Are Bitcoin prices predictable?
- Despite the recent volatility, Bitcoin prices are exactly where they should be – according to our CPI / FOMC road map that we laid out in early February.
- Based on the January Effect, Bitcoin prices could finish the year around 45,000 and while that price target appeared optimistic back then (prices were at 22k), it seems now quite achievable.
- We suggested using the predictable path as a roadmap and selling when prices are above this ‘fair value’ level or buying when below.
- So every time, we trade +10% above this level (as in 10 days ago) or -10% below this level. Hence we suggested selling at 30,350 and now our ideal level is to add around 25,000, but we might not drop so low.
- That’s why we suggested on Monday adding half a position at 27,500.
- As we still expect the higher path to 45,000 this year will continue, buying at “fair value” 27,000/27,500 could make sense - even if we prefer discounts.
- As the US 10yr bond yield has started to trade below 3.50%, we can assume that inflation will be a big tailwind for risk assets – notably Bitcoin. This has been our thesis since the 2023 Outlook report (published in December 2022) and why we expected a massive rally from 17,000.
- We also notice that the volatility index (VIX) has started to trade below 20 and this could set up the market (stocks and crypto) for a slow summer grind higher—never short a dull market. As Bitcoin is more sensitive to liquidity, we expected Bitcoin's outperformance over stocks.
- Right now, Bitcoin is neither over- nor under-valued, nor are our Greed & Fear indices signaling any extreme readings – ten days ago, we warned that those indices signaled exuberant sentiment. We were also trading far above (+12%) the “fair value” path.
- This year is about patience and discipline to stick to the data and analysis. The path to 45,000 continues...
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