US Stocks, Aussie Dollar, Silver all up - US/China trade war priced in - Can Bitcoin find a bottom as risk comes back?
Is Bitcoin a safehaven or a risk asset?
Ask a crypto-enthusiast and they'll tell you Bitcoin is a hedge against the global financial sector going to shit ... but do institutional investors see it that way? My view is that an investment in Bitcoin is incredibly risky (relatively speaking) and I imagine most institutional guys would see it the same. The fact is, BTCUSD's multi-year rally has been in the context of a multi-year mega rally in US stocks, and, the December -> Q1 correction coincided near perfectly with a correction in the SPX. I see very little empirical evidence or logic behind Bitcoin as a safehaven.
Silver and the Aussie Dollar
I'm currently long Silver, AUDUSD and the SPX and they are all doing quite well. Precious metals are funny as they tend to do well against the buck on risk appetite as a decent amount of supply comes from Australia. On the other hand, they can also benefit when investors flee to safety in times of crisis. Anyway, right now we are clearly looking at the former and the correlation between Silver and the Aussie is incredibly strong - take a look at this line chart comparison:
As you can see the two essentially move in unison. There are so many instances of tops and bottoms lining up on that chart (or the Aussie front running Silver) I can't actually highlight them all. I thought some of the #steemsilvergold crowd might be interested in this - we all like to think the coins/assets we are trading move on their own strengths and weakness, but market wide sentiment is often the biggest driver. Anyway I am looking for a substantial move up in the Aussie as per this next chart and I think that bodes extremely well for Silver over the next couple of months:
US Stocks
This SPX rally is nearing it's 10th birthday, it can't go on forever and Presdient Fuckface and Emperor Xi have sure murkied the waters, but I really don't think the party's over just yet. It's extremely important to not let your politico-economic biases cloud your trading judgement - your thoughts on the sustainability of fiat and the dangers of QE have ZERO - I repeat ZERO - bearing on market wide risk sentiment. Markets love QE. Markets love cheap money and if stocks do start going to shit, I'd bet my life on a wager the Fed starts up the presses again. They don't even need to do that right away, they have a bunch of rate cuts up their sleeve thanks to a very well handled tightening cycle from that old bird Fuckface canned.
As far as the charts go, I think the pain is now over in SPX and a bottom is in. I'm not sure if we'll get actual trend resumption immediately considering deterioating US/Sino relations, but I'm looking for a move back towards the highs at least. Having said that, EVERY correction in the past 10 years has led to massive continuation:
*Technically speaking, every correction ever has led to massive continuation - stocks, unlike currency, naturally trend higher
WTF does this have to do with Bitcoin?
Anyway, let's bring it all back home ... WTF does all this mean for Bitcoin? Well, as I said in the intro, I do not buy the safehaven argument one bit. Bitcoin has rallied with stocks and it has sold off with stocks. I'm seeing SPX, Silver and the Aussie (Risk) bottoming and I'm seeing Bitcoin bears looking pretty damn confused every time they get past defence:
I think the institutional guys are here already and more are coming. Soros is here and that's good enough for me. Spend 5m studying that guys track record (trading - not Alex Jones videos) and you'll see what I mean. The world probably isn't going down the shitter just yet and if it does the zombies will not accept Bitcoin. If I'm right and the big guns are going to continue throwing cheap money at risk and specifically Bitcoin, we could be looking at another awesome year in the crypto markets!
Time to leave your politico-economic pre-conceptions (misconceptions?) at the door and make some damn money. Think that's something we can all agree on.
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Great informative post and a good dash of humour too.
I think the argument about Bitcoin being safe haven is about there being no default risk and if we do have a big debt crisis and banks start falling over like they threatened to do in 2008 then Bitcoin will be "relatively" safe compared to holding money in one of those banks accounts.
Huge call you're making on the SPX having a bottom. I respect that, but I won't be convinced until we take out a new high. Then we might see some serious mania in stocks like we did Apr-Oct in 1987. That would flow into cryptos too so either way, a critical 6 months ahead whether its up or down I don't yet know.
Sure there's no counterparty risk and see why that's attractive, but the fact is the correlation to safety just isn't there - seems to be the exact opposite.
I've been well and truly FOMO trained on this one. Every time I thought it was done, it wasn't. Every time I thought it was a risky buy it was a perfect trade and the few times I shorted I got fucked or breakeven :)
Decent rip higher in the correlated markets today and VIX got knocked down. Hopefully it follows through and you can be proven right.
Also, if you want a long term safe haven there are only 2 I look at. Gold and Silver :)
Yep everything is looking mighty fine indeed :)
SPX bears trying to scuttle the rally here at the inverse neckline, but looks like it will break higher I reckon
This makes a lot of sense to me, been accumulating silver gold risky Junior miners.I really know that I will be proven right someday, but it would be nice to make some money for a change!{I did ok with crypto's}
Interesting, yeah metals and equities really aren't my speciality, but have heard that miners often outperform the metals they mine substantially.
I too feel that cryptocurrencies have some life left in them still, especially altcoins with better technology and use. It SUCKS though that Bitcoin has such a huge sway on the whole space.
Yeah totally, will be like that for a while I think, but will eventually be Yahoo.
SPX and NDX Rallying back to highs, may cause Bitcoin to bounce but it is setting up a crash pattern here and likely won’t bottom until down 80+% from the highs under 4K.
Bardurmp
I’ve been having this same debate with a mate lately. My opinion is that it should be some sort of safe haven, but in reality it’s just not trading that way. And as you know, opinions or what markets should be doing don’t matter. The only thing that matters is price and whether you’re on the right side of it. Don’t get caught out.
You can blog great content when you do. This is definitely worth the resteem upvote. Keep it up!
🔥.
^ this
Hello mate bulleth,
Looks like you have a good understanding of the finacial markets and how they all work together.
Hope you are correct about Bitcoin still going be around and this year will be a better BULLISH for Bitcoin. Now is a good time to buy more BITCOIN at a huge discount.
Comments?
Bit useless now after the fact, but I'd totally agree :)
Hi @bulleth
Excellent article. I subscribed to your blog.
I will be grateful if you subscribe to my blog @dreladred
Good luck to you!
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