I’m Not Buying Bitcoin At $80k. Here’s Why....

This video is for information and entertainment  only. It reflects my personal opinions and is   not financial advice. Check the description for  more information. Always do your own research. Hey   guys, what's up? Welcome back to the channel. I'm  Alessandro, and today we're looking at the bulls   versus the bears. We're going to make a case for  whether or not the bull right now is in the bears'   court or the bulls' court. Now, you might think  our bull market is completely back on. There is   no denying it. And to be honest, that actually  is my base case. But if you don't steelman the   other side, or you don't at least admit there is  an alternative story here that might drive prices   down, then you're not really doing a very good  job of analyzing risk. There's always risk. If   I just show you the Bitcoin chart a minute, this  sort of 60K level, this first wick down to 60K,   we never really had any open and closes on  a weekly time frame below that level. I was   always a bit nervous that we would because I was  always kind of like, "Look, if we close underneath   here on a weekly time frame, then this doesn't  look good from a price action perspective." Now,   I might buy Bitcoin because I genuinely think  the long-term thesis of it is strong, but this   doesn't look good. Any buy of this is probably  going to be underwater for another 9 months,   12 months maybe. Fortunately, we didn't. So,  this bullet was dodged, I guess. But look,   this right here is a high. This is  a high right here. And right now,   this is a lower high. I do think we break through  this level, but right now it's a lower high,   and that isn't ideal. What normally happens after  a low, like one of these lows here, like a macro   low, they're called, this would be a macro low,  this would be a macro low. After a macro low,   what normally happens with Bitcoin is it pulls  back about 20%, give or take. The median is   about 20%. These are all the times it's happened  throughout history: 2016, 2012, 2015, 2018, 2020,   etc., etc. The first pullback, they have been  getting less brutal over time, but not too   much less brutal. In 2022, the first pullback  was 18%. In 2021, the first pullback was 23%.   If we were to pull back that kind of level  from here, the median is 20%. So, let's just   put that on. That puts Bitcoin right back inside  this range that it was trading in for that 70,   90-day, maybe longer actually, basically almost  half a year period. If it trades back into that   area after blasting through like this and having  no support on the way down, that is not a good   look. Honestly, that does not show any strength  in the move, and you want to see strength in   the move. So, my point is, it isn't a straight  slam dunk that it's bull mode from here. You can   steelman the bear case, and we're going to have  a little look at what that looks like to them. All right. So, before we go through the bulls'  and the bears' case, I'm going to tell you about   today's sponsor, KHI. This is for US. KHI are the  only CFTC-regulated place to trade perpetuals in   the US. So, if you're in the US and you're trading  perpetuals, it's basically not really legal for   you to do it anywhere other than KHI right now.  If you're using a VPN or anything like that,   you don't need to do that anymore because KHI  now actually have CFTC-approved perpetuals,   and it's cheaper than anywhere else. This  is for a 100K position, which obviously is   a big position for smaller traders that are  trading 10K or less. KHI is incredibly cheap.   One basis point means 0.01%. So, for every $100,  it would cost you just 1 cent, or every $10,000,   it only costs you a dollar to trade on KHI. So,  KHI right now are cheaper than everywhere else,   cheaper than Hyperliquid, Binance, etc. Not only  are they cheaper, but cash that you have on the   platform earns the base rate, 3.25%. So, idle  cash that you've got on KHI that's either inside   a position or you just got sitting there waiting  on the order book or whatever is paying you 3.25%.   This is more money in your pocket. If you're  trading perpetuals, you might as well use it.   There's a link in the description. Massive thanks  to KHI for the sponsorship, wicked sponsorship. Back to the show. Bulls versus bears. As I said,  it's not that much of a slam dunk that Bitcoin   is just out of the woods here, and we're going  to be straight bull mode. These are the top 20   indicators you might suggest are whether it's  a bull market or a bear market. I'm going to go   through them, but it's going to be a bit boring  if I just go through every single one and lecture   you on it. I'm going to group a couple of them  together. But fundamentally, my point today is   that it's not a slam dunk. It isn't just "this  is blatantly a bull market, and there's nothing   that can deny that." That's a good thing because  once all the indicators are bullish, a lot of the   potential for upside is already gone. You kind  of have to place the risk before the trade is   completely obvious. Now, if you ask me what I'm  doing here, if I was unallocated to Bitcoin right   now, I would not be buying any Bitcoin. I would  be waiting for that first pullback. Who's to say   where that first pullback's going to come from?  I don't know. Is it going to come from here? As   I said, if it comes from here, that would be a  bit concerning. If it comes from 85K, 88K, then   actually a 20% pullback from there doesn't look  anywhere near as bad. It sort of pulls it back to   70ishK. That looks much more reasonable, much more  in the lines of bullish market structure. However,   I don't know where that first pullback's going to  come from. So, if I wasn't allocated right now,   I'd just be waiting. I might have to wait  2 weeks, 4 weeks, 8 weeks to actually get   allocated in that case. But I think I probably  would just be patient and wait it out in reality. Now, this is the case: bulls versus bears. Price  holding above the line that bull markets typically   hold. What does that mean? The bull market  support band is a combination of the 20-week   moving average and the 21-week exponential  moving average. It basically just says, "Look,   generally when Bitcoin's above it, it's a bull  market. When Bitcoin's below it, it's a bear   market." Pretty simple. It's a band based around  two moving averages that are relatively fast,   and it oscillates. Bull market when it's above,  bear market when it's below. Similar theme on   some of these other ones as well, but that's the  case for the bulls. The case for the bears is that   we're still underneath the 50-week moving average.  It's capping the rally here. That isn't what you   want to see. You want to see price action break  above the 50-week and hold it on a weekly time   frame. Until we see that, you really can argue  it's not officially a bull market. However,   in the bulls' court, price is above the 200-week  moving average, and it has held it. That's a very   strong case for the bulls. Traditionally, this  has been the ultimate low for Bitcoin. Yes,   during FTX and Luna, it came lower, but  arguably that might now, in hindsight, be   the exception rather than the rule. However, the  deep flush to the 100-month never came, and you   might argue that actually it's not the exception.  So, this is kind of the case for the bulls and the   bears. It's hard to say exactly definitively,  "This is a case for the bulls," or "This is   a case for the bears." We did hit that level  in 2022. You might argue it was a black swan.   It didn't happen in COVID, so maybe this  doesn't need to happen is the reality. Now, momentum measured in the RSI flipped back  to the bulls. When we've typically seen momentum   turn bullish, i.e., turn to the upside, it's  typically marked good periods of time to be long   Bitcoin. It's not surprising. There's only one  time in history where it flipped bullish, held   above it for 2 weeks, and then 6 months later was  down, and that was in 2022, in March of 2022. So,   typically when you see these flips, Bitcoin tends  to be in a good position 6 months later. One case   for the bears, though, stocks at record highs,  and Bitcoin is not with them. Bitcoin used to   trade very similar to the NASDAQ. It hasn't been.  Maybe this decorrelation is what we want to see.   If Bitcoin becomes decoupled from equities, that  might be a good thing in the long term. But for   now, I don't know if the S&P 500 came down 10%,  how would Bitcoin fare? Look at this. Today,   the S&P 500 came down on good job numbers. The  US released some labor statistics, and the US   made three times more jobs than the market was  expecting them to make. You'd imagine this is a   good thing, a good thing for the economy. Great.  No, no, no, no, no. The market said this isn't   a good thing. If we look at KHI, we can see  a rate hike in the last day. This is today.   This is when the job data came out, and then bang,  we got this lovely little flip for a Fed decision   in September. What does this mean? It means  Bitcoin completely followed. If we zoom in on   an hourly time frame for Bitcoin, guess when this  candle was? This candle came when the jobs data   was released. So, the US made more jobs than  it was anticipating. Because it made more jobs   than anticipated, Bitcoin sold off three and a  bit percent, exactly in line with equities. So,   this correlation to equities is definitely  dramatic, especially on the shorter-term time   frames when we see big news come out, and  it's following. I think you can absolutely   say a case for the bears is that stocks  are at record highs, and Bitcoin is not. Weekly bullish divergence, third time in 15 years.  This is a very strong case for the bulls. This   only happened at FTX and then once again in 2015.  This is a very strong case for the bulls. Hard   money went to gold. You could argue, "Yeah, maybe  last year was a very, very good year for gold,   very poor year for Bitcoin." But I personally  think Bitcoin's bottomed against gold here.   We will only see whether that's true over the  next one to two years, really. You could argue   the clock both ways. The October low, September,  now we're very, very close. You could argue that   we're not in October yet, so we should expect  the next 4 to 6 weeks to pull us back to that   sort of four-year cycle low. Or you could  say, "Look, we're basically 95% of the way   there. Close enough." I'm not sure. I don't think  you can say that's a bull case or a bear case.   Half the on-chain capitulation boxes are still  unticked. So, you could argue a strong case   for the bears because these are all on-chain  indicators that typically mark Bitcoin lows.   The price goes underneath the realized price.  That didn't happen. The realized price is the   average of all of the on-chain Bitcoin last time  it was moved. Price under the true market mean,   that was ticked. Price under the long-term  cost holder basis, this didn't happen. So,   there are three strong on-chain indicators that  were not hit. Again, it's up in the air. There's   a case for the bulls. There's a case for the  bears. It's three versus three. So, it's not   clear. This is the point I want to get across.  It is not clear that Bitcoin is out of the woods. Recent buyers are back in profit. You could argue  this is a case for the bulls. Average ETF buyers   are still underwater. The average cost basis  for the ETF, including the conversions of GBTC,   is 84K. You could argue maybe we chop around  in the 84K region for a long time. I really   do think this 84K level is actually my base  case for where we go from here. I do think we   go to this sort of 84K level, which is kind  of where I think there's a very good chance   that we go. This is the average cost basis of  the ETF. I think it's also roughly this kind   of level back through here that hasn't really  been tested yet. Whenever it does get tested,   you'd imagine that gets rejected to the downside  on that first pass. 84K, 84 to 85K, I think,   is where I want to see this rally kind of stall  out to know that there's enough leeway for the   first pullback to actually happen, and it to  be able to be pretty deep and pretty brutal and   pretty questionable as to whether the bull market  is still on or not. But it's enough. I do want to   see Bitcoin go a little bit higher here, and it  would concern me if we pulled back 20% from here,   as I went through at the start of the video.  Average ETF buyers underwater is a case for   the bears because that's overhead  resistance. They might just dump. We mentioned this before, but supply in  profit and loss. This is a level that's   always marked Bitcoin bottoms when  half the network is in a loss. So,   half the coins in the network were bought at  a higher price, i.e., half the coins in the   network are losing money for whoever bought  them. This typically marks lows for Bitcoin.   We hit that level, and we rebounded from  that level. So, a case for the bulls. This is liquidity generally. Fed net liquidity  has not been going up. It has been roughly   flat in the last two years. It's actually been  trending downwards. So, from a US perspective,   there's not been net new Fed liquidity. Yes, M2  has been going up, but M2 is just one metric.   You need to be looking at global how much  actual liquidity there is across the US, not   just in terms of M2. That hasn't been increasing  actually. So, net liquidity in the US hasn't been   increasing. However, we are seeing ETF money  flow back into Bitcoin. $3.4 billion over the   last four weeks is an enormous amount of inflows.  It's up there with some of the highest inflows,   notwithstanding the initial inflows that the  ETF had. A strong case for the bears that people   are often missing is that cash is paying a lot  right now. The reason the S&P 500 sold off like   this today, the reason Bitcoin sold off today, is  because of this chart right here. This chart right   here is the US 2-year yield. I'm just going to put  it in a line chart so it's really simple to see. The reason equity sold off today, Bitcoin sold  off today, was because of that jobs data that   I outlined. The reason the jobs data is important  is because of this chart right here. This is the   US 2-year yield. This is the cost for the US  government to borrow money from the market for   2 years. This white line is what it is, and  the green line is the Federal Reserve's Fed   funds rate, or the rate everyone talks about  when they say the Fed are hiking or the Fed   are cutting. You can see that the white line  basically leads the green line. People say,   "Oh, the Fed are in charge. Don't fight the  Fed," these kinds of things. But really,   it's the market that leads the Fed. The Fed  are not driving the car. The Fed are watching   where the market goes and trying to react to  it. If we go through history, look here, you   had the Fed dropping rates after the market had  already told them rates need to be lower. Here,   you had the market rising above the Fed funds  rate, the Fed funds rate following to meet it.   You only really see the Fed funds rate lead in  times of extreme economic crisis: the GFC, COVID,   etc. But even at those times, often the yield  foresees Fed intervention and it sells off anyway. The point is, right now, the 2-year yield, the  white line, is well above the Fed funds rate.   This doesn't happen for long periods of time too  frequently. This is why the market right now is   saying that any data that says the economy  is stronger than it was otherwise thought,   and inflation is higher than otherwise thought,  the Fed are going to have to raise rates because   inflation's already high. Inflation's been above  target for the last 65 months in a row. So,   inflation's already high. If inflation is high and  you get good economic data, it means the economy   is really strong. It means inflation is going to  go higher unless the Fed use one of their tools,   which is increasing interest rates to try and  make the economy not run so hot. Time will tell   whether that happens. KHI thinks it's a coin  flip right now for whether the Fed are going   to hike in September. Fed decision in September:  a hike is at 53%, and a no hike is at 48%. It's a   coin flip. I think this sort of thing going into  future meetings is what's going to happen. Kevin   Walsh has said he doesn't want to give forward  guidance. What does that mean? It means we're   going to have uncertainty going into meetings  because no forward guidance. So, this is to be   expected. But the pressure is on him right now  to raise rates because this line is well above,   the white line is well above the green line, and  typically the green line follows the white line.   So, cash is paying a lot, and cash might yet pay  some more. We might see yields go even higher. Money growth is accelerating. US M2, Chinese M2,  both those things are ripping to all-time highs.   Bitcoin doesn't tend to follow M2 that well,  though, but more liquidity generally is   better for Bitcoin. No clear side. Neither  side is crowded on the futures book. So,   you don't pay a lot to go long. You're not  getting paid to go short. It's pretty flat   at the moment. Pretty standard open interest,  pretty standard funding. The labor market has   not cracked. We were just speaking  about this. It's not really bullish,   not really bearish. It's kind of bullish because a  good labor market is a good thing for the economy.   It's kind of bearish because a good labor  market means pressure on the Fed to hike, and   markets aren't really liking that idea. My honest  opinion is that if we see a 25 basis point hike,   it is going to do close to nothing to most assets.  If we see a hiking cycle, if the Fed begin going   into a hiking cycle, which is very different  to raising interest rates by 25 basis points,   if we're going into a hiking cycle, if the Fed  rather than go from here, up 25 basis points to   here, they actually start going like this and they  go into a hiking cycle, that's a problem. If the   Fed hike once and then keep the Fed funds rate  here, that's going to have no impact basically   on most risk assets because borrowing costs are  already a bit higher than the Fed funds rate   anyway. In actual fact, if the Fed hike here, it  might pull down longer-term interest rates because   the market sees the Fed beginning to hike, and  it chills out a little bit and says, "Oh, okay,   fine. I haven't got to panic anymore." There's an  old adage in bonds: "When the Fed panic, you can   stop panicking." What does that mean? It means if  you're a bondholder, you're panicking. "Why aren't   the Fed doing anything? Why aren't they raising  rates?" You're selling your bonds. You want to get   out of those bonds. It's raising. It's pushing  yields up. The Fed hike rates. You go, "Oh, no   worries. I'm chill. The Fed are in charge again.  The Fed are hiking rates again. I can relax." Right, guys? That actually covers it. So, if  we're going through here, bulls versus bears,   it's not a slam dunk, is the point. I think  there's edge in understanding that. Why is   there edge in understanding that it's not a  slam dunk? Because when it is a slam dunk,   when you think pressing buy isn't scary,  there isn't some uncertainty, it becomes   consensus. That's when you definitely shouldn't  be doing it. If it's not slightly concerning,   a slight wall of worry to do anything when it  comes to investing, if it's completely consensus,   that's concerning. Consensus means everything has  already switched, and there's nothing else that   can switch to being positive, which means when bad  news happens, it's probably not going to be ideal.   So, if nothing else, just take it with you that  uncertainty is actually a good thing if you can   create some kind of certainty in your own mind  about the plan that you want to take on board   and execute when you've got one. So, that's  it, guys. Please, please do me a massive,   massive favor if you're in the US, only if  you're in the US. Check out the link with   KHI. Honestly, I really, really appreciate  it if you can do that. It's cheaper for you   anyway. It's basically one basis point to trade,  and they're paying 3.25% for cash that's held on   the platform. Again, just US users, no one  else. Thank you to KHI for sponsoring the   video. Thank you guys very much for watching,  and I shall see you in the next one. Ciao ciao.