CryptRowe Forecast #14
Going, going, gone (foul ball tho)
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,
Hello and welcome to another week of the CryptRowe newsletter! 🎉
The price action on Bitcoin and other Digital Assets has been wild the last few weeks. Notedly, we’ve seen prices rise 30%-80% from lows.
But, how sustainable is this rally? Is the bottom in and are we up only? Let’s tune in to find out 🙃.
Sincerely,
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 still here and getting worse in le datas. Housing market looks potentially next on the chopping block. Macro Environment still a basket full of headwinds against Bitcoin and Digital Assets.
Long Term Buyers (6 mo. - 1 year) are still in a historically positive return zone.
Short Term Traders: I’m expecting further downside soon. Invalidation will be sustained rips up and new support levels being set. Short Term price rises should be seen as bounces and not trend reversals until we see bullish confluence.
2: Macro Lens
Last Newsletter, we highlighted our three biggest Macro headwinds against Digital Assets:
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.
Still nothing new, however I did want to highlight one other (not great for appreciating assets) chart of note.
A post from le chartmaster Jurrien Timmer of Fidelity:
Basically, “If we are indeed in a macro recessionary period, odds of the stock market (and thus the correlated Bitcoin and other risk-on digital assets) going lower is very high. Unless, of course, we see a strong resurgence bounce like post-Covid.” 😬
Additionally, talk of the Housing Market is all the rage on Crypto Twitter. It looks like there might be a potentially cooling off of demand with interest rates set to rise.
As a reminder, I am but a humble Mathematician and 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 doesn’t bode well for Bitcoin. What about High Time Frame (HTF, zoomed-out) looks at On-Chain data?
Here’s my Aggregate Bitcoin On-Chain indicator that combines about 14 On-Chain and Technical Analysis indicators.
So we are still in a very great long-term buying opportunity. The outlook analysis we performed a few newsletters ago still holds. Basically if you hold for 6 months to 1 year from now, historically we’ve never had negative returns.
Could this time be really different or even slightly different? Absolutely. We have a relatively small sample size (Bitcoin’s history of 12 years or so). And. It’s still great odds of outsized returns.
So, again, if you buy now or lower, and never look at the Bitcoin price again for 6 months to 1 year, the odds are really good you’ll be in profit.
One additional larger note, is that Long Term Holders (holders who have held for > 155 days), are in a zone where we traditionally see capitulation. (The black horizontal line is “breakeven”: no loss, no gain.)
We’ve seen that a little capitulation. We haven’t seen a lot. I would expect or bet on seeing more. ¯\_(ツ)_/¯
4: Zooming In
On a shorter-term horizon, here’s the 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)
Some green fakeouts on the 3d/ MRGO-28 but still quite desert-y.
Still a time to be defensive and in cash from a short term perspective, imo.
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).
So we bounced relatively hard on the previous ATH levels, but volume is currently very low, and as I said in a tweet recently, it’s hard for me to imagine that Bitcoin and Alts rally 30%-80% during a macro recession, but I could be wrong ¯\_(ツ)_/¯.
So, via the TA chart, $15k-16k seems like it would be a “soft” ish landing, and a crash down to $10k-13k would be definitely a hard landing.
For the on-chain chart, one upward price hope glimmer is that the lowest price level currently is Bitcoin’s balanced price at $17.7k or so (but a metric I haven’t added yet, CVDD is at around $14.4k for a bottom).
6: “So… should I buy now or no?”
“I Dollar Cost Average (DCA)!”
Yes, I would be buying if I were you… one should always be buying on their DCA cadence 😏😊. As a reminder, DCA is great for folks who value an asset’s long-term potential but don’t have the time nor expertise to try and time tops/bottoms.
“I’m a long term 1-2 year investor.”
Yes, I would be and did buy some long-term holdings here. I would also buy more if it goes lower. If the price goes higher, I still expect a retrace down so will wait to buy more lower again. Remember, if you’re a 1-2 year investor, “exact timing” is a nonsense game to play.
“I’m a short term investor / trader.”
I still am not buying here. I don’t see any confluence on the desert (binary aggregate) chart above. The recessionary vibes are still looming and feeling like they’re growing. And… alts are up 30%-80%. So… No. Will be watching for a Covid-esque rally to invalidate these thoughts. Keeping capital safe and secure in a bear market is top priority.
7: Matt’s Portfolio
My Long Term Portfolio is now 80% in USD. I bought some (20%) long-term BTC holdings and put it in Cold Storage.
Trading, I’m still in USD and waiting for lower lows to come. In general, still looking for and waiting for bullish convergence of data and indicators to jump back in., but would watch for invalidation like a rip above $23k or more with strength (but even then I’d be skeptical).
Still not there yet.
Stay safe folks 🤝.
Also, and as a long term reminder… this is the historic trajectory (and current drawdown) inverted and in context 😏 (It shows the # of Bitcoins per dollar ~ inverted from what we normally see.)
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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