The Weekly Close

After a small shakeout and altcoin massacre below $100k at the start of the week, Bitcoin closed a beautiful weekly candle well above $100k. The large wicks to the downside show the clear buying demand we have right now and the momentum is a force to be reckoned with. There really isn’t much to do during these Bitcoin price discovery runs aside from sitting back, remaining calm and enjoying the ride.

Temperature Check

The shakeout we had at the beginning of the week was able to clear out some leverage and reset sentiment slightly, bringing us down from the Extreme Greed region into Greed. Interestingly, the fear and greed index is mirroring what happened in March of this year quite closely with the brief dip into Greed after a few weeks of Extreme Greed. Sentiment can remain elevated for awhile and my main priority during these Extreme Greed phases is remaining calm and rational while everyone is throwing risk management out of the window thanks to the euphoria across Twitter and YouTube.

Global Liquidity

One of my main concerns is the continuous drop in Global Liquidity. Bitcoin has many strong narratives and strong momentum right now, but this relationship with Global Liquidity over the past 3 years is hard to ignore. If the pattern were to continue, we would expect a Bitcoin local top by end of year or early January at the latest. This doesn’t mean I’ll sell all my holdings and wait for that to happen. Instead, I’ll be paying close attention to this week’s FOMC meeting and to the release of the Economic projections for 2025 which should have a large impact on the DXY and, as a result, Global Liquidity.

Inflation

Core CPI, the FED’s preferred way to look at CPI, remains quite stubborn above the FED’s 2% target at the 3.3% level. Markets haven’t been too spooked by this for now, but with the FED planning a few more rate cuts thanks to labor market weakness and ballooning interest expense for the Federal government, this will likely become a larger issue in early 2025 and could interrupt our bull market like the inflation scare in early 2021 did. I look forward to hearing what Powell says about the inflation issue during this week’s FOMC press conference and what the FED projects for inflation in 2025.

Acknowledging Multiple Outcomes

Bitcoin continues to follow our early top scenario quite closely. We seem to have powered through the $100k psychological barrier and Bitcoin looks ready to break higher over the next few weeks. I would love nothing more than a Bitcoin rally until the end of 2025, but that isn’t my base case or a scenario I am willing to bet too heavily on right now. Same goes for the broken cycle scenario where Bitcoin puts in a cycle top this month. Accounting for these scenarios and their likelihoods allows to me plan for multiple outcomes and navigate the fear and greed we all feel during volatility.

My Current Portfolio

I took some small profits across all my holdings this morning and moved them into cash. It was incredibly hard to do because their charts look quite bullish and I expect this momentum to continue. I reminded myself that for this stage in the cycle my cash target is 20-30% so as long as my spot holdings are between 70-80% I will benefit greatly from more upside while this small profit taking protects me from downside risk and rewards me for my patience and belief in this asset class when others wrote it off. My goal is not to take on maximum risk and make maximum profit, if it was I would end up getting rugged on a memecoin or liquidated on a leverage exchange. My goal is to optimize a balance between reducing risk and stress by taking small profits along the way and sticking to more established projects while benefiting from price appreciation and investor greed. I’m not recommending anyone do exactly what I’m doing because all our circumstances and goals are different, but I’m hoping that sharing my decisions and thought process will provide you with insights that I didn’t have in previous cycles.

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. It’s surreal to think that after years of patience and pain the dream of a $100k+ Bitcoin is now a boring normality. This is the most exciting and profitable part of the cycle, but also the one where the most mistakes are made because it feels like nothing can ever go wrong. Try and come up with a plan for yourself that benefits greatly from whatever your base case is, but also protects you incase you end up being wrong about what 2025 has in store. 🫡