- Passionate Income
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- Crypto is Heating Up 👀
986 Words | 4 Min 11 Sec Read
Welcome to another issue of Passionate Income.
Today we’ll be discussing the recent Bitcoin run up, including why Bitcoin has exploded 20% over the last week.
We'll also be covering why crypto in general is at a major inflection point, with the direction for markets likely to be determined in the next 30 days.
Let’s dive in.
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While we usually wait two months between our Bitcoin updates, things are heating up. Because of that, if we wait another month, it could be too late.
So here’s the deal:
We could be a matter of weeks, if not days, from the beginning of the true crypto bull run.
After skyrocketing from October 2023 through March of this year, crypto has been in a painful downward trend for the last six months.
Between the economy slowing down, geopolitical tensions, and traditional markets waiting for the Federal Reserve to finally cut interest rates, there have been zero catalysts for a sustained uptrend.
However, with this week’s announcement the Fed would cut interest rates by 0.5%, both equity markets and crypto have exploded higher.
The good news is that this has resulted in the S&P 500 reaching all-time highs earlier today.
And with Bitcoin mimicking the behavior of traditional markets, with a very high correlation coefficient, this is great news for crypto.
The problem?
Despite the stock market's success, Bitcoin is still down approximately 12% from its all-time high.
On the weekly chart, we've put in a higher low relative to the August 5 week to the downside. Unfortunately, until we close the weekly above $64,250, we do not have confirmation of a trend change.
On the monthly chart, we need to close above $61,320 to show a breakout above the current order block.
In addition, the monthly chart shows Bitcoin breaking below the Pi cycle bottom indicator during August.
While a one-month break below is not a death knell, two months in row indicates trouble. Meaning, if we drop back below for September, it will be "Do or Die" that we see a break to the upside during October.
Lose three candles, however, and it's game over for another 6+ months.
On the positive side, as of today, Bitcoin has regained the upside of the pi cycle bottom indicator on the monthly chart (above).
And ideally, it will maintain its positioning through the end of the month (so we don't enter into the two negative closes territory).
Further, there are a variety of fractals and time measurements that show we are literally days away from when Bitcoin should—in theory—begin its bull run.
For better or worse, however, whether Bitcoin and our beloved alt coins go higher has very little to do with crypto itself.
Instead, it's almost entirely dependent on what the stock market does.
After months of slowing, investors are trying to develop a better understanding of what direction the economy is headed.
On the one hand, inflation has slowed dramatically relative to 2022 and 2023.
Given the Federal Reserve’s dual mandate of controlling inflation and maintaining employment, this is great news.
Unfortunately, the unemployment situation has been getting worse every quarter that goes by. Which is a large part of the reason the financial community believes the Fed increased their rate cut from 0.25% to 0.5%.
As recently as two weeks ago, the investment community saw a 0.5% cut as a signal that there was trouble in the economy.
Add in the fact that we have elections coming up, and there's a general feeling of uncertainty surrounding financial markets.
So what should you do?
Long story short, keep your eyes on the stock market.
If the S&P 500 and NASDAQ continue to march higher, Bitcoin will move up even more dramatically (while smaller market cap "altcoins" explode).
On the flipside, if the stock market starts heading down anytime between now and late October, it will spell disaster for crypto markets.
To the point that it's likely the cycle will be over, with the March all-time high of ~$74,000 marking the top.
That said, activity in traditional markets shows that a lot of big players de-risked around the August 5 Japanese yen carry trade crash. Because of that, they are likely to start buying again, sending the stock markets even higher.
In addition, with the Fed having cut rates, it will now be more difficult to get the 4.5% to 5% yield American consumers have grown accustomed to.
Because of that, there are trillions of dollars in consumer savings that could flood into higher-risk assets (like stocks and crypto) as people seek to earn a higher yield.
So if you’re at all involved in the crypto markets, the time to start paying attention is now. Right now.
Historically speaking, crypto can explode higher at the drop of a hat, forcing anyone who's been sitting on the sidelines waiting to make emotional, FOMO-driven decisions.
The better option?
Prepare your trading and investing plan now, allowing you to take an appropriate level of risk while setting yourself up for maximum profits.
💡 Takeaway: Crypto is at a major pivot point. Reverse the weekly downtrend and we likely skyrocket to new all-time highs during Q4. However, if we breakdown, we could visit anywhere from the $47,00 to the $33,000 range.
🎁 Resources:
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