Insider Newsletter 16: April 2023
Bitcoin prices have been running up in a steady channel since January of 2023, up 86% already. In early April, we hit the top of that channel, resulting in a breather and minor retracement. What’s incredible is across our AI indicators, technical indicators, on-chain data, and the macroeconomic picture, it appears a cohesive picture is coming together forming the setup of a significant bull run that may last through the end of 2025.
This may still go down as a time in history when Bitcoin was suppressed due to recession, war, hasty crypto regulation, and broader financial system turmoil.
Actions We’re Taking
At the risk of sounding like a broken record, we’re still dollar-cost-averaging in at these prices.
Here’s the same update from last month:
- Continuing to dollar-cost-average into BTC.
- Staying prepared to invest lump sums into BTC if the market takes another leg down.
- Keeping all funds off exchanges.
We bought continuously and aggressively during the second half of 2022, so we’re also ready to sit back and enjoy the ride-up if the market does go on a run. Our Market Index helped us invest while others were fearful.
If the market stagnates or drops, we’ll continue to buy more. In the meantime, we’re dollar-cost averaging into Bitcoin at a moderate pace.
Coming Soon! Can You Beat Our AI?
We’ll soon be releasing a prediction market feature on the Member Dashboard that will allow you to compete against our AI Predictions.
For each month you predict better, you’ll rack up a free month of the Insider membership.
This will be a fun game, give solid value back to you, and help improve our models with crowd-sourced feedback.
Crypto-ML Data
Our AI and analytics show the market may be flat over the next month, but that’s okay as it presents more time for us to DCA if true.
30-Day Price Prediction
Our 30-day price predictions have been targeting the $30K level, oscillating between values above and below. This is understandable as it is a major battleground both technically and psychologically.
Below is a graph of our AI predictions compared to the real-life results.
And as always, we publish our prediction history publicly to stay fully accountable.
As mentioned last month, we had a period of time during which the interest rate data was improperly reported by our data provider (section in red) but this has since been addressed. Predictions are largely back on track.
As we’ll show in the technical analysis section, Bitcoin has hit multiple overlapping levels of resistance. We may see some profit-taking before the run begins again in earnest.
The latest predictions show we’ll still be hovering just under $30K in late May. The most recent predictions have put late May between $27K to $29K.
Price Channels
As will be the story of this newsletter, there is resistance everywhere.
The Price Channels look at logarithmic regression channels. Even in that view, you see clear resistance that Bitcoin is hitting against.
The good news is that assuming this growth model holds into the future, Bitcoin is still in a strong buy zone.
As noted in the intro, this may go down in history as the time Bitcoin was suppressed due to recession, war, hasty crypto regulation, and broader financial system turmoil.
Market Index
The Market Index has definitively cooled off, meaning there is less greed in the market. This is based on price action as well as social & search sentiment.
This index continues to perform well and be very reliable, showing greed indicators before a cool-off like the one we’re experiencing now.
It’s a constant reminder to do the opposite of whatever the current hype cycle is.
As supported by other indicators, it’s likely we’ll dip down a bit more, offering more long-term buying opportunities before continuing back up to test the $30K level.
Commentary
The $30K price level is a huge battleground. Bitcoin is facing challenging news and economic pressure, yet holding strong. Prices may hover here for a while, but a convincing break above will be the onset of this rally’s next leg, which ultimately may take us to a new all-time high in 2025.
Crypto news
As was mentioned in last month’s Insider Newsletter, emerging regulation continues to dominate crypto headlines. The analysis in that newsletter stands, so it’s worth reading that newsletter for more detail.
Some unfolding events:
- Coinbase is pushing courts for regulatory clarity (decrypt.co).
- Binance backed out of its Voyager deal, citing US regulatory environment (cointelegraph.com).
- Outside of the US, there is mixed regulatory clarity and few safehavens for crypto (forbes.com).
While this unfolds, people and companies in the US and other countries will be less likely to invest, innovate, and build their careers in the crypto space. This limits both funding and the talent pool.
This is unfortunate and hopefully, we see a sensible regulatory framework emerge.
However, should a positive framework become available, we can expect greater investment and adoption. In other words, this is an avenue for market cap and prices to rise significantly in the future.
Technical and on-chain view
The most telling technical chart is this basic support & resistance line along with a channel of our recent bullish run.
The $30K level is full of congestion and major reversals. Combine that with the upward channel, and the current retracement seems reasonable and a natural point for some slowdown and profit-taking.
What would happen if that lower channel breaks?
Moving averages are another great way to see large-scale trends and pivotal reversal points. Here, we could see a channel bottom of around $22K if selling pressure continues.
Running Fibonacci lines from the 2020 crash through the 2021 peak, we see the same level appear again.
On-chain, we see whales are buying at this point. Bitcoin bought and still held by whale addresses (greater than 10,000 BTC) is represented by the blue circles. You can see heavy buying activity in recent weeks that is still held.
Similarly, you see large accounts (holding 1,000 to 10,000 BTC) are also buying and holding in recent weeks.
From a halving perspective, the story repeats. We see this pattern unfolding that has a major neckline ($30K) that we’re currently butting up against. We also see that breaking past this point has historically been the onset of each major bull run extending into the mid of the next halving phase.
That’s how significant our current position is.
While this pattern has only repeated a couple of times, we can use it to estimate the next Bitcoin all-time high will be around the $180K level and will occur in November of 2025.
Macroeconomic view
The 30-day price prediction AI weighs macroeconomic data points more heavily than anything else, namely interest rates and spreads. While the last year has seen incredible movement in rate hikes, the news and changes have stagnated. This may be why we’re seeing Bitcoin prices and the predictions hold relatively steady.
Similarly, the War in Ukraine appears to be in a war of attrition state that may last for years.
While all of this unfolds, we know less money is available to invest in Bitcoin or anything else:
- House and car loans are expensive, with mortgages hitting 7% and inflation at a 40-year high (bankrate.com, April 24).
- UK mortgage rates have 3x’d, which will shock adjustable-rate holders (bloomberg.com).
- Basic savings accounts and CDs are offering 5%+ interest rates, making the risk-free rate very attractive to investors (cnbc.com).
- Consumer debt has hit an all-time high with credit card interest rates going over 20%, which will have ripple effects across banks as consumers default (consumerfinance.gov, April 17).
The next FOMC (Federal Open Market Committee) meeting is on May 3. That will provide the status and direction on inflation and interest rates. In general, analysts believe we may see moderate hikes through the summer and then a reduction of rates toward the latter half of the year (finance.yahoo.com), which would coincide nicely with another Bitcoin run.
Putting It All Together
If you have conviction in Bitcoin’s long-term use case, it sure seems we’re at a pivotal point, ready to break out and enter the next major bull phase. Economics, history, technical analysis, and AI are all pointing in the same direction.
Steps to consider (same as last month):
- Move your crypto to your own non-custodial wallet at least while the industry dust settles.
- Minimize expenses.
- Determine a budget and diversified savings and investing plan. Bitcoin is a subset of this plan.
- Automate monthly Bitcoin investing so that you stick to your plan.
We are currently using Swan Bitcoin to automate regular purchases of Bitcoin and automate transferring it to our non-custodial wallets.
Learn more about Swan Bitcoin.
Questions and Comments
Do you have thoughts, comments, or criticisms of this analysis? Let us know in the comments below!