Bitcoin Just Tricked Every Investor... And An Opportunity Like This Won't Come Again

Source: YouTube

Introduction

Speaker 1: 00:00

Bitcoin has been consolidating for quite some time, and everyone is confused. Some even believe that this entire bull run has been a massive fakeout. But we've just seen something very unusual, and some even believe that we're moving towards a financial crisis.

In this video, I'm going to give you all the levels I'm watching, what direction I expect Bitcoin to go in, and the four warning signs that I look at before I reconsider my portfolio.

Bitcoin's key levels and exchange offer

Speaker 1: 00:22

As I said, ladies and gentlemen, Bitcoin has been consolidating for quite a while. It seemingly found a strong level of resistance here at $84,000, which also happens to be the point of control of a previous range.

More importantly, if any of you have been watching my videos, then you'd know how much I stressed this level as a potential buy level. I have publicly said on this YouTube channel for weeks, if not months, that everyone should be looking at this level as a great time to buy.

Bitcoin hit this level and then immediately went up over 4%. I don't just talk the talk; I walk the walk, which is exactly why I'm floating $4,200 in profit, with my breakeven level at the same resistance level that has sent Bitcoin down.

Bitcoin is right now, as you guys can see, struggling at the 60-period moving average, which has also been used as resistance previously. However, this time it managed to close above. If it can stay above that, then I think it highlights that the demand for Bitcoin is increasing. Later in this video, I'm going to show you something to back that statement up, and something that will likely piss a lot of the Bitcoin bears off.

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Liquidity, inflation, and rate-hike expectations

Speaker 1: 01:50

Do I expect Bitcoin to go higher from this point forward? Let's have a look at something that could tell us a little bit more about the direction.

First of all, I mentioned the $80,000 level also because it is a level where a lot of trading took place. Look at all these green bubbles right here. That represents extremely large orders being executed at that very level. If we go back, you can see that at this wick near $80,000 or $81,000, there's also a lot of trading volume. That's often where price is going to find support.

If we take a look out here to the right, you can see that we do have some liquidity, mostly around $78,000. If we scroll up, it's not even comparable to the liquidity we have towards the upside. It just keeps going. We have $130,000, $150,000—even at $160,000 do we have an immense amount of sell orders. This can often act as a magnet for price and is a massive reason for Bitcoin to continue higher.

But that all depends on the macro environment. Recently, we got an inflation report: core CPI as well as headline CPI. Following that, we got PPI. The inflation itself came in at 3.7, forecasted at 3.6, which was expected given the higher oil prices. But what surprised a lot of people was the core inflation that came in at 2.6, expected at 2.5. This can suggest that inflation is spreading beyond energy, which can eventually lead to the Fed becoming increasingly hawkish, which can be incredibly bearish for Bitcoin.

But something very interesting happened, because as we got that negative report regarding inflation, the October rate-hike odds are now pretty much the lowest I have ever seen, at 16%. I know a lot of people are looking at this number in December and thinking, “What in the world? We're basically guaranteed a rate hike in December.” But that depends entirely on the response that we get during the October meeting.

Oil prices and Bitcoin's rebalance

Speaker 1: 03:37

I would not personally take this as a definitive outcome until we have seen the Federal Reserve meeting in October. There's still a chance that oil can stabilize enough throughout October and November, before the December meeting, that could significantly impact the rate-hike probabilities. We've just gotten a headline that makes this significantly more probable.

Oil prices slipped from a five-month high on Monday as investors took profits after U.S. President Donald Trump waived sanctions and tariffs on Russia that may lead to more Russian fuel exports. This could provide some relief for energy, which will inevitably benefit the U.S. economy.

Do not get me wrong: oil is still severely elevated here at $107, but we can only hope that this is going to send it down further. Oil has recently reached the high which previously sent it down quite a bit, so we can only hope that the exact same thing is going to happen now.

What I'm specifically paying attention to is this trend line, because that has held up extremely well within oil. I think if we break this alongside the 50-period moving average, then there's a good chance oil is seeing a change in sentiment.

Regarding Bitcoin itself, we've recently seen a pullback. I also told you that that was incredibly probable, because even in very bullish markets, you are going to get rebalances, specifically towards equilibrium.

What happened when price reached 50% of the range? It used that as a massive support level, which is a great sign that what we've just seen is nothing more than a rebalance towards a discount before it then continues its bull run, which is very normal market behavior.

If we can get significant displacement above this point of control, then I think it highlights the demand for Bitcoin. It also highlights that the bulls are now back in control. The point of control at about $84,000, alongside the 200 simple moving average at $83,000, are my points of interest.

Breakout confirmation, yields, and positioning

Speaker 1: 05:31

If we can manage to close above both, then I think that the Bitcoin bull run is going to continue and the bulls are now back in control.

Something recently happened that almost nobody saw coming, and that was the 10-year yield reversing completely. We hit a high that I had called out on this YouTube channel at about 5.3%. It obviously found a level of resistance, and it has now pulled back a total of 6%. This is great news.

Some people will argue that the reason the yields went down is not beneficial to Bitcoin, but I fundamentally disagree. The lower the yield, regardless of reason, the lower the returns they are going to provide, which means Bitcoin becomes relatively more attractive.

What I'm watching for next is the consolidation, or area-of-balance price action, right here, which obviously acts as some sort of level of support. I want to see this get violated, and then, following that, ideally we see a violation of the 50 simple moving average. Later in this video, you'll understand why it is so crucial that we are now seeing a reversal within the 10-year yield.

I mentioned that I was going to show you something that was very likely going to piss Bitcoin bears off, and something that would support my statement of higher prices within Bitcoin. That is the COT report we received on Friday.

If you've been watching this channel, you know that leveraged funds have been incredibly bearish pretty much since 2024. But you guys can see that over the last couple of months, they have become increasingly more bullish. Sure, we've seen these sorts of dips here, but the most recent reports have all been positive. You can see that they added 1,008. That is not something we've seen from leveraged funds. It is incredibly significant when we do see that, because it signals that they are now shifting from bearish to bullish.

We've also seen asset managers once again add 110, and they are net long still. Leveraged funds continue to remain net short, but overall they are becoming increasingly more bullish.

Is this a bullish sign in terms of positioning? Absolutely. This is one of the most important pieces of data to look at when trying to determine long-term direction within any asset.

Something we can add on top of the bullish positioning is what we're looking at here. Long-term holder losses have eased well off their cycle peak. You guys can see that these massive peaks within long-term holder losses often peak right before a massive bull run.

Cycle comparisons, momentum, and macro signals

Speaker 1: 07:51

This cycle is no different. In fact, we are seeing this signal much stronger relative to something like 2019, and it's comparable to last cycle, which is, by the way, the only cycle that I would ever compare today's price action to.

Overall, this is a great sign that the Bitcoin bull run is actually here, regardless of what bears might be saying on CT. That being said, there are multiple indicators highlighting that this is almost certainly a sentiment shift within the higher time frame, one being what we're looking at here.

The indicator up top is a trend indicator, and you guys can see a clear pattern. Bitcoin closes above the 200 simple moving average, the momentum indicator shifts from negative to positive, and the momentum really starts picking up when the RSI goes above the threshold of 70, which most people take as a bearish signal. But history shows us that this is, in fact, when bull markets really pick up.

We saw it again last cycle: Bitcoin closed above the 200 simple moving average, the indicator flipped from negative to positive, and the momentum really started to pick up once the RSI entered the overbought area.

We have seen the exact same pattern this cycle. Bitcoin closed above the 200 simple moving average; the indicator flipped from negative to positive. The only thing we're missing is the RSI moving above the threshold of 70. But if we compare what we're seeing now to last cycle, that is not unusual. You guys can see that it took this entire consolidation before the RSI eventually crossed into overbought, which highlighted the momentum.

What we're seeing right now is obviously very similar to the consolidation we saw here in 2023, which means towards the end of this consolidation, we could anticipate that the RSI moves above 70, the momentum within Bitcoin starts picking up, and the bull run really begins.

Lastly, not the entire macro environment is negative. When we're talking about inflation, yes, it looks negative. But there are other things that we can look at which are suggesting the opposite—for example, the copper-gold ratio, which is the ratio you're seeing up here.

Every single bull run, without fail, this bottomed and it went higher. It happened in 2020, it happened in 2017, and it is happening right now. The copper-gold ratio has bottomed. It is starting to move higher, but more importantly, it is doing so as the ISM PMI is expanding.

Bitcoin has also bottomed at the electrical cost, which has historically been where Bitcoin has bottomed every single bull run. If we want to draw a comparison to 2020, we can also see that it had one initial test, then went higher, had another test, and then the bull run started.

Very similar to what we're seeing now: we had the initial test, went higher, another test, and now we can anticipate that the bull run is finally starting. Do I think Bitcoin is still within a bull run?

Four financial-crisis warning signs

Speaker 1: 10:41

And can we expect upside? Yes, absolutely. But there are certain things that everyone needs to watch out for, regardless of you caring about cryptocurrency or equities.

When we're talking about a financial crisis, there are a few things that I'm paying very close attention to—ones that have saved me before.

Number one: credit spreads, but more importantly, the HYOS, which has already started to expand. It bottomed at 260. It's now sitting at 3.23. If this starts moving towards 5%, that signals extreme stress. It is a signal that we should all take incredibly seriously. That's number one: the credit spreads exceeding 5%.

Number two is the 10-year yield moving above the threshold of 5.5%. When the 10-year yield is trading between 5.5% and 6%, I consider that my danger zone. That is when I seriously start paying attention.

Number three: inflation exceeding earnings. If inflation starts outpacing the average hourly earnings, I consider that a massive warning sign. We're actually seeing that right now, but on its own I don't consider that a massive warning sign, and it's not something that would make me reconsider my portfolio. But if it happens alongside the other things that I've just talked about, then that is exactly when we should worry.

The last thing I look at is the VIX, the S&P 500 Volatility Index. This is the last of the indicators, and it's not something that has to happen, but it is something that you can look at to measure when this financial crisis will hit equities. Of course, you can connect that to Bitcoin too.

To determine whether a financial crisis is approaching, look at the three I showed you: the credit spreads, the average hourly earnings versus inflation, as well as the 10-year yield. To confirm when we can expect this to negatively impact Bitcoin, look at the VIX.

Closing outlook

Speaker 1: 12:23

Ladies and gentlemen, I sincerely hope you enjoyed this video and you now know a lot more about what I personally believe about Bitcoin.

Can we see short-term downside within Bitcoin? Yes. I believe the worst, worst, worst-case scenario for Bitcoin this cycle is $72,500, or at least in that region. But overall, I remain cautiously bullish. You now know the exact warning signs that I am personally looking for when it comes to a financial crisis, and when we should start reconsidering our portfolios.

If you enjoyed this video, make sure to like it, subscribe to the channel, maybe even leave a comment. If you want to join my free trading group, you can find a link for that down below.

Without further ado, ladies and gentlemen, I appreciate every single one of you, and I hope to see you within my next video.