’t be too bad either. What we really don’t want to see is an upside surprise in the inflation data.

The Bigger Picture

Although Bitcoin’s short-term path is difficult to predict here, I still believe we will see new highs quite soon. The Early Cycle scenario still looks the most likely to me based on current market structure, but I am open to the Normal Cycle scenario if Bitcoin enters a prolonged period of consolidation and chop going into Q3. I still believe it is unlikely that the cycle top is in, but it is a scenario I will keep my eye on as we get deeper into 2025.

What I’m doing with my portfolio

No changes were made to my portfolio this week. During these choppy Bitcoin pullbacks the best action is usually no action. I am quite happy with my allocations and unless the market tells me otherwise, I will continue to sit on my hands and wait for this pullback to play out. I still expect to have another opportunity to take profits at new highs sometime in the near future so i will patiently wait until that time comes.

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 available as I finish building out the Mental Models course. You can learn more here:

Although it can be tempting to want to constantly make changes after every single market move, I have found that these time periods are best spent focusing on other aspects of life outside of markets. This makes it much easier to sit through the chop without overtrading or going back and forth between thinking the cycle is or isn’t over based on current sentiment. I think the best is still ahead for 2025 and as always, I hope you have an amazing week and the future looks bright. 🤝