I hope everyone is keeping well and are ready for increased volatility this week, as it brings a plethora of economic and crypto events. I know I have not written any updates for a while, but will not be revisiting the past couple of months as I trust you were trying your best to be on top of the crypto news like SEC lawsuits that started this most recent sell-off on altcoins or banks falling.
Macro Madness
All start with June 13th and CPI numbers, followed by FOMC meeting on Wednesday and ECB meeting on Thursday.
Most still paying attention to total CPI which has been steadily falling since July 2022, while Core CPI is showing more resilience and will keep rates higher for a while in my opinion. Will it stop the stock market from being high on hopium? Probably not, as we have seen numerous times before, once market makers are set to move it one way, bad news is good news and good news is great news and an “excuse” to pump all up, while people continue to come to terms daily with higher prices that are here to stay and constant uncertainty whether their bank is next in line to fail.
As the above CME chart shows, FED is expected to keep the rates the same and the market is already expecting rates cut later in 2023/early 2024, which explains the most recent euphoria seen on SP500 and Nasdaq. While both are still a fair bit off their all-time highs, I recommend looking closely at the below chart showing clearly what happens when FED does cut rates.
As you can see each time FED raised rates significantly and followed up with heavy cuts, risk on assets, in this case SP500 did not react well, as most experts will try to make you believe FED cutting rates is a good thing. FED cuts rates when things go from bad to worse and thats what happened in 2001, 2007, and 2020. Add to that the fact that the above SP500 multi year chart looks very much like most meme coins, does not give me much confidence we will see high returns similar to the period from 2010 to 2021 anytime soon.
The Good, the Bad, and the Ugly
I wish Clint could challenge Gary to a duel and teach him a lesson, but it is not all so bad as “ugly” Gary is giving all of us yet another chance to scoop up some cheap crypto very soon (no not yet, be patient). I’ve been writing before, that there is no rush in buying altcoins as bear markets are there for a good reason, to let bad projects die out and those that actually have strong fundamentals will come out on top. Last year was the time to research and 2023 is not any different, as regulators continue to try and “catch up” with crypto trends, I feel still figuring out how to do it, while they seem to be doing a good job of messing it up at least in Canada and US. Let’s hope the rest of the world is smarter and will not follow suit, but keep this in mind for now that while crypto is clearly under higher scrutiny, some would say even a coordinated attack, the safest bet is to just stack up Bitcoin.
As you can see TOTAL3 chart, so crypto market cap without BTC and ETH, even with the push in early 2023 failed to get to tops from Summer 2022 and is heading fast to make new lows (I am fairly sure not what your daily crypto YouTube feed was telling will happen earlier this year when all hailed new bull run happening), keeping in line with prevailing downtrend even though it has been clearly weakening, don’t expect high returns from your investment until at least late 2024.
Bitcoin as always is more resilient during bear markets than altcoins and is finally set to regain its dominance of the market as BTC.D is closing in on 50%. Depending on how the stock market reacts to the busy week ahead and the outcome of SEC vs XRP three years court battle on which you can read more below.
https://cointelegraph.com/news/ripple-sec-case-outcome
One of my favorite charts to look for medium-term projections is the above weekly Haiken Ashi, which you might have seen in my previous newsletters. Once the consolidation zone is identified and steady for few weeks, it rarely fails to break out to whichever the prevailing trend is. In our case it is still a downtrend and the minimum range for BTC price to fall to is 22.5k with a possible scenario of reaching as far down as 17-19.5k. Keep in mind for that to happen mentioned earlier macro situation would have to unwind or regulators fight against crypto in US and Canada to gain further momentum.
As my time is limited I had to keep this newsletter short, but I should be returning to more regular writing in the coming weeks. Please remember to share and subscribe if you have not done so yet.
Always excited to see a new post. :)
Thank you!
Thank you Gigi, appreciate your time and expertise.
Hope youre still making time for the band 😻