Making an attempt

I don’t know what to think about the current market. On the one hand, Bitcoin is coming out of the bottom of the range, which is good for momentum. On the other hand, the macro landscape looks like shit. So what to do?

First there was inflation. Then the war. And after that, a cycle of quantitative tightening began.

What did the stock market do with all this?

It returned to its previous values …

Stock Market Drawdowns: Comparison of S&P Trajectories14.

Which means one of the three:

we do not have enough something important that would justify that very high stock prices deserve to go even higher;

the Fed has everything under control, nothing to worry about;

the market is fucking complacent.

The Fed is certainly not controls the situation. If you want to summarize this in one chart then just look at the returns -year bonds compared to inflation. It’s not what it’s like to be in control. The Fed messed up and didn’t foresee inflation coming. Now she’s just playing catch-up.

-Year US Treasury Bonds vs. Inflation

Actually, in my opinion, the current situation is a combination of two things.

Of course, investors are calm. The Great Recession lasted years . I bet that many of those who now invest in the stock market were not investors then.

All they knew was that the Fed would support them if something will go wrong. And they might be right were it not for the relevance of the current configuration (high debt, very low rates, very loose monetary regime) for quite a long period of time. So it’s hard to say what’s going to happen.

But where the hell are you going to keep your cash if not in the stock market?

Keeping money just so irrelevant in the current inflation. The bond market pays negative interest rates. Gold is no longer in fashion. And with rising mortgage rates, real estate could become a more difficult game.

This means that risky and digital assets remain. And because many investors do both at the same time, eventually bitcoin continues to be positively correlated with the stock market.

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Bitcoin Correlations

Bitcoin is now exiting the bottom of the range. This is still far from the all-time high, but if you are optimistic, then the pattern more or less corresponds to the recovery mode from long drawdowns.

Is this supported by some on-chain trend?

Only by addresses that control less than BTC. They are the only ones showing a clear trend. Addresses controlling from to 1k BTC, largely flat. And the whales distribute the coins.

So there is no wide on-chain support. The participation rate is growing. However, in general, all this does not look very convincing.

Meanwhile, on-chain data simply tells about the background against which events unfold. In the short term, price formation is determined by what happens on the exchanges, and depends more on derivatives markets than anything else.

So maybe you just like me, confused by the current situation. Should you bet? Or is it better to do nothing until everything is clear?

I think it depends on your particular situation.

If If you have been accumulating coins for some time, and the share of the additionally acquired position is small as a percentage of the total portfolio, then doing nothing is not so bad. You already have exposure. You might want to keep some spare cash ready to take a position if we ever see a crash in the market. Entry right at the moment of rising momentum is ideal for low risk profits. And to implement this, you could also use the old reliable trend-following!

Historically, trading momentum has been a no-brainer. Losses are usually small while potential gains can be huge.

So even if the days are -Bitcoin’s one-step increase in quotes is probably over, it’s worth a try. After all, this strategy still works well on assets like Apple.

And it just so happens that we have that opportunity right now. Look at 200 – daily moving average.

At the time of this review (I am writing these lines on Monday, March, in the morning Hong Kong time) bitcoin may have already exceeded its – daily moving average. If so, it’s time to go long and ride the wave.

If this is the start of a parabolic move, then you’re pretty much guaranteed some profit. Otherwise, you will close the position the next time BTC crosses the moving average from top to bottom, and this usually does not result in very large losses.

You can also decide to bet to ETH instead of BTC as these two assets move in sync. However, Ethereum has the potential to move faster, which it has already demonstrated in the current cycle.

Should you use the intersection case 03-day moving average to go long anyway? I would say yes.

Sometimes trying to play too smart gets in the way of making money.

If you systematically apply strategies that give positive expected return, just ignore everything else and bet on the most likely outcome.

You decide.

BitNews disclaim responsibility for any investment advice that may be contained in this article. All judgments expressed express exclusively the personal opinions of the author and the respondents. Any actions related to investments and trading in the crypto markets are associated with the risk of losing the invested funds. Based on the data provided, you make investment decisions carefully, responsibly and at your own peril and risk.

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