@macroscope17Some quick notes on the BTC selloff and what to watch for next:
1. Ive said that in a gold bull market, BTC should vastly outperform it. The important caveat is that when risk assets get hit like last week, BTCs risk aspect will drive it more than its long-term inflation hedge. But its faster horse relationship to gold remains intact. And the price levels I said to watch in a tweet on February 19 are still operative. If BTC trades back up to those levels (essentially a new high) watch for a new period of huge outperformance over gold and other assets. The key word is if
its not a prediction.
2. Its important to understand institutional mentality. I posted this on November 10 after the election: There will likely be a very large bid under BTC on price retracements. This has been true for many months but I think it ramps up going forward. Many institutions are price-sensitive and sit out momentum moves, but they come alive on the bid when they get their price. Remember those 13F filings that showed large position increases and new buyers like a Middle East sovereign wealth fund? Those filings were as of December 31, so all that buying happened during October, November and December. Last weeks BTC dip took us back to mid-November price levels, where much of that 13F buying happened. Thats where many price-sensitive buyers come alive again. A sovereign wealth fund doesnt take a big position just to dump a couple months later for a loss or a small gain. Unless his investment thesis changes, Paul Tudor Jones doesnt make IBIT the largest stock/ETF position in his entire portfolio (which he did, according to the most recent 13F filing) only to bail soon after. These types of buyers live at certain levels and they like entry liquidity. Well find out more in the next round of 13F filings.
3. It will be important to keep an eye on DC. The frustration about a slow-moving strategic BTC reserve is understandable but misguided. Remember, Trumps executive order on January 23 established a 180-day deadline for the Working Group to submit a report on a national stockpile. That means late July at the latest (and it could happen before then). In coming months, traders will begin to anticipate that report.
4. Trump has always defined his presidency by how the stock market performs. BTC is now clearly part of that self-appraisal. If price weakness continues before the Working Group submits its report, expect BTC-supportive statements by Trump and possibly even a unilateral action or announcement. Traders (especially shorts) should understand that this could happen at any time.
5. The Lummis Bill proposes large-scale BTC buying by the United States. Ive said that if this bill (or a similar initiative) passes, BTC could surge deeply into the six figures or higher. But even if the Bill doesnt pass, does anyone really think the only nation to have started buying BTC recently is the one that was required to disclose it via a 13F?
6. Ultimately its crucial to remember what Ive said before about smart position-sizing. This cannot be emphasized enough and it applies to investors as well as traders. If someone got worried during this selloff, thats a sign that they need to reevaluate their position size. I posted this on November 10 after the election: Being conservative will become even more important to avoid getting blown out of a game that has now arguably changed in very important ways for the long-term. We weep for leveraged traders and momentum monkeys.
This is opinion only and not advice.
https://x.com/macroscope17/status/1895824176403128606
