Bitcoin; you’ll have to look Long Term to see it!

The realized profit/loss chart below shows a clear bottom, to the realized loss of holders that sold.  Those who have unrealized losses, won’t sell, because it would be at a loss.  Also, if they would sell, they already did.  So far, Bitcoin is holding on to $28,900 and creating support there.  Is this a good sign?  Time will tell.  Here is the realized profit/loss chart:

 

 

Ultimately, the global macro environment is so bad that we don’t see how Bitcoin does’nt re-visit $25K or below in the near term.  Let’s just stick to global macro.  That is what is wagging the dog anyway.  To see the upside in Bitcoin, we have to see across the bridge to the other side of this recession/depression the global economy is heading into.  This next chart is the S&P 500 first 95 days of any year.  2022 is second worse next to 1932:

 

 

We have been saying the global macro environment is 1930’s level bad.  This next chart shows us why.  The Wilshire 5000 market cap index is plungind hard.  Yet the Fed Funds Rate is below zero, and must increase substantially, into a recession, to leave it any room to cut rates.  The only way to get on the other side of this recession, is to eventually cut rates.  The recession and falling stocks are coming at us so fast now, that the Fed is running out of time to raise rates before they will have to cut rates again!  This is similar to a Japan stagflation scenario.  See the chart below:

 

 

In 2009 the FFR was over 5%.  It is 0.8% right now.  See the difference?

 

Here is another chart showing the situation.  This chart compares 1 year Treasury Bill Yields with the S&P 500:

 

 
The Fed simply will NOT be able to raise rates fast enough to keep up with this recession.  It is starting in May and June 2022.  The Fed and Neutral ATM as well, thought we had until the Fall.  At least until August.  No, the recession has already started!  It will get MUCH worse!

 

Now, in terms of standard deviations.  Bitcoin should be close to a bottom, while the Nasdaq has a long way to fall.  Harry Dent a respected economist, thinks Bitcoin could fall to $7K before reaching $1Million between 2030 and 2037.  We tend to believe that Bitcoin IS closer to a bottom, but not there yet.  Realistically, Bitcoin really could drop to $20K or $21K.  Maybe a wick or two below $18K, but not for very long.  Hard to predict how bad this is going to get before QE (quantitative easing) starts up again.  Here are some distribution charts comparing where Bitcoin is vs Nasdaq from a standard deviation standpoint:

 

 

 

One factor that we believe really helps Bitcoin in this recession is the DXY chart.  Here are two DXY charts below.  Remember, that is the US dollar index.  The first chart is zoomed out, the second is more zoomed in.  The DXY is showing weakness.  It is beginning to fall, a great sign for Bitcoin.  Pointing to a sign that Bitcoin is closer to a bottom:

 

 

So far Bitcoin is hanging in good above $28,900.  It is faring better than the Nasdaq and S&P so far.  If the DXY does fall further next week or the week after.  Bitcoin could rally.  However, as long as rate hikes stay on the table.  Bitcoin rally’s will be very limited.  Therefore, a change in direction from hawk to dove is required before we see any meaningful Bitcoin price relief!  According to this Bitcoin chart below, going back to early 2020.  Bitcoin is just accumulating at this bottom level.  We just don’t see the Harry Dent scenario playing out.  Although we respect his opinion.  Bitcoin is closer to a bottom.  We just don’t know where it is.  So, dollar cost average and keep a long time frame.  When the dovish Fed talk comes back, perhaps in the fall.  Bitcoin can go on a run.  See this chart below.  It gives us some hope.  

 

 

Nayib Bukele the President of El Salvador is always good for some hope as well, click here to view on twitter.

 

If some of these 44 nation states begin adopting Bitcoin as legal tender later in 2022.  That could fuel a full bull run this fall.  We can only hope, right?  We are not financial advisors and this is not financial advise.  Bitcoin is close to it’s bottom.  Watch the DXY chart, and buy the dips!  This cannot last forever.  The Sun will rise again!

 

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.