Market Update - February 21, 2023
Market Update - February 21, 2023
Bitcoin’s price is kissing the fabled 200-week moving average, arguably the most important price level in its history. What will happen next? Big zoom or big crash?
(Altcoins will go whichever way bitcoin goes.)
Today’s update looks beyond that. As a continuation of the February 15, 2023 update, we’ll look at these topics:
A brief summary of the situation
Why you win either way
Metrics, continued
Altcoin Strategery, I mean, “strategy”
Scroll down for a TL;DW summary or watch the video below. I strongly advise watching the full update for nuance, perspective, background, and the best results, but I realize you may not have much time to spare.
To speed up the video (shorten the playing time), tap the circled gear button at the bottom-right corner of the video:
TL;DW
As of today’s update, my plan says to buy bitcoin when its price is below $15,900.
Don’t be surprised if we see bitcoin’s price drop to $14,000, a natural technical level, but if you wait for that to happen, you could be waiting forever.
I’ll alert you when it’s time to buy again. For now, set aside cash (or buy short-duration T-bills) and wait for the next buying opportunity. That may come soon or possibly not for a long time.
If you’re really antsy, buy crypto whenever bitcoin’s price goes below $19,300.
As bitcoin’s price goes up, the lines will follow. Bitcoin’s price will go back into the buying zone, possibly at prices the same as or lower than today.
A brief summary of the situation
Make sure you caught my most recent update.
You can work your way backward to see how the market has changed or take this summary:
Since May 2022, bitcoin has behaved the same as it did in 2011, 2015, and 2018-2019, previous market bottoms. Despite big negative events in crypto and the wider “macro” world during each of those previous bottoms, people did the same things with their bitcoins as they’re doing now.
Miners, exchanges, and institutions—all the major sources of bitcoin supply—seem reluctant to sell in size or in a way that shows up in any of the data I use. There’s selling but not that much relative to historical trends.
We don’t see much evidence of new money coming in large amounts, but what comes into the market tends to stay and accumulate to HODL wallets and active stackers.
We don’t see any signs that the market has enough fuel to sustain this upward momentum (yet).
Most skeptics already sold or never bought. To play the market, they can only take out short positions where they borrow bitcoin and hope the price goes down. Bitcoin’s price has reached key levels where traders should do just that (watch the video for the specific levels).
Throw in generational low prices, apathy among “retail,” low liquidity, and the lack of market-makers to absorb buying/selling pressure, we have all the conditions for a “short squeeze” that pushes bitcoin’s price much higher if bitcoin’s price goes much higher than $25,000.
Of course, we’re not there yet and might not get there for a while.
You may think that doesn’t make sense with macro/recession/China/war etc, but you have to accept that these are the conditions we’re in.
Imagine if bitcoin’s price goes to $50k by May and people say “Hong Kong’s open for business / Asian bid,” “Saudis/Russians breaking free of USD,” “finally the US is out of crypto so we can go mainstream,” “we’re closer to $69,000 than $20,000,” and other memes. People will get excited and buy into the narrative. Sentiment can change quickly.
Sometimes, the market goes zoom despite the gloom.
Why you win either way
There are still only two realistic scenarios:
Continue to trade in a range of $16-25k.
Big pump to $40-50k+ and crash back to today’s prices or a little higher.
If you’re following the plan, you win either way.
If the market keeps moving higher, the buying zone will rise to meet it. You’ll get that money into the market at today’s prices or a little higher.
If the market goes back down, bitcoin’s price will fall into the buying zone. We’ll get to buy more at a lower price.
(Note, if you don’t have any crypto, now’s the time to buy some. Yes, you’d feel terrible if the first scenario plays out, but it’s the risk you’ll have to make every day of the bull market. Drops of 30-50% are common during bull markets.)
In 2011, 2015, and 2019, the market went really high, really fast, then crashed to prices at or slightly higher than where they started.
Since everything leading up to this moment matches everything we saw during those times, why should we expect a different result?
Here’s what that would look like in today’s market, plus a scenario that represents something in between:
Watch from the 3-minute mark for more on all of this.
Metrics, continued
I won’t get too much into the charts and metrics in this update. We’ve looked at plenty in recent updates and I’ll have more over the next few weeks.
aSOPR, a barometer for sentiment, still shows healthy equilibrium despite the fluctuations in price. We’re right above the 1 as the market trends sideways, suggesting people who want to get in or out feel good about the prices they’re getting and the market’s not too hot or cold for its own good.
We also don’t see many traders getting zapped with short or long liquidations, those artificial pumps and dumps that freak people out but don’t change the trajectory of the market.
Combined with the drop in leverage and speculation we’ve seen recently, this means the movements of the market more closely reflect organic activity not the behaviors of traders.
We do see a leveling off in bitcoins on exchanges for the first time in a long time. That means bitcoins are staying in places where their HODLers intend to sell them. Let’s keep an eye on that.
Skip to the 11:26 minute for charts.
We’ll look at more charts and behaviors next time.
Altcoin Strategery, I mean, “strategy”
We still see altcoins pace bitcoin on my chart, which strips out ETH, SOL, and the big stablecoins.
As a result, I’ll keep buying altcoins every two weeks as I’ve done since last June. Small ones, mostly outside the top 100, because when the market is beat down like this, small ones give you more upside for the same amount of risk.
Here’s the list so far:
Watch from the 16-minute mark for more on that.
I have four more altcoins on my “to do” list and I expect to have another altcoin report soon. Some resources for you:
Top 100 Altcoins—Which Will Survive Through the Bull Market?
My Mirror Posts or any of the places I publish free content on altcoins.
Relax and enjoy the ride!