Setup Sunday: The Hits Keep On Comin'

Summary

The video discusses the recent turmoil in the cryptocurrency market, attributing it to a combination of factors including Bitcoin supply sell-offs, lack of ETF support, and global economic uncertainties. It highlights the impact of rising volatility, tech and semiconductor downturns, and geopolitical tensions on market sentiment. The speaker also touches on potential strategies for navigating the market, including the possibility of a 'death cross' for Bitcoin and the role of central bank interventions in stabilizing the situation.

Takeaways

• 📉 The speaker initially defended their previous analysis of Bitcoin's technicals being positive but acknowledged that the situation did not pan out as expected due to various external factors.
• 💰 There was a significant sell-off in Bitcoin, with around 10 billion in Bitcoin supply moved or sold, without any help from ETFs, which the speaker had previously anticipated.
• 🌐 The speaker discussed the impact of global economic events, such as the interest rate differential between the Bank of Japan and the Fed, and the potential for further market pain if leverage isn't unwound.
• 📈 The speaker touched upon the unemployment data, which was weak and triggered a 'risk-off' mentality, contributing to the downward pressure on Bitcoin and other assets.
• 📊 The VIX volatility index spiked, which historically has had a negative correlation with Bitcoin, suggesting further potential declines in the cryptocurrency.
• 💥 The speaker highlighted the domino effect of leverage unwinding and changing beliefs about the world's economic dynamics, which are contributing to the current market turmoil.
• 🚀 Despite the negative sentiment, there is a mention of potential positive developments, such as a $2 billion purchase by an investor named 'Sailor,' which could provide some support to the market.
• 📉 The speaker discussed the potential for a 'death cross' in Bitcoin's chart, which is a bearish signal that could attract negative headlines and further selling pressure.
• 📊 The speaker provided a technical analysis of Bitcoin's chart, suggesting that the current trend is bearish and that any bullish reversal would require significant changes in market conditions or interventions.
• 💡 The speaker mentioned the importance of watching for potential bullish patterns such as a falling wedge or an inverted Head and Shoulders pattern in the future as signs of a potential reversal.
• 🛑 The speaker advised caution with leverage and any aggressive trading strategies due to the high volatility and uncertainty in the market.

Q & A

What was the initial sentiment in the cryptocurrency market a week ago?

A week ago, the sentiment in the cryptocurrency market was high, with technicals looking good based on the speaker's system, but this analysis did not pan out as expected.

What happened after Sunday that affected the Bitcoin market?

After Sunday, there was a movement or sale of around 10 billion in Bitcoin supply without any help from ETFs, which significantly impacted the Bitcoin market.

What is the relationship between the VIX volatility index and Bitcoin's performance?

When the VIX volatility index is up significantly, Bitcoin usually performs poorly, as indicated by historical data showing a correlation between high VIX levels and Bitcoin's downturns.

How did the unemployment data affect the market sentiment?

The unemployment data was weak, which triggered the 'Som rule' and brought about the potential for a recession, contributing to a worsening market sentiment.

What is the significance of the leveraged trade involving JPY and US equities?

The leveraged trade involving borrowing JPY to buy US equities is significant because it involves billions, and potentially trillions, of dollars. When there are changes in interest rate differentials or forced unwinding of these trades, it can cause substantial market disruptions.

What is a 'death cross' in the context of trading?

A 'death cross' in trading refers to a situation where a short-term moving average, such as the 50-day moving average, crosses below a long-term moving average, like the 200-day moving average, indicating a potential bearish trend.

What does the speaker suggest as a potential safe haven during market turmoil?

The speaker suggests that gold and bond ETFs like TLT, TMF, and AGG could serve as safe havens during market turmoil, as they have shown potential for growth despite the overall market downturn.

What is the potential impact of a central bank intervention on the cryptocurrency market?

A central bank intervention, such as liquidity reinjection into the ecosystem, could potentially stabilize or even boost the cryptocurrency market, as it did post-SVB with the BTFP (Bank Term Funding Program).

What is the current state of the altcoins according to the speaker?

The speaker indicates that altcoins have been in a downtrend for a long time, with the charts not signaling any buy opportunities, and they are currently experiencing a significant downturn.

What is the significance of the 'Golden Cross' in trading?

A 'Golden Cross' occurs when a short-term moving average crosses above a long-term moving average, signaling a potential bullish trend and is considered a positive sign for traders.

How does the speaker view the current situation with ETFs and Bitcoin?

The speaker expresses skepticism about the impact of ETFs on Bitcoin's price, noting that despite the introduction of ETFs, the market has not shown significant positive movement and may even face further unwinding pressures.