Bitcoin; eventually the tide can turn, this cleansing had to happen!

We have been out on vacation for a week.  Back to reality!  Bitcoin has not been this far below the 200 day moving average for much time.  Only 3% of it’s lifetime has Bitcoin been this oversold before. Prices on this chart below show Bitcoin below the meyer multiple and the realized price which has only happened 5 times in Bitcoin history.  Therefore, price levels in this area are historic.  Here is the chart below:

 

 

Does that mean now is the time to buy?  Perhaps it does, yes!  Dollar cost average on a long term basis and don’t sell.  That way if it drops to $17K or $14K, you can buy that dip and average in the buy price long term.  The next halving is 1rst Qtr 2024.  Then, it usually takes 18 to 24 months for the market top.  By mid to late 2025, there will be another market top.  Perhaps early 2026.  Buying at these low levels ensures the optimal return in 3.5 years or so.  In 7.5 to 8 years, the return will be life changing!  So stay patient, ignore the noise!

 

The Celsius Network, Luna, and Terra are all either crashed and insolvent, or in serious trouble but might survive (Celsius).  Blockfi is getting into trouble with liquidity as well.  These companies that rehypothecate your Bitcoin in exchange for high returns, they are risky.  Yes the returns are great, 10% up to 18%.  However, many have shut down and refused withdrawals in the past.  Celcius and Blockfi are two of the largest.  There is always a shedding of weaker alt coins during bear markets, and we expect this later on.  For now, it appears to be the stablecoins (Terra) and networks that loan against and rehypothecate Bitcoin that are in trouble.  They lose so much liquidity, that they cannot stay solvent through a down turn.  This is why we have always and will always advocate for dollar cost averaging into Bitcoin, and keeping it OFF of exchanges!  Store it on a cold storage wallet like Trezor, or Cold Card.  Unchained Capital for 401K’s, and IRA’s in Bitcoin.  Then, your coins are never at risk.  Unchained let’s you keep the keys.  Not your keys, not your coins.  Neutral ATM does not borrow against our Bitcoin either.  We never will.  We only store it offline and HODL.  We buy dips as we have these last three weeks.  We will buy more dips as this bear market progresses. 

 

How did the market turn like this?  The US Dollar also has liquidity issues.  $6 trillion in USD has been removed from circulation through quantitative tightening, raising rates.  Cost push inflation and demand pull inflation are hitting at the same time.  In addition, raw materials are tight and unavailable.  Stagflation is setting in now.  Europe wants a loose US Fed, yet as the Federal Fund Rate (FFR) increases, that causes money to flow from Europe, into the US equities, and bond markets.  Especially bond markets.  The higher the FFR goes, the more likely money will flow into the US.  It will hurt equities and real estate markets.  So the balance will become, how far can the Fed go, before they have to pivot.   This Fed pivot, whenever it does happen, will signal the reversal time period for Bitcoin, to find a bottom, and move up.  Until then, the potential still exists for Bitcoin to dump again.  This joke below shows how the government bonds, and banking system manipulate the monetary system.  The Fed is private, we have to remember that.  They are not part of the government:
 

 

Stagflation is recession in equities, real estate, inflation, and high unemployment at the same time.  It’s what happened in the 70’s and it has already begun and will only worsen from here.  Below is a chart on how long it takes for one to lose all of their money to inflation, at different real inflation rates:

 

 

With real inflation closing in on 17% to over 20%, depending on where you live.  New York and California have the highest inflation.  It could be 5 to 8 years of this, then everyone retiring in 2021-2022, will be broke!  This is a very serious problem, and the Fed has little to fight this inflation with.  Remember, in the late 70’s, and early 80’s, Paul Volker the Fed Chairman under Ronald Reagan.  He only had a few hundred billion in Federal debt.  Now, it is $31 trillion.  Just based on that difference alone, the Fed cannot raise rates above CPI inflation of 8.6%.  The debt service would exceed GDP if the Federal Funds Rate (FFR) reached 9% or so.  There is no way for FFR to get that high without completely gutting Equities and Real Estate.  Therefore, expectations are for negative interest rates in 2024.  See this chart below:

 

 

That remains a question mark until we get closer to that time.  We have seen Fed pivots countless times.  We expect another one at some point in 2022!  It may be the fall, but eventually.  We expect a Fed pivot!  This is unsustainable long term.  Until then, we expect Bitcoin to be in a bear market.  Also, unsustainable longterm.  The US and global economies, including fiat currencies, are heading in a downward trajectory.  This pulls down Bitcoin.  Yet, since March 2020, Bitcoin has still outperformed major assets as this depicts:

• Gold    -8%
• SPX      +14%
• Bitcoin +250%

 

Alex Gladstein agrees with us in this tweet:

Bitcoin seems to react to monetary inflation. Which was historic between March 2020 and November 2021, when it went up 17x vs USD. Ever since the Fed signaled (and executed on) tighter conditions, it has declined. Would expect it to rise again when the Fed pivots.

 

Unfortunately, we do not expect a Fed pivot just yet.  Here is where Bitcoin could be heading, according to Steve Courtney.  In our opinion he is the best chart analyst, regarding Bitcoin.  The chart below, shows a 6 month bearish engulfing candle.  A 6 month candle will give us a trend reversal.  See the chart below:
 

Then, we can see the golden zone (yellow squares) whereby Bitcoin reaches cycle bottoms.  We are in the golden zone now, but where is the bottom.  Notice the green line droping below the yellow line (RSI), in the lower chart:

 

 

Here is a close up of it.  This signals we are very, very close to the bottom.  Even if Bitcoin drops to $15K.  If you bought at $19K like we did two weeks ago, do it again now.  Then buy again when and if Bitcoin dips to $15K.  Either way, buy this dip!  It is an opportunity!  Here is the RSI close up chart:

 

 

Bitcoin will not stay down here that much longer.  By early July, we will have a better indication of time frames for this bottom.  It could still go a little lower.  We are buying in smaller quantities as we await this solid bottom signal to flash.  It has not happened yet.  Still buying the dip and waiting!  We are not financial advisors and this is not financial advise.  Whenever the Fed makes their pivot.  Neutral ATM will be ready with our stack of Bitcoin, in cold storage!  

 

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

 

Give Neutral ATM a try.  We have low rates, convenient locations and we are expanding. Contact Neutral ATM, we will answer all your questions about Bitcoin and using our ATM machines. Find a Neutral ATM Bitcoin machine location near you.