Bears could use a little disinfectant
Bulls continue to face attacks from all sides, will they remain strong?
Weekly musing: follow the bulls, not the bears.
What a nice battle! Bears had some fun bringing BTC down to $60k and bulls with the spectacular bounce that followed. However, the failure to print a higher high, with BTC meeting resistance at $68k, creates some uncertainty for the week ahead. Why?
On the one hand, it seems the market hasn’t fully reset yet. Funding rates - a proxy for fear and greed - decreased to healthier levels but remain elevated. Some say they’re back to normal, but you can monitor the data and judge for yourself.
On the other, even bull market dips tend to create more chaos before bulls cool off and return with full confidence. While it’s not just a matter of time, as Shiller argues, this shows how fresh this correction is before we can say it’s over.
Overall, you need to keep in mind bitcoin and its key levels. No one knows the future, but fear will increase if BTC drops below $60k again - a lower low hinting at continued correction - and euphoria will return if we’re above $70k again.
Conversely, the above doesn’t mean I believe we’ll see a prolonged correction just yet. US stocks are about to close their best week of the year as the Fed maintained its hints that it will finally initiate the pivot in interest rates around the summer.
This call for caution is just a reflection of what I’m perceiving to be a momentary weakness in the market, an opinion shared with some solid traders in my feed, but not with the majority of the people I’m talking to - hence the focus today.
As always, let’s continue to monitor the situation. While many expect the halving and the rise of liquid restaking protocols to re-ignite the bull, note the headwinds too, such as the SEC’s latest attack or India’s increasingly stringent regulations.
And if some are rejoicing that BlackRock announced a new aptly named tokenised fund on Ethereum - BUIDL, for BlackRock’s USD Institutional Digital Liquidity Fund - remember TradFi’s interest in crypto is ultimately also a battle.
Meanwhile, remember that in uncertain times the market tends to chop sideways. Q1 is coming to an end and it’s likely fresh institutional funds will only come back once April hits the tape. Now more than ever, patience is of the essence!
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