A couple of weeks ago I saw a tweet by Chris Burniske comparing the sentiment and frothy markets around the time of the spot ETF approvals to the Coinbase IPO which marked a local top in April 2021. I remember thinking why did he have to go and say something like that because I knew there was some truth to it but I didn't want to hear it. Since then the markets have pulled back 20%~ and it was a missed opportunity to risk off or hedge some of my exposure to digital assets. I have a long-term permabull bias for a couple of reasons:
If we take BTC/USD for example, over a long enough time frame I think Bitcoin will appreciate relative to the US dollar because of the positive and negative factors outlined above.
This is fine for a long-term investment thesis but over lower time frames it is sub-optimal to be permanently bullish. I've spent weeks of my life studying market cycles and have created a list of signals and red flags for potential market tops and bottoms: Top Signals
Bottom Signals
All of this seems obvious in hindsight but controlling emotions and timing markets is far harder in practice. I find selling in to Euphoria particularly difficult. Having a contrarian opinion on the market when the whole industry is at peak “this actually is the future of finance”, during a blow off top is exceptionally hard. It always feels like a stupid mistake at the time, I’ve often found the best trades are like that. To overcome this difficulty I've created long-term plans and price targets which, while not set in stone, provide some guidance when things get "exciting" and my natural instincts work against me. If we are lucky enough to see another bull run over the next couple of years, have a think about your exit plan or where you want to get to long term and how best to achieve those goals.
Bitcoin has pulled back around 20% from the peak before the spot ETF approval. Currently trading at just over $40k with sentiment waning in the last week. ETH/BTC looked good for about 5 minutes before it pulled back in to the downward trend, looks like we will have to wait for a break out above that key trend line (see below).
Some speculation that the worse of the GBTC selling is over but outflows are exceeding inflows according to Coindesk. A drop down to $30-36k still looks healthy on a higher time frame but no guarantees that anyone sidelined will get those entries. Any big dips are likely going to be short lived as high expectations throughout the industry for a new all time high in 2024-2025 following the halving in April. Social links are below and if you enjoyed this newsletter I would appreciate it if you could share this content
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