The Weekly Close

After an extensive battle over the weekend, the Bitcoin bulls were able to close the weekly candle above $100k. This increases the likelihood of further upside before we see a major correction. I am not surprised that we started this week off with a little chop to shakeout out over leveraged traders before our next move higher.

Temperature Check

We just completed our 4th week in the “Extreme Greed” region. Market participants are taking on high levels of risk and leverage as they watch their portfolio value increase week after week. We know that bull markets are full of leverage washouts and sudden corrections and it would not surprise me if we see one soon.

Global Liquidity

The correlation between Bitcoin and global liquidity has been staggering this cycle. Bitcoin has followed Global Liquidity with a 2-3 month lag since the beginning of 2022. If that trend were to continue, we would expect the global liquidity downtrend that began on October 1st to impact Bitcoin within the next 2 weeks. We have seen Bitcoin diverge from Global Liquidity on shorter time frames thanks to crypto specific catalysts like the spot ETF launch and the presidential election outcome, but I believe Global Liquidity drives Bitcoin’s macro movements and cycles.

The Labor Market

It has become clear that the FED’s priority has shifted from inflation fears to concerns surrounding labor market weakness. The unemployment rate is a very momentum driven data set and once it begins trending higher, it eventually accelerates. The FED knows this and are trying to get ahead of it by slowly lowering rates to keep markets calm and soften the blow. This is another reason why I believe we only have a few more months to go in this bull market before this becomes an issue.

The Big Picture

I remain optimistic that we still have a few more months to enjoy this Bitcoin expansion phase. We have enjoyed a free ride with minimal corrections ever since the election result so I believe there will be some fear that develops in the near future to shake investors out of this uptrend. The best way to avoid letting emotions take hold is by looking at the bigger picture and having a plan no matter what the outcome.

My Current Portfolio

No changes were made to my portfolio this week. I would have locked in some more profits if we had closed the week below $100k. Since my cash position is already near the higher end of my 20-30% range, I am happy to let my spot holdings ride. I have had a hard time finding alts I can buy with size and conviction, especially with how elevated funding rates and open interest is on altcoins right now. The stress free approach of holding the majors and not getting involved in the altcoin musical chair rotation casino has been quite enjoyable this cycle so far. I will continue to be on the lookout for opportunities or new hot narratives that develop as the cycle progresses.

P.S. If you made it to the end of this weekly report, thank you so much for reading and I hope you got some type of value from it. I think the excitement and volatility in this market will only increase over the next few weeks. Make sure you have a plan for various outcomes and not just the one you hope occurs. 🤝