Talk about market equity evaporating before us. Over 5 Trillion dollars has been erased form the markets since February 1st with around 2.5 Trillion being erased in the USA alone. Not only this, 24 billion has flowed out of the ETF market alone. The fear on the street is "It Ain't over Yet!", and yet the fake news that is constantly thrown across crypto sites is that many nations are concerned about bitcoin and its affect in the financial markets and are looking for tougher regulations. These so call analysts and news writers live in a house with now windows! The furthest thing on the minds of Countries right now is Bitcoin' period! We are in the midst of rising rates, rising inflation, an equity meltdown, a potential derivatives market collapse, and you really think that the central banks of the world are worried about the 400 billion dollar market? This could be no more evident in the lack of knowledge among several senators, during the Senate Banking Hearing with the CFTC and the SEC, of the space in general. They lack knowledge because it is the furthest thing from their minds with a budget bill needing passed, healthcare, immigration, terrorism, and to cap it off a derivatives meltdown on their plate. The crypto market is simply a side venue which several showed up for because they had to, or like Sen Warren, to grandstand for CNN'. There were several empty seats!
With carnage in the markets you would think that gold' would be bullish. Quite the opposite, it is down with equities. Now much of this is simply institutions that use gold for a hedge are now selling to cover their margin calls. However with all the wreckage in the markets smaller investors as well as larger investors are going to look for not only a safe haven, but for growth that can offset their losses, and a hedge vs inflation. So what will they buy now?
Bonds
Your kidding right?
Stocks
There is simply not a lot of VALUE in the stock market regardless of what you may hear. Simply you are paying a premium for growth like NVDA with a 55PE or Amazon at 219.
Gold
Sure you will see a rise in gold prices, but the world economy is still growing, and it is already trading at the top of its range. Now gold is an inflationary hedge, but many already own gold, so how much more can flow into this market? Most hold "digital gold" and a little physical.
Cryptos
I think money starts flowing into the crypto markets especially after the Senate Hearing this past Tuesday. Money managers are looking for growth right now and with a 400 billion dollar market cap, and the future being bright for block chain, there is plenty of room for growth here. Retail investors that are pulling their money out of the market as a whole, are concerned about inflation which reduces their purchasing power, and another round of QE, to settle the markets, would be a boost for deflationary currencies such as Bitcoin'. Who wants fiat deterioration?
Yesterday we posted that we were looking for a pullback from the 8398 level to around 7500 where we would look to buy. Well we did not quite get there and are trading around the 8275 level. So do I buy here? As we may still pull back and are trading close to the top of the channel, and the 8400 level, the risk to reward tells me to be patient. I do not mind buying a breakout which is 125-150 pts away, when there is an opportunity to buy 775pts lower at the 7550 level. I'll be patient here.
Could continued selling pressure in the equities markets cause another pullback? Sure but unlike the gold derivatives market which is very deep, any selling in the crypto space has likely been done to cover margins in the market.
Bottom Line: As the dust starts to settle the best opportunity for growth is in the crypto space right now. Your buying off the highs, near the lows, in a young market that has the potential to be a disruptor. Is this a risky market? Sure it is, but so is the derivatives market as we have seen this week.
With carnage in the markets you would think that gold' would be bullish. Quite the opposite, it is down with equities. Now much of this is simply institutions that use gold for a hedge are now selling to cover their margin calls. However with all the wreckage in the markets smaller investors as well as larger investors are going to look for not only a safe haven, but for growth that can offset their losses, and a hedge vs inflation. So what will they buy now?
Bonds
Your kidding right?
Stocks
There is simply not a lot of VALUE in the stock market regardless of what you may hear. Simply you are paying a premium for growth like NVDA with a 55PE or Amazon at 219.
Gold
Sure you will see a rise in gold prices, but the world economy is still growing, and it is already trading at the top of its range. Now gold is an inflationary hedge, but many already own gold, so how much more can flow into this market? Most hold "digital gold" and a little physical.
Cryptos
I think money starts flowing into the crypto markets especially after the Senate Hearing this past Tuesday. Money managers are looking for growth right now and with a 400 billion dollar market cap, and the future being bright for block chain, there is plenty of room for growth here. Retail investors that are pulling their money out of the market as a whole, are concerned about inflation which reduces their purchasing power, and another round of QE, to settle the markets, would be a boost for deflationary currencies such as Bitcoin'. Who wants fiat deterioration?
Yesterday we posted that we were looking for a pullback from the 8398 level to around 7500 where we would look to buy. Well we did not quite get there and are trading around the 8275 level. So do I buy here? As we may still pull back and are trading close to the top of the channel, and the 8400 level, the risk to reward tells me to be patient. I do not mind buying a breakout which is 125-150 pts away, when there is an opportunity to buy 775pts lower at the 7550 level. I'll be patient here.
Could continued selling pressure in the equities markets cause another pullback? Sure but unlike the gold derivatives market which is very deep, any selling in the crypto space has likely been done to cover margins in the market.
Bottom Line: As the dust starts to settle the best opportunity for growth is in the crypto space right now. Your buying off the highs, near the lows, in a young market that has the potential to be a disruptor. Is this a risky market? Sure it is, but so is the derivatives market as we have seen this week.
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Note the selloff in Bitcoin coincided just prior and during the meltdown.
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Gold and SVXY
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We have broken through the upper channel trend line and are simply testing it here. Closing above this level on the daily would be a good bullish signal. I have added breakout or breakdown levels which would signal either a bearish continuation or a bullish reversal. Very simple chart.
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On a shorter term basis we have broken through the 0.382 retracement of the most current correction from 13k. As long as we hold above the 7550 level (even if we get a very short spike to the 7250 level which is the 0.618 retracement of the overall short term bullish move) we should get a run at the 9850 level. I'm not adding here but this could set up nicely for a shorter term trade. A break of the 9850 level increases the probability that we are in the final 5th wave of the long term cycle. A break of the 14598 level confirms this and we get at least one more run at 20k.
