The Stock Market or Bitcoin?: Bitcoin and FED

Stock Market or Bitcoin

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Bitcoin tested the temperature below $33,000 but we have since re-contacted $38,000. Volatility could remain high after the Fed press conference on Wednesday.

Bitcoin: Weekly Summary

First of all, let us remember that blockchain is not a crystal ball. On-chain analysis is a more or less useful analysis tool, and it does not take into account the bulk of speculative transactions that take place on exchanges.

In his report, analyst @Checkmatey was slightly bearish, suggesting that the downtrend could extend:

“This is the biggest drop since the 2018-2020 bear market if you set aside the July 2021 low. A decline of this magnitude could change investor sentiment and market sentiment.”

He prefers to see the glass as half full and stress that this decline is, above all, a great buying opportunity. Never give in to FOMO (Fear of Missing out) and buy when prices are low, that’s the secret.

It should also be remembered that in the last 9 years95% of the rise in bitcoin has occurred in a 64-day window, that is, only 2% of the time. The best strategy is to wait, against all odds.

One of the interesting data in the report is that of withdrawals from the HTA. We can see that painful phases like the one we are experiencing are common. For example, BTC had fallen 83% in December 2018 and then 74% in March 2020, right at the start of the pandemic.

Report: Summary

– On-chain analysis shows that short-term holders (those who bought BTC less than 155 days ago) hold 18% of BTC and are all in the red.

– As for the long-term holders, who own 82% of the BTC, 78% of them are still in profit. Last week we were at 85%.

– The most indicative is that the amount of BTC that has not moved in more than a year has increased since October. More than 60% of the BTC was last transferred more than a year ago.

This last point is interesting. We are above the level reached during the covid crash of 2020, as well as during the bear markets of 2015/16 and 2018/2019.

In other words, more and more BTC finds its way into the hands of holders. This dynamic is more important than the reaction of short-term traders who seem to forget that it is risky to short the best asset in the history of mankind.

In total, 35% of BTC is in the red. We are at a maximum of 20 months. This is a threshold towards which we historically see bullish pullbacks, although we have seen worse:

To help you hang on despite this nasty volatility, keep in mind that, on average, dips last 89 days, and dips are 57%. However, the bullish streaks that follow average 362%.

The stock market or Bitcoin

Unsurprisingly, the Fed‘s monetary tightening is rocking Wall Street, which has so far been levitated by trillions created ex nihilo to buy government debt and real estate loans.

As a result, the Fed’s balance now stands at 38% of GDP. This figure is still small compared to the ECB (82%) or the Bank of Japan (134%). What had to happen, happened. Inflation is so high that the Fed plans to stop printing money from March.

In other words, there is no longer any reason for the stock bubble to keep swelling. Majors like Microsoft, Google, Apple, Nvidia and Tesla will hold out, but it’s already carnage for small-cap stocks, which are down more than 20% from their November highs. Some valuations have dropped 50-80%.

The NASDAQ is down 14% from the ATH. It’s not enough for the Fed to back down just yet. Especially since Jerome Powell was very clear in his last appearance before the US Congress:

“If things go as planned, we will end our asset purchases in March and start raising rates over the course of the year […] At some point, perhaps later in the year, we will start to reduce the size of our balance”.

So we probably shouldn’t expect any fuss this Wednesday. That said: you can’t take advantage of a ponzi.

According to the US Treasury website, US taxpayers paid about $562 billion in interest on the nation’s debt that was three times less. This relatively low total interest payment is made possible by low interest rates.

But the truth is that rates cannot go up without causing a biblical recession. The Fed can fake it for a while, but sooner or later it will be forced to back down.

Also, it doesn’t matter if rates go up to 1.50% or 2% when inflation is in double digits. Don’t let the Fed’s blunders distract you. Fiat currency is collapsing against the backdrop of energy shortages and those who don’t put their savings in a safe haven are going to be swept away.

Let’s finish by remembering that bitcoin is a long-term investment. No one has ever lost money over a period of more than three years. Yes, it is the sixth largest reduction in history. Yes, Bitcoin has temporarily melted by 50%. But it’s still up 900% in the last three years.