The air is getting thin for the Bitcoin bulls
1) For the second consecutive month, the lower-than-expected U.S. inflation data had only a minor impact on the price of Bitcoin.
2) While we saw rallies of +3.4% and +7.2% on the day of the CPI data release in December 2022 and January 2023, the last two data releases saw only returns of -0.7% and +0.8%, respectively. Nada.
3) Based on the relationship with tech stocks (Nasdaq), Bitcoin should now have been above $30,000, and the fact that this is not the case should caution any short-term traders.
4) This decoupling could start a more significant divergence between the two.
5) Many equity investors have expected that a U.S. recession was imminent, only to be disappointed as tech stocks continue to rally. Those shorts need to be covered. Unfortunately, Bitcoin does not have large outstanding shorts that could be squeezed - hence the potential divergence between Nasdaq and Bitcoin.
6) Our own Greed & Fear index for Bitcoin is trading at 37% - a little bit in no-man’s land, and we may have to wait for lower Bitcoin prices to call a tactical trading low.
7) It is a good time to wait and be cautious. Our suggestion: Pick up a book and spend the time reading; we don’t need to trade the markets daily.
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