Cryptic ball: D for dump.
This Wednesday crypto found its highest level in a month, with bitcoin hitting $24.3k and ether testing $1.6k again. Both then fell, even if stocks kept rallying. While some are blaming Tesla for this, I argue there's something else at play.
- Firstly, crypto has been leading macro moves for a while now. While relief rallies often need a pause, this is the time of the month when volatility increases as uncertainty surrounding the Fed's FOMC meeting increases.
- That means I'm expecting stonks to dip a bit during the rest of the week, with crypto's upcoming direction potentially dictating what can happen next week in global markets. Overall, I'm still expecting that direction will be up. Why?
- Well, the news that Tesla sold 65% of its original bitcoin holdings in Q2, around $30k, having already sold 10% one year ago, is "a nothingburger" - especially as Elon Musk clarified they are "open to increasing its crypto holdings" again.
- Then, what matters is still the wider macro picture. For now, I'm confident the next announcement on July 27th will confirm a 75bps hike, which is fully priced in. And that will allow the rest of summer to play out nicely.
- After that, I'm a bit concerned with how instability in Europe over an uncertain, but likely colder winter, can impact the rest of the world. But as the Fed is likely forced to pivot in Q3 then I reckon the US effect will be larger anyway.
All-in-all, it's clear all markets are rallying as they anticipate the worse is behind us. If circumstances, e.g. war, winter, or inflation, change that and bind the Fed to continue raising rates, then I may be wrong. Until then, time to research alts.
Chart art: P for pivot.
Three things: R for rekt.
- DeFi Hashira explains "why the bottom is in" and I agree.
- Tascha Che explains "why crypto adoption has barely grown" and I disagree (because it's not about "real transactions", but smart contract usage).
- Shaman explains how a "crypto scammer was caught through his mom"!