Bitcoin’s 2 Month Consolidation

It was November 9th when Bitcoin last made an ATH at $69K.  Since then, it dumped to $42K eventually.  Now we see in these next three charts from Will Clemente that open interest is building up in Bitcoin!  However, are they long positions or short positions.  Nothing has been wiped out yet.  Leverage is high.  Whales will wipe out the open interest in one direction or the other.  We have no idea which direction Bitcoin will turn at the moment.  The longer it consolidates the more violent the liquidation of either leveraged long positions or leveraged short positions.  We just don’t know right now.  Fear and greed is low:

Therefore, market sentiment is very negative and a lot of people expect a dump to $42K or even into the $30’s!  It could easily go the exact opposite way!  Impossible to know right now.  Below are the three charts focusing on implied volatility.  One month, three month, and six month time frames per chart:

So in each of these charts, the orange, yellow or green line is the implied volatility and the grey line is the BTC price.  In each case, one month, three month, and six month implied volatility is dropping like a stone!  The longer the index, the lower implied volatility goes!  What does this mean.  Well, it means as leverage increases and volatility decreases, a big move is likely to happen.  When, nobody knows.  Which direction, at this time, nobody knows.  It’s 50/50.  We have to be honest about that.  Which is why we led this week with global macro analysis, which was also inconclusive.  To us, the fear and greed index of 23 gives us the best market sentiment indicator, which, often leads to a reversal.  We are buying the dip today, but only on a hunch and a commitment to Bitcoin as the answer.  We have absolutely no guidance on which direction Bitcoin is going right now.  Of course we hope it is up!  Below is the yearly candle for Bitcoin.  2021 was an up year, but disappointing all the same:

 

Below, is the stock to flow chart relating the last two bull runs.  The light blue line is the 2017 bull run.  The blue line is the 2020 bull run thorugh May 2020.  The red line is the same bull run since May 2020.  We had a long consolidation from May until October 2021, then another one from mid November to present.  Obviously, Bitcoin is crab crawling and going nowhere.  It’s like a stable coin.  However, everytime Bitcoin consolidates, historically, it ends in volatility either up or down.  On the chart below, notice the horizontal lines (light green is $100K, dark green is $288K): 

 

Will Bitcoin follow the stock to flow and eventually get in this $100K to $288K zone?  We have always believed that to be true.  When considering the global macro environment right now, the US and the world are in a no mand’s land.  Until the US Fed embarks on their new position, whatever that may be, Bitcoin may not make a material move up or down.  It may remain in this consolidation zone between $42K and $53K.  To us, that appears to be where we are right now.  Stuck!  Nobody wants this as a long term outcome.  However, the world waits with baited breath on how economies are going to react to Fed policies once they are in action.  Right now, all we have a projections and press releases.  Nothing has actually been enacted officially.  It is a waiting game at this point.  There is no end in sight to this waiting game.  So, sit on your hands, buy your Bitcoin dips.  There is still time for the bull run to continue!  Just not yet!
 

Neutral ATM is here to get everyone off of zero Bitcoin. 
 

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