Be prepared to buy the Bitcoin dip
1) From a short-term trading perspective, we prefer to be long Bitcoin (BTC) above 28,000 and cautious below that level. As we laid out in last week’s flagship report, traders should be ready to buy the dip as markets could fall back to 25,500.
2) At the same time, markets could also immediately rally as the U.S. Treasury Secretary provides deposit guarantees. Quarter-end buying motivates fund managers to show their investors they are smartly positioned for a peak in U.S. inflation.
3) Our ‘MP Greed & Fear Index (G&F) has been losing momentum during the last 24 hours (now below 90%), and this is a slightly worrying sign as this indicator has previously signaled short-term tops (ahead of FTX and ahead of the Silicon Valley Bank implosion) as well as market bottoms in mid-November 2022 and also when SVB and Signature Bank deposits were guaranteed on March 10 2023).
4) Therefore, we have entered the area between two borders (28,000 on one side and 25,500 on the other). Either you want to be flat or sell options between those levels, as volatility will likely decline when the market might move sideways.
5) We also pointed out that 28,000 is a level of ‘resistance’ from where the ‘market is momentarily struggling.’ There is no coincidence that the market is hit with some well-anticipated news that a global crypto exchange is running into some regulatory issues.
6) Of note is that volume has normalized with Bitcoin trading only $18bn (BTC) during the last 24 hours, USDT $29bn (USDT), and Ethereum $10bn (ETH). The declining volume will mean declining volatility, leading to falling option prices -> sell options.
7) We certainly need to be laser-focused on BNB as the CFTC news could spill over into SEC news which could be more damaging as previous paths of regulations have shown. Also, with just a $1bn trading volume in BNB during the last 24h, there is little liquidity, and the BNB token has underperformed Bitcoin since the summer of 2022.
8) Hence, we can argue that even the Binance news is positive for Bitcoin (BTC) as another round of flight to quality is upon us.
9) This is not the time to be emotional. It is essential to understand what has been priced in (CFTC news) and what is not (U.S. CPI dropping to 3%) and therefore ‘be prepared to buy the (Bitcoin) dip.’
10) So see you back at either 28,000 or 25,500….. but our finger is on the buy trigger….
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