EVERYBODY WANTS TO KNOW - Our Latest Bitcoin Views

👇1-11) Traders expected that Bitcoin would move by +/-6% after the US CPI was released, and this is precisely how much Bitcoin rallied after inflation printed marginally below Wall Street expectations. Our model also predicted this marginally lower inflation number, and despite inflation likely remaining sticky for the following 1-2 prints, the data will materially improve by late summer.

👇2-11) This will remove Bitcoin's downside risk, the overhanging factor during the last two months. Although not every indicator or market structure is supportive, this inflation print has to be interpreted as supportive for risk assets. The ETF buyers in Q1 might not return as the funding rate remains too low, but a new set of wealth advisors might be ready to step in.

Our Indicator Shows When Inflation Could Be Higher or Lower

👇3-11) Since US inflation surprised higher than expected for a second consecutive month on March 10/12, Bitcoin has been in a consolidation period. Few have realized the importance of this data point as it also caused ETF inflows to dry up. This indicates that institutional investors see Bitcoin predominantly as a macro asset.

Will The BTC ETF Inflows Resume After the May 15 CPI data point?

👇4-11) We also predicted the drying up of ETF flows three days before they turned south. The 13F filings, which list multi-manager funds as the key buyers of these Bitcoin ETFs, confirm our theory that premium arbitrage-seeking hedge funds primarily drove ETF flows. Those funds rarely take directional bets.

👇5-11) On average, the Nasdaq has rallied +21% during the last three US presidential election years. While Bitcoin has massively outperformed during those years (+192%), the Nasdaq is leading and should also lift Bitcoin higher.

👇6-11) Our strategy to buy Bitcoin lower and have excellent risk/reward due to fantastic entry levels near 52,000/55,000 has failed to work. Although we have been bearish since the 68,300 ‘line-in-the-sand,’ and Bitcoin did fall to as low as 56,300 and miss the upper range of our 55,000 target by 3%, the downside momentum appears to have been averted.

👇7-11) It is important to note that Bitcoin only broke the 60,000 level because the Hong Kong ETFs were disappointing. Hence, we would need to find another black swan to push prices materially lower. Sure, the SEC might still vote down the ETH ETF, but Bitcoin probably couldn't care less. Demand for ETH purely depends on staking, which is likely insufficient to increase ETH prices. Hence, we remain bearish on ETH.

👇8-11) Interestingly, despite higher-than-expected inflation data, Fed Chair Powell (and team) prevented Bitcoin from falling deeper into the red. While PPI printed much higher than expected earlier this week, Powell quickly dismissed it and suffocated any thoughts about rate hikes. 

👇9-11) This monetary support ahead of the November election might be politically motivated, especially as Powell was joined by the well-respected Treasury Secretary Yellen, who reassured investors that the US economy is performing well. Fighting the Fed is tough, so prices will likely rally as Powell crushes any hawkish views.

👇10-11) As the US tech sector continues to report strong earnings as the AI (artificial intelligence) narrative promises to drive productivity growth, risk assets will likely continue to rally. There are still $6 trillion in US money market funds earning 5% annually while the Nasdaq is up +13% YtD. 

👇11-11) Only some things are bullish. Lack of VC funding is likely preventing a massive altcoin rally like in 2020/21. Nevertheless, there will be a few altcoin winners along with Bitcoin. The winning portfolio might be a core position in Bitcoin with some blended high-conviction altcoins around. Our bearish Ethereum view remains valid, but as we wrote two days ago, if you are bullish, buy Bitcoin, and if you are bearish, sell Ethereum.