The reasoning wasn’t entirely apparent to me at the time but thanks to a bit of crowdsourcing it now is.
As bitcoin has been pulling back from the recent highs, over the last week or so the number 8,500 keeps coming up in chat groups and social media as a level that people would be looking to buy bitcoin.
Only after posting this observation on twitter did it become clear why. Several people pointed out the significance of this level. Though it seems like an arbitrary reason to me, the graph from the CME group shows a rather conspicuous gap (blue circle) that has yet to be filled.
Because the CME group is closed during the weekends, the surge that bitcoin experienced on Saturday, June 15th doesn’t show up on their chart. The tendency of most financial assets is to at some point cover these type of gaps.
Now, just because many people are looking to buy at that level doesn’t necessarily mean that it will go there, nor does it mean that if it gets that far it will turn around at that level. As we know, past performance is not an indication of future results.
In fact, it’s entirely possible that the market could turn around even today and if that ends up happening, there is a strong case for a new altseason to occur.
Today’s Highlights
- Fresh Highs
- Greenspan’s Insurance
- Crypto not Libra
Traditional Markets
Prime Minister Boris Johnson held the first meeting with his new cabinet today. As may have been expected, he’s completely reshuffled the ministries, putting several hard-line Brexiteers in key positions.
Pundits are quick to speculate that Johnson’s stance to leave at the end of October, deal or no-deal, could be just a bluff.
In order to get negotiations back on track, he does need to have a hard deadline and the EU needs to believe that he’s willing to pull the trigger. As we’ve learned from Trump, who Boris is often compared to, sometimes you need to actually pull the trigger in order to make them believe you’re capable.
Needless to say, the British Pound remains extremely volatile. Just look at all these wild swings and violent periods of consolidation over the last few days.
Stocks Climb Higher
The reason for the climb, as we know, is due to the central banks going soft on monetary policy. Today the European Central Bank will make their interest rate decision and though many analysts disagree on what they might do. Just about all believe that it will be dovish.
Just yesterday Alan Greenspan even came out in support of the Fed’s dovish tone.
If there was any confusion, let it be clear that I’m in no way related to the former Fed boss. In fact, our views on the coming cut are polar opposites.
Those of you who’ve been reading my updates know why this may be the worst monetary policy mistake since the great depression. If you haven’t been reading, feel free to check out this webcast we did at the start of the month explaining why.
For those of you who still care about earnings and profits, watch out for quarterly reports from both Amazon and Alphabet that will be announced after the closing bell along with dozens of other companies.
Crypto not Libra
The Libra hearings in the US Congress last week were extremely enlightening for a lot of reasons but I think one of the key takeaways for lawmakers was that Libra does not represent the entire crypto market and that it is only one project within a much broader industry.
Here we can see crypto advocate Meltem Demirors explaining the difference between Libra and Bitcoin for example. So, the next step it seems is for Congress to take a broader look at crypto, which they plan on doing next Tuesday.
We’re moving at a rapid pace now. Onwards and upwards!
Have a great day!
Mati Greenspan
Senior Market Analyst
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