TIME TO GET BULLISH BITCOIN ?

[MongiIG]

TIME TO GET BULLISH BITCOIN

In recent weeks I have noticed that sentiment in cryptos is very one-sided and if I’m honest, they have a good right to be with Bitcoin down over 60% since its peak. However, as is often the case, sentiment follows the price. For example, you tend to hear someone say “Bitcoin looks ugly” when Bitcoin is trading at the lows (well, obviously), you rarely hear someone say Bitcoin looks weak when it is struggling at recent highs.

As such, after the sell-off we have seen in cryptos, we have seen a Short Bitcoin ETF launched AFTER a circa 60% drawdown, brilliant timing!. While in recent days, said Short Bitcoin ETF has seen exposure explode by 300%. What’s more, investors have reportedly begun taking their Bitcoin off exchanges and stowing them into crypto wallets.

June 21st – ProShares launches the first Short Bitcoin ETF

July 6th – Investors reportedly begin to take Bitcoin off exchanges

Source: ProShares, Cointelegraph

That said, as shown below, landmarks in Bitcoin have also marked turning points for the cryptocurrency. Not to forget that with the correlation between equities and cryptos only strengthing in the past year, the stock market plays an important role for Bitcoin. For me, while I still favour selling rallies in equities, I am more positive on risk sentiment in the next week or two, which of course can change quickly should next week’s CPI show another topside beat vs expectations. However, where sentiment lies with crypto is clear to me, thus given my less bearish view on stocks, I am siding with a short-squeeze in Bitcoin towards 28000. The view is wrong should we break below 17500.

Bitcoin Chart: Daily Time Frame

Source: Refinitiv

 

Jul 8, 2022 | DailyFX
Justin McQueen, Strategist