Resending: Bitcoin: Multiple BUY Signals Activated, Don't Miss Out

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Resending this from earlier this week:

πŸ‘‡1-11) We have issued several timely (bullish) reports in the last few days. On May 18, we published β€˜A new trading alert for Bitcoin ETFs has been triggered,’ on May 20, we published β€˜Our Bitcoin Greed & Fear Index Turns Bullish.’ FOMO will be huge as many have stepped away from the market (here). Others are quietly moving billions into crypto, as our data shows below. In crypto, you need to be fast; this is why we run models to alert us when rockets launch.

πŸ‘‡2-11) We became increasingly constructive on Bitcoin last week and reiterated this view in our strategy subscribers’ webinar on May 16 (the replay link is at the bottom of this report, which we have made available for all subscribers). In it, we emphasized that the inflation risk that caused the bigger corrections in mid-March and mid-April had been removed from the market. This would set up the market for a breakout, ending the consolidation period.

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πŸ‘‡3-11) On Saturday, May 18, we also sent out a Trading Signal alert for the Bitcoin ETFs (here), which signaled that there were potentially +17% (median) or +20% (average) returns to be made over the next month.

πŸ‘‡4-11) This signal could fail, but Bitcoin is on the right path. We have set up a site (here) for crypto-equity-related signals as we have more signals around GBTC and MicroStrategy today (see below). We will update this website regularly, as many have asked to run crypto-related equities through our models.

πŸ‘‡5-11) The latest GBTC buy signal (as a representative of the Bitcoin Spot ETFs) is based on a price range breakout, which has had seven successful signals out of the last ten times it has been triggered (resulting in a 70% hit rate). Outside of the 2022 bear market, all signals have worked. The median and average historical returns are +18.5% and +14.1% over the next two weeks (according to the backtest).

πŸ‘‡6-11) We also have a new buy signal for MicroStrategy. Although the hit rate is lower at 60% and the return expectations might not be as attractive based on the risk/reward factors, the median return is still +12% (average return +15.9%) over two weeks based on historical signals. This signal is just another data point: the trading environment looks bullish again.

πŸ‘‡7-11) If Bitcoin stays > above 71,000 for another three days, a very important buy signal could be triggered, with expectations of another +9% rally during the next two weeks. This signal has a hit ratio of 80%. Ten out of the last twelve signals worked, indicating that Bitcoin could hit 80,000 (or near) by June. Bitcoin is still the better risk/reward trade, in our view.

πŸ‘‡8-11) FOMO will be high because positioning is not catching up quickly enough with the recent rally. Futures open interest is at $18.2bn while it was near $20bn when Bitcoin traded at 71,000 in late March and early April. This is because all the open interest is piling into ETH. Two months ago, when ETH also traded near 3,600, open interest was $9bn; now it's $10bn. This indicates that, at least, futures traders expect this ETH rally to continue.

πŸ‘‡9-11) Retail trading activity is nearly nonexistent, with volumes in Korea still being sub-$2bn. As a reminder, they were $3bn in mid-February but increased to $16bn when the Solana mem-coin hype was the topic de jour. But not all engines need to be on fire to lift crypto higher.

πŸ‘‡10-11) Inflows have quietly become stronger, with nearly $1bn of Bitcoin ETF buying during the last five trading ideas. Stablecoin inflows increased by $0.85bn, and futures leverage increased by $1.7bn for BTC and $3bn for ETH. Our money flow index increased roughly $4bn during the last week alone ($46.8bn). This could continue to increase FOMO.

πŸ‘‡11-11) Hence, this rally can continue as a potential Bitcoin breakout looms. The market structure has improved with inflows, and while many are missing out, this rally could create even more FOMO, forcing prices higher. The critical factor to understand is that, as we pointed out in our webinar, the risk of higher inflation negatively impacting Bitcoin was removed from the market last week. This might have brought back TradeFi investors.

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