pebblewriter

Tag: crypto

  • Update on Bitcoin: Jan 19, 2022

    In our last update on BTC [see: Dec 5 Update] we noted that BTC had briefly dipped below our 46,000 target and was due for a backtest.

    I would expect a bounce up to backtest at least the black dashed line (51,766ish) or even the cloud bottom (54,850.) If those (now) resistance levels hold, then the next targets remain to the downside…

    As it turned out, BTC’s bounce took it to 51,991, whereupon it obliged us with a backtest of the black line and began sliding to new lows. It is now off over 40% since our short call on Nov 8 [see: Out of Sync.]

    While bitcoin bulls are as buoyant as ever, our charts now suggest even more downside than before.

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  • Update on Bitcoin: Nov 19, 2021

    BTC reached our next downside target, a 17.2% drop from our short call on Nov 8, reiterated on Nov 9 and 10.

    Last, BTC is getting a very nice bounce this morning, perhaps on the notion that Elon’s $20 billion in TSLA sales might land in crypto. In any case, this is a very important juncture for BTC. I expect it to fail and revert to the cloud and dotted blue channel line at 55,700ish.

    BTC has substantial downside risk if this support doesn’t hold.

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  • The Bond Market Finally Woke Up

    For months we’ve been warning about the coming inflation problem, wondering when the bond market would notice and/or care.  The immediate problem in a nutshell:

    One of the most highly correlated components of CPI with the headline rate is the price of energy, and gasoline in particular.  If prices were to remain where they are now, the base effect will result in a 40% increase YoY in April.  Historically, this has produced headline CPI in excess of 2.5%.The Fed points out this base effect bump will be transitory and should be ignored, but the recent rise in interest rates tells us that the bond market is not ignoring it. In fact, recent beats in economic data and sharp price increases across the commodity complex underscore the notion that the rise in inflation will not be transitory. The pop we could see in April would be only the beginning.

    As we approach $30 trillion in debt with more stimulus on the way, markets have to wonder what to make of CPI of 2.5-3.0% or higher. In our opinion, the US has no choice but to follow in the BoJ’s and ECB’s footsteps and repudiate higher rates until the end of time.

    10Y note futures reached a level at which we have felt would represent critical support. A drop below this level, we reasoned, would sound loud alarm bells. As we wrote yesterday: “This is quite possibly the Fed’s last chance to avoid a real mess in the bond market.”

    Bottom line, don’t be fooled by the Fed’s ability to repeatedly bail out equities at the last minute.

    The algos have learned well to respond to moves in VIX, currencies and oil/gas when they are so instructed. It’s no surprise that yesterday’s plunge was arrested at our previous SMA downside target.

    The problem is bigger and more difficult to cope with than most – including, apparently, the Fed – can imagine.

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  • Update on Bitcoin: Jan 12, 2021

    Quick note:  BTC backtested the top of the broken pink channel as detailed in our Jan 7 post [see: Jan 7 Update on BTC.]

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  • Update on Bitcoin: Jan 7, 2021

    It seems like just yesterday BTC reached our last upside target range at 29,890-30,108. Actually, it was Monday [see: Jan 4 Update on Bitcoin.]

    If it can hold these Fibs, the next major Fib target to the upside is the blue 2.24 and red 3.618 at 40,180-40,138.

    Go figure.

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  • Update on Bitcoin: May 28, 2020

    I’ve only posted about BTC once before, back on Mar 23 in response to a member request [see: FOMC Embraces MMT.]  The Dow was about to test its 2016 election day lows and, not coincidentally, the Fed had just unleashed QEinfinity.

    The post went as follows:

    Two major chart patterns jump out at me: first, the obvious triangle pattern on the weekly arithmetic chart (it isn’t there on the log chart) suggests BTC should bounce from here and return to the top trend line (which failed, BTW, to hold a recent tiny breakout.) It currently stands around 9,925.Second, the daily log chart shows a TL was broken last week but BTC has since rebounded back above it. For those wondering, the retracement of the rise from the Dec 2018 lows to the Jun 2019 highs reached about 81%. Had the TL held, we’d be looking at a Fibonacci 78%.

    If you believe that BTC will necessarily rise (as gold will) as QE explodes, the charts support a continuing bounce. If you believe the FOMC will do whatever it takes to support the USD and crush surrogates such as BTC and GC, then keep an eye on that TL (5,000ish) as a fairly clear stop level.

    Having spent a few hours studying Bitcoin, I promptly forgot about it.  I don’t really follow it, and believe it’s at least as heavily manipulated as everything else. Probably more. But, thanks to member John K., I was encouraged to take another look.

    As it turned out, BTC did continue its bounce and went on to test the top trend line, reaching 9917.25 on May 8.  It was an impressive 100% move from the March lows.

    Of course, now it’s back at overhead resistance – the same trend line from December 2017 which halted the 2017 and 2019 rallies.We’ll take a look at the potential for a reversal or a breakout.

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