Riding The Wave Weekly Outlook #31

Jul 29, 2022

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Tweets
What’s Happening Now?
What Might Happen Next?

Tweets

Mac10 @SuburbanDrone

The Fed eased too much in 2007 due to the housing crash. Which caused a commodity bubble. In 2008, they got too tight. Which caused the Lehman meltdown. The same comedy of errors they are making right now:

Julian Brigden @JulianMI2

In the last 50yrs, whenever New Homes for Sale materially diverged from New Homes Sold, the end result was always a recession and most of the time ugly ones. #housingmarket , #recession #recession2022

Alf @MacroAlf

Projected Fed Funds in Dec 2023: Dot Plot: 3.75% Bond Market: 2.84% Projected Fed Funds in Dec 2024: Dot Plot: 3.38% Bond Market: 2.49% Historically huge (100 bps!) discrepancy between where the FOMC & the bond market believe Fed Funds will be We'll soon find out who's right

The Kobeissi Letter @KobeissiLetter

SUMMARY OF FED DECISION (7/27): 1. Raising interest rates by 75 basis points unanimously 2. Anticipates "ongoing increases" in rates 3. Affirmed plan to raise QT caps to $95B/month 4. Spending indicators "softened" The Fed is sending us into a recession to control inflation.

TechDev @TechDev_52

Here's the thing about being long-term bullish, but also waiting for 10K... Everything has a probability, so of course it can happen. But if it does, it breaks a 12-year "log parabola" support. So, I personally would not be eager to buy down there for the long term.

Watcher.Guru @WatcherGuru

JUST IN: Fed Chair Jerome Powell says another unusually large increase could be appropriate at the next meeting.

CoinsKid @Coins_Kid

Bottoms never feel like bottoms. You always miss them if you act on sentiment, trust me I know from experience. Use the data to determine a bottom. So far 7 indicators told us that the bottom was last month. I'm relying on Data not Emotion. Is this time different? #bitcoin

The Kobeissi Letter @KobeissiLetter

BREAKING: Q2 GDP unexpectedly falls by -0.9%, officially putting the U.S. in a recession.

Callie Cox @callieabost

THE Q2 GDP REPORT 😰 ⬇️ 2 straight quarters of declining GDP ☹️ Much slower consumer and business demand 🫣 Biggest drag from the lack of home buying since 2010 (excl Q2 2020) 🧊 The Fed wanted a chiller economy, and it looks like they got it

Alf @MacroAlf

Powell is more careful now that the Fed feels they reached neutral rates: why? Because every time the Fed hiked above that (restrictive policy) it ended up breaking something. Every single time.

Watcher.Guru @WatcherGuru

JUST IN: SEC Chair Gary Gensler says the agency is working with #crypto exchanges to regulate them like securities exchanges.

The Kobeissi Letter @KobeissiLetter

As we are now 12% off the low, the S&P 500 is in its 3rd relief rally of 10% or more. To put this in perspective: 1, 2008 had 5 relief rallies averaging 14% 2. 2001 had 6 relief rallies averaging 17% If bulls fail to set a major bottom now, bears are ready to make new lows.

Alf @MacroAlf

For context, this is the biggest two-days rally following a Fed hike since the 1970s.

Blockworks @Blockworks_

The 2008 crisis gave us the first age of crypto. The current bear market can be the catalyst that propels DeFi into the mainstream. 3 problems DeFi is trying to solve.

What’s Happening Now?

Bitcoin is making another attempt at closing above its 200 week SMA as well as its 8 week SMA.

On the daily time frame, we are still stuck at the $24,000 price point & we are approaching the downtrend (blue diagonal line) we have been following over the past several months.

Daily Timeframe Bitcoin. Red/blue boxes are potential areas of support/resistance, blue line represents downtrend we seem to be following, yellow line represents 200 week SMA

What Might Happen Next?

There have been a lot of indicators that are pointing to the mid $17,000s being the bottom of this drop, but I’m not entirely convinced. For context, I do have most of my funds in crypto, but I’m not putting new funds in via DCA or investing the last of my dry powder for several key reasons:

Crypto and traditional markets are still coupled (relief rallies between both are still lining up)

We haven’t managed to close above any core SMA’s yet
We haven’t broken through the diagonal downtrend (usually, diagonals are easier to break than horizontal downtrends or, at the very least easier to interpret)
We are still finding heavy resistance at the horizontal resistance lines
The indicators that are pointing to this being a bottom haven’t handled recession behavior before because crypto hasn’t existed during a past recession.
Inflation hasn’t yet been brought under control, so we likely have more rate hikes coming increasing the risk of a sharp economic freakout, which could send crypto sharply down with traditional markets or sharply up if it decouples.

Of course, I am happy to see that we dont appear to be dependent on Tesla’s actions anymore, but as you can see from the above, there are many more important boxes to tick/overcome. I also am not in a huge rush as historically, Bitcoin has tended to move within a range/sideways for a while after setting in a bottom (in past runs, usually around 3 months to a year)

Thank you for reading the article, if you have any feedback feel free to leave a comment, and if you think anyone would benefit from the info in here please feel free to share it.

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Riding The Wave Weekly Outlook #31

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Tweets

What’s Happening Now?

What Might Happen Next?

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