Bitcoin's 25% Down Week

TLDR: I’m medium-term bearish, but still long-term bullish.

After one of the most boring six months in its history, Bitcoin finally made a move—to the downside.

The consolidation at the orange resistance zone (prior all-time highs), after it’s meteoric rise post-FTX collapse and ETF launch, had me hopeful that there wouldn’t be a major pullback, but alas, amidst stock market weakness, Bitcoin has pulled back about 30% within the past ten days.

How does this pullback change my long-term outlook?

It doesn’t change it at all.

The monthly chart is still in an uptrend, making higher-highs and higher-lows. It’s perfectly healthy to get a pullback like this after the incredible performance Bitcoin has given us over the past year and a half. And this pullback isn’t even that bad (yet) by historical standards.

That being said, the monthly chart isn’t giving me a swing trade buy signal yet because I don’t see a logical place for a stop loss. I would remain long-term bullish on Bitcoin based on the monthly chart even if Bitcoin pulls back all the way to $36K.

My game plan based on the monthly chart:

• Buy the dip at $36K if it goes all the way down there

• Buy the break out above $71.5K if it gets there

Compared to the monthly chart, the weekly chart is bearish. The main signal that makes me medium-term bearish is:

• Downtrend—Bitcoin has been making a series of lower-highs and lower-lows.

In addition, Bitcoin is below the 20-week moving average (rounded grey line) and that moving average is now pointed down.

However, as I’ve said in previous reports, I stopped actively swing trading crypto shortly after the ETFs went live. I only long-term invest now, and with a much smaller percentage of my portfolio than I have in the past.

This is in part because I believe that crypto has been de-risked and therefore the upside is now limited, and in part because I’m investing in my new startup in AI because I think that’s a better use of my time and money.

I would need to see a legendary crash down to about $36K in order to get interested in swing trading again.

As a long-term investor, I’m not too worried about this medium-term bearish signal on the weekly chart.

Bitcoin ETF flows have flatlined, generally speaking. The market cap of Bitcoin still hasn’t surpassed its highs from three years ago. The stock market, on the other hand, has made new highs since then.

We need new money to come in. Bitcoin has saturated the total addressable market of early adopters and needs to start creating new demand within the mainstream.

Interest rate traders expect rates to come down next month. If the stock market continues to pull back, I believe interest rate cuts will provide a floor for both Bitcoin and stocks.

United States Government debt sits at around $35 Trillion. I haven’t heard any plausible plans for resolving this problem.

It’s such a complex issue—maybe it’s not actually a problem, or maybe there will be some unforeseen solution to it—but it certainly doesn’t look good.

This plus massive increases in supply of the United States Dollar by money printing are the biggest long-term bull cases for Bitcoin from a fundamental perspective IMO.