CryptRowe Forecast #18
"jk, lol, brb" - Bitcoin
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 edition of the bi-weekly CryptRowe newsletter! 🎉
Since we last met, Bitcoin’s price action ran up to $25k and has since retraced to about $21k. “Stairs up. Elevator down.” As they say
Is this a sign of further downside to come? Or is it a “bear trap” where we’re about to run up to $29k and beyond?
Let’s tune in and keep reading to find out 🙃.
Sincerely,
Matt Rowe
As a reminder, this email might cut off or not fit into most inboxes so be sure to click “read more” at the bottom or just click the title at the top of the email to be taken to the Newsletter webpage.
Table of Contents
TLDR;
Macro Lens
Zooming Out
Zooming In
Price Levels
“So… should I buy now or no?”
Matt’s Portfolio
Lol of the Day
1: TLDR;
Inflation predictions are kind of nonsense, and in addition to the leading Recession indicators we have, the housing market looks also not great. 🤦🏼♂️
Long Term Buyers: are still in a great opportunity to have historically positive (outsized) returns in 6 mo. to 1 year.
Short Term Traders: I’m still expecting further downside over the coming weeks. Invalidation would be sustained movement above $25k.
2: Macro Lens
I really wish I had good things to say here in this section. Le sigh. But here are are again 🙃. So the running *wah wah* list of Macro Economic headwinds against Digital Assets are (still):
We are most likely in or heading into a Recession. And since Bitcoin is a Risk-On asset (currently), those don’t do well, usually, during a Recession.
QT has begun (and is still slowly ramping up), which adversely affects Risk-On assets (again, of which BTC is currently).
The US got / confirmed two negative quarters of growth (GDP), which some folks use to define a Recession, and others are arguing is an inadequate definition. You can read more about a summary of this from last week’s newsletter here.
Ok, so “what else is bad Matt” 🙈 🤦🏼♂️. Well…
First, on Inflation. Basically, “We have no idea what it’s going to do.” This chart has been floating around in a few different places all last week.
This chart is meant to show that… the economists forecasting Inflation don’t seem to know how to do it any more than you or I, and honestly it seems they just draw a line from wherever inflation is down to 2%.
Which, honestly, I understand. Trying to measure or predict inflation seems really really complex with nuanced supply and demand inputs on all sides. So I get that it’s complex. But just… drawing a line down to 2% as your “analysis” seems ridiculous.
So, “our official inflation predictions are more ‘hopes’ than anything else” 🤦🏼♂️.
Second, and additionally, the housing market doesn’t seem… er… great.
So, (a) Inflation predictions are unhelpful and the path forward is unknown and (b) the housing market looks dubious. (Also, if you’re curious about the Chinese housing market potential unwind / difficulties read this.)
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. I am but Big Bird in a Macro Econ board meeting. Go to them for more 🙃.
Before I move on I wanted to update you on the “Ethereum Merge” drama that’s been happening. I have way too many thoughts on this for an investor email but basically (and a TLDR; of what you might care about)… I would be cautious investing big in anything ETH related right now. The volatility coming I think will, or could be, wild. Also… I would avoid “Staking” your ETH if you can right now. The switch over to “Proof of Stake” doesn’t have withdrawal code yet (can’t get your money back) and there’s a war brewing about what to do with the centralization of power (Staking Providers like Coinbase and Lido vs. OG insiders vs. the Ethereum Foundation vs. Retail folks) and governmental oversight (telling those staking providers to ban certain transactions). People are, understandably, angry and getting vitriolic on all sides.
So if you do decide to gamble and invest on the Merge, make sure you hedge somehow. Or, if you decide to stake… just know there is no way to get your money out currently, and that functionality is secondary to a larger war being waged in that space.
Ok, moving on, but for real this time.
3: Zooming Out
So, Macro Economics is still pointing towards more potential pain with Risk-On assets. And this doesn’t bode well for Bitcoin. But what about High Time Frame (HTF, zoomed-out) On-Chain data?
My Aggregate Bitcoin On-Chain indicator (below) combines about 14 On-Chain and Technical Analysis indicators.
So we are still in a very great long-term buying opportunity. And last time we re-did the outlook analysis and it’s still looking solid 180+ days out. The slight tick down is decently expected, but what we’ll wait to see is how sustained it will be.
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)
So for sustained run-ups, we need to usually see the chart flood with green. We don’t see that now. We see an attempt at that, and then we went back to desert land. It looks surprisingly similar to A (We are currently B).
Regarding the stacking of size-based cohorts:
This pattern still sticks in my brain. We don’t see a key cohort (1k_10k) stacking along with the small fishes. The last times this happened we saw further downside.
The stacking that IS happening across all cohorts, is … weak at best (light colors).
There are more metrics that we could talk about for shoter-term notes of interest but I’ll leave it here for now.
All of these combined tell me that, the odds seem skewed towards more downside in the short term.
5: Price Levels
So Macro is not great. But the long term buying opportunity is pretty amazing. But the short term is skewed / biased towards more downside.
What price levels should we be watching?
From a TA (Technical Analysis) perspective, not much has changed.
$29k or so for heavy resistance, and still $14k-16k for a “soft-ish” landing. Around $10k for a hard landing.
Here’s some updated (blockchain) On-Chain levels of note:
Given there’s some confluence for both TA + On-chain around $14k - $16k I would feel pretty good about targeting bids there. Breaks below that would feel like a temporary swan dive down.
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.
If you scale your DCA quantity by whether we are bearish or bullish, now is a great time to scale up the quantity (size or frequency) of your DCA since we are in such a bearish phase.
“I’m a long term 1-2 year investor.”
Yes, I would be and did buy some long-term holdings around $20k. I will also buy more if it goes lower. My target is $14k - $16k for unloading a large portion of my cash bags. Remember, if you’re a 1-2 year investor, “exact timing” or “exact price levels” is a nonsense game to play. Patience is power for the long term investor.
“I’m a short term investor / trader.”
I still am not buying here. Le sigh. I know it’s boring and annoying to wait for lower lows and “miss out” and the bullish impulses within a larger bear environment. I get it. And… I don’t see the kind of confluence I want in the shoter-term time frames above. That combined with recessionary vibes that still loom (and seem to be growing), I’m not comfortable advocating for shorter term plays right now for myself.
In all things, remember: keeping capital safe and secure in a bear market is top priority.
7: Matt’s Portfolio
My Long Term Portfolio is still 80% in USD and 20% in BTC (put it in Cold Storage).
Trading, I’m still in USD and waiting for lower lows to come. In general, I’m still looking for and waiting for bullish convergence of data and indicators to jump back in. Invalidation to me would be a rip above $25k or more with strength (but even then I’d need to see a lot of consistent strength - without would be skeptical).
Still not there yet.
Stay safe folks 🤝.
8: Lol of the Day
A lol just in case the economy or whatever else has you down.
I mean it’s a Dachshund in a reindeer costume eating a carrot. 😂 🥰
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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