Abstraction Capital’s Market Updates provide insights into the crypto market and strategy performance. Please enjoy Market Update #9.
Cyclical High Timeframe Analysis
Will wait until further clarity on BTC before doing a cyclical high timeframe analysis
Technical Analysis
Although I remain bullish on Bitcoin on a 12+ month time horizon, I believe we could have a sustained pullback in the short term. The weekly Bollinger bands have tightened, indicating we are more likely to see an expansionary move than continued chop. Because price has been consolidating below the midpoint, the likelihood of expansion out of this range to the downside is increased. Market structure is looking bearish as well, with a series of lower highs and lows. Next big support is at the $43k structure. All high time frame VWAPs lost. Would have to see 60k reclaimed at a minimum before considering putting on a discretionary position.
Recent News and Developments
There is major macro risk with Japan JPY as well as Geopolitical risk with Israel and Iran. To compound this, unemployment numbers came in above expected and Powell and the Fed are appearing to hold firm. Recession risk is firmly on the table.
In my opinion, the Democrats need a reason to stimulate so that they don’t look biased propping up the current administration heading into the election. The Fed put will remain alive and well, in my opinion, but could only come once some damage has been done. In this scenario, we will trade a lot higher from these levels end of year. Best to be patient and observe right now. Luckily, as discussed in the next section, we have some dry powder to play with.
Cross-Asset Momentum Strategy
Although catching a little chop the strategy has been safely positioned in cash since August 1st.
| Strategy | Bitcoin |
1 Week Performance | -6.40% | -22.4% |
Performance since Market Report #1 | -26.5% | -25.3% |