Bitcoin hourly
A soft US ISM services report led to a round of US dollar selling and improving risk appetite in financial markets. That was the final nudge bitcoin needed to get above $69,000 for the first time ever.
The 2021 top briefly broke in a rise to $69,200 before a quick round of profit taking sent it back below $68,000. It’s not uncommon for traders to set sell orders at all-time highs or use that to take profits. We saw something earlier today in gold as it rose to an all-time high as well.
Bitcoin has been on an incredible run since October as excitement about an ETF launch fuelled an FOMO rally. There was a 20% dip after the release of the ETFs but that was picked up after about two weeks and it’s been one-way trading since, breaking the 2021 all-time high just after the Nasdaq did the same.
Back in 2021, ultra-low rates were fuelling bubbles in everything but this time it’s coming with Fed funds at 5.25-5.50% — the highest since 2000. Despite that, the sentiment is the same with meme stocks starting to take off and joke coins getting major bids.
The mindset of the market has simply changed with traders chasing one momentum trade to the next. Still, it’s not a surprise that gold and bitcoin have hit records on the same day. There is a large segment of the market waiting for the dollar to crack in order to pour into non-dollar assets and commodities.
The thinking is that high Fed rates will eventually slay inflation and hurt growth, leading to a round of rate cuts and a disinflation cycle. In addition, AI has triggered dreams of a forever-changed world and likely a disinflationary one. So rather than actual low rates as the trigger this cycle, it’s enough to have expectations of low rates in the future.
For bitcoin specifically, the halvening in late April is leading to a dip-buying mentality. That will reduce daily supply of bitcoin and put something of a squeeze on the market, though there’s also a high risk of a similar kind of ‘sell-the-fact’ trade like the launch of the ETF. However that will depend on where price is when April rolls around.