The Weekly : 2021 #7

Bitcoin’s mission towards the moon continues

At $18.7k it appeared over-extended last November. Now above $57k it’s surely seeing a short-term blow-off top.

February 21, 2021 / 1 min read

Bitcoin’s mission towards the moon continues

Back in November we commented how bitcoin had ripped up to $18.7k, and at 55% above the 20-week EMA was seeing some overextension. With the price of bitcoin now over $58k and ~120% above the 20-week SMA at time of writing (who know what it’ll be tomorrow) the speed of it’s continued momentum has been spectacular, surprising even cryptos most bullish “investors”. For a bit of comparison, at the 2017/18 bitcoin peaked about 200% above the 20-week SMA.

Institutional interest has increased over recent months with MicroStrategy, Tesla adding significantly to their corporate treasuries. It’s also seen a significant spike on Google trends.

From a technical perspective it left historic levels and resistances a long time ago and sits in uncharted territory, very much in price discovery mode. Broadly speaking the crypto space is a mass of hype, agenda, click bait and misleading price predictions, but Ben Cowan provides something of an oasis in terms of insightful and un-hyped analysis. Highly recommend.

Regardless of whether you believer in 4-year cycles or lengthening cycles, this move is early by any standards so it seems unlikely we’re approaching a cycle-top, but clearly something of a short-term one. Where that top is though is anyone’s guess – could be hours, days or weeks. Given the velocity of the move sustaining it for further months looks unlikely.

With institutions involved for the first time many are claiming “this time is different”.

It seems unlikely.

Bond yields keep rising

U.S. government bond yields rose yet again last week in further evidence that investors are expecting the U.S economy to gather strength in coming months and consequently contemplate the possible risk of rising interest rates given inflation expectations sit at their highest levels in a decade.