CryptRowe Forecast #13
Goblintown
The CryptRowe Newsletter provides Math, Stats, and Data insight around the current state of Bitcoin and other Digital Assets. Whether you’re new to Crypto, have some experience, or are a seasoned investor or institutional fund manager, this newsletter is for you.
Dear Reader,
I used to work as a Software Engineer, then Data Engineer, then IT / SaaS Product Manager. My job was to build and solve problems yes, but often… my job was to be “the skunk in the room.” The person who’s responsibility it is to say the hard but true thing that might ruin someone’s plans, but that ultimately will be helpful in the end. Honesty as a means of kindness, even if it means someone’s plans don’t get to be what they hoped for.
I feel similar about this Newsletter.
Now, I’m not always right. One of my gifts isn’t “being right”. One of my main gifts is actually “I’m rarely wrong in the same way twice.” My superpower is actually, “I’m amazing at making mistakes (when I am brave enough to let myself).”
So I don’t love that I’ve been calling bearish, potential crash, and to “play defense” for a while now. I don’t love that the price action for an asset class that I find fascinating and intriguing has and will probably end up with some folks losing enough that they:
leave the space.
write off Bitcoin and/or Crypto.
have a heavy bag of digital assets that are worth much less than they bought them for.
I don’t love those things.
And.
I love that I get to be in this space and at least help inform folks about what “the skunk in the room” might think. I get to help people protect capital that they can use for future problem solving, nourishment, and opportunity. And I get to help educate and empower people to learn and grow in this space.
We all need a canary in a coal mine. Maybe I’m yours 🙃 (or could be in this space).
Regardless, days and weeks like we’ve had are tough. Please take care of yourself. Please be kind. Please learn.
Please reach out if there’s anything I can do.
Sincerely, and with all the kindness I have,
Matt Rowe
Table of Contents
TLDR;
Macro Lens
Zooming Out
Zooming In
Price Levels
“So… should I buy now or no?”
Matt’s Portfolio
1: TLDR;
Recession vibes still looming, fr fr. (As the Zoomers will say 😏 😂.) Basically Macro Economic Environment still working against Bitcoin and Crypto.
Long Term Buyers (1-2 years) are still in a historically guaranteed positive return zone.
Short Term we should still be on defense and expect bearish drawdowns. Short Term price rises should be seen as bounces and not trend reversals until we see bullish confluence.
2: Macro Lens
Last Newsletter, we talked about the five headwinds moving against Bitcoin. A few of the more prominent / salient ones are:
Most likely in or heading into a Recession.
Bitcoin is a Risk-On asset (currently) and in a Recession, those don’t do well, usually.
Nothing much has changed here except “it’s starting to look / loom worse'“. 😬
I do want to add one Macro Econ note about why things are so bad this time around. If you listen to Lyn Alden or Macro Econ folks at all you’ll hear them say the “Debt to GDP ratio is crazy high” (paraphrasing). So the Debt of the US (public + private) is high relative to the GDP (country’s production measure). Why is this important?
Well… the GDP is needed and used to pay back the folks who hold the US debt. And if the debt compounds faster than the GDP available to pay them back… it might result in insolvency / inability to pay them back. Double 😬.
Again, I could have this wrong / be misunderstanding this (I’m just a simple Mathematician and Engineer). But I think / am pretty sure this is the situation.
So stay safe out there folks. Protect your capital / assets. Invest in things that have staying power. This might be the era of the Value Stocks and Commodities for a while at least ¯\_(ツ)_/¯.
As a reminder, I am not a Macro Economist and most of what I learn about / signal comes from Lyn Alden, Ecoinometrics, and Mr. Alf. They are smarter than me about Macro things. Go to them for more 🙃.
3: Zooming Out
So, Macro Economics still don’t bode well for Bitcoin. What about High Time Frame (HTF, zoomed-out) looks at On-Chain data?
Well, because the daily close was $26k (last night for me), the on-chain data takes a day or so to computer and calculate so I don’t have that data yet. However, we don’t really need it. We know we were low, and we just went lower. So we can still say a few things about where we are today.
So we were very low in a great long term value buy-zone, and we just went lower in price. So we are going to be even lower tomorrow and in an even greater value-zone.
If you’ve been following along with me on Twitter, I’ve been highlighting how going lower was more probable because of Long Term Holder behavior.
Last time we analyzed the odds of solid returns after 1 or 2 years and that still holds. We might even have better odds for different time horizons. We’ll know more next time for sure (and if something wildly drastic happens I will aim to send out an alert to inform).
So if you bought now, you could peek at your computer after a year or two and odds are still very good you’d be up / in profit (even better than they were last Newsletter I’d wager).
4: Zooming In
On a shorter-term horizon, I’ve been quite fond lately of this Binary Aggregate chart I built.
It combines some of the metrics I look at for confluence of momentum. Each of the metrics has a “above/below” signal that helps show whether it’s a good time to buy or not. I just put them all together.
It uses the:
Hodl Wave Crosses (24h-1m and 1m-3m)
Size Cohort’s Net Change (for 1k-10k BTC Holders).
While we recently had a green fakeout on two of the metrics (3d Heikin Ashi and 28 Day MRGO), we are still in the desert, like last Newsletter.
Not much has changed. Still a time to be defensive and in cash from a short term perspective.
5: Price Levels
So Macro is not great. But the long term buying opportunity is pretty amazing. But the short term is also not great.
What price levels should we be watching?
Here’s my TA chart (Technical Analysis).
Here’s my On-Chain chart (blockchain data).
Well in the TA chart we are resting on a slight (weak) support line in the middle of a zone with (relatively) no historical volume. 😬 $20,000 ish is the previous all-time high from 2018 and looks like it will have a decent chance of that being support.
In the On-Chain chart we see $22k/$23k is support and below that is $18,750.
Also FWIW we are on the support line for ETH if you adjust by M2 Money Supply (Which increase a LOT post 2020).
6: “So… should I buy now or no?”
“I DCA!”
Yes, I would be buying if I were you… one should always be buying on their DCA cadence 😂 😏 🙃 😊.
“I’m a long term 1-2 year investor.”
Yes, I would be buying here. I might buy here with some and keep some catch to wait and see in case it goes down further (with upside invalidation criteria defined and alerts ready). But really, if you’re a 1-2 year investor, “exact timing” is a nonsense game to play anyways. ¯\_(ツ)_/¯
“I’m a short term investor / trader.”
No. I would only buy slightly above support lines with tight stops to catch rips up and sell them. Until we have a confluence of bullish indicators telling us it’s safe / odds of an uptrend resume I would stay in cash and protect my capital.
And for some sprinkles on top from a great analyst TXMC:
7: Matt’s Portfolio
My Trading Portfolio (smaller subset of my overall long-term Bitcoin portfolio in Cold Storage) is currently still all in USD (and as a reminder, I moved my Altcoin strategy over to this.)
As annoying as it was to be patient, I’m so glad I did. I missed out a little trying to catch bullish bounces but it wasn’t really an issue.
Currently looking for and waiting for bullish convergence of data and indicators to jump back in.
Not there yet.
Stay safe folks 🤝.
Closing
And that’s it! As always, if you have questions, desires for clarification, or thoughts on how to improve this letter for yourself or others please reply and let me know or reach out on Twitter.
Also, if you are interested in any kinds of individual consulting services regarding your own Bitcoin or Crypto journey (getting started, trading, analytics, learning, advising, etc.), feel free to respond to this email or follow / reach out to me on Twitter, where I also post more nuanced / individual metric-specific charts there more often.
As always, this post is free and if you enjoyed it or learned something feel free to share it 😊 🎉.
Thank you for reading!
Sincerely,
Matt Rowe
Links and References
Data Provider: Glassnode (free on-chain charts, paid tiers available, I have T3).
My Twitter: @mattrowsboats (often provides on-chain analysis)
Crypto Learning Twitter Lists: On-Chain, Macro-Econ, and TA.
Disclaimer 1
Exercise caution, don’t lose it all. Please don’t trade on this newsletter assuming it is perfect information. Everything here is probabilistic and based off of past patterns, which may prove to be invalidated. Short time frames are subject to less accuracy as markets can change on a dime due to a variety of factors and events in the world. Use risk management as much as possible.
Disclaimer 2 (the all caps one)
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