April 29: Don't Fight the Fed for Now

BTC is up for the past 7-days with Bitcoin and Ethereum hovering right below $7,800 and $200 key short-term levels. While the top two coins are both hesitating for a decisive move higher,  Ripple (XRP) has been making a big splash over the past 24 hours up 10%. History has shown that XRP has the ability to trade like that without many headlines or catalysts. 

In my previous analysis, I shared that the recent rally has been driven mostly by liquidations of shorts. Another salient driver could be increased spot buying. This is perhaps why futures are mostly trading at a discount to spot. And it isn't entirely surprising either as leveraged traders in crypto are likely more skeptical after March's crash. Evidence of spot buying through headlines like this "Grayscale is buying half of all newly minted Ethereum". In short, the backdrop for a longer-term bull market is constructive, and definitely a healthier rally than the earlier one we had this year.

With today's spotlight on FOMC and a few large tech (FB, Microsoft) earnings, I suspect risk assets to trade well into, and may potentially sell after "the fact". So BTC is going to be well bid, and until we close above the 200 DMA at $7,980 with strong volumes, we can test the $8,200 region. With implied volatility quite cheap, tight $300 range over the past five days, halving in 12 days, persistent negative funding, record USD stable coin balances in exchanges and Fed's "whatever it takes" attitude. It's hard to argue against such asymmetric risk-reward in the short-term, so I continue to advocate buying on dips around $7,200 region and BTC calls i.e. $8,250 expires in 9 days. Many are puzzled with equities performance; for example, Nasdaq is now almost unchanged year-to-date, this is why you don't want to fight the Fed. At least, not for now, live, let's live to fight another day... Good luck!

Two key levels to watch.... $8,200 and $7,200... If we break $8,200 there's gonna be fireworks, otherwise buy on dips towards $7,200 region...