Are We Still In A Bull Cycle?
Bitcoin fell significantly due to the FED meeting and uncertainty around interest rate cuts. In this report, I discuss: - The BTC Lighthouse temperature - Inflation, interest rates, and money supply - Lack of demand
Welcome to the BTC Lighthouse report.
Bitcoin fell significantly due to the FED meeting and uncertainty around interest rate cuts.
In this report, I discuss:
- The BTC Lighthouse temperature
- Inflation, interest rates, and money supply
- Lack of demand
BTC Lighthouse Temperature
Bitcoin's price has fallen by 20% since its all-time high in April. The BTC Lighthouse temperature dropped sharply into the Neutral zone.
Bitcoin Performance
Despite its current crash, Bitcoin has outperformed the S&P 500 and NYFANG over five years.
Bitcoin's three-year performance is low because it was at its all-time high of $69k precisely three years ago.
Inflation, Interest Rates, And Money Supply
Inflation has reared its head up again.
The Fed has become dovish, and interest rate cut expectations have decreased. 46.7% of the market expects no rate cuts in the next six months.
Markets are reacting negatively to this news. The S&P 500 has dropped by 5% last month from its all-time high.
The rate of increase in the money supply has also come down (see the red arrow below). However, over a more extended period, the rate of money supply has shifted from decreasing to increasing (see the orange arrow below).
In the past, the price of Bitcoin has been highly correlated with the rate of increase in the money supply.
All these factors have caused the BTC Lighthouse Macro temperature to drop to 2.9.
Bitcoin, after a record-breaking seven-month run-up, reacted sharply to this news and dropped by 20%.
Lack Of Demand
Bitcoin ETFs
Bitcoin ETF flows, which have stagnated since mid-March, have decreased slightly over the week. The macro uncertainty is causing a lack of demand.
Whales
The increase in the number of Bitcoin whales has also paused.
Demand has clearly paused, and right now, it is a wait-and-watch period to see if it picks up again.
Conclusion
It's impossible to predict Bitcoin prices in the short term. Bitcoin has had 20% drawdowns in bull cycles many times.
The post below from Coinbase illustrates the number of drawdowns Bitcoin has seen in previous bull cycles.
We are still in a bull market, and the current drawdown is the consolidation of Bitcoin. However, the macro environment can play a spoiler in the short term.
Please give your comments and feedback on this report. See you in the next block.
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