Bitcoin: The Santa Powell Rally?

Everyone seems to think they have the FED figured out. The "herd" consensus seems to believe the Federal Reserve will have to ease off the hawkish agenda and not raise rates as high as previously implied in order to avoid a major recession. Chairman Powell comes out with this speech over the previous Wednesday just AFTER a major holiday in the U.S. I do not pretend to have the answers or know what the Federal Reserve is going to do next, BUT I do know markets are irrational and his speech lined up very well with the seasonal holiday optimism typical of this time of year. So the stock market, still drunk and high off the the holiday happiness, and itching for a squeeze, delivered a spectacular rally. Santa Powell's holiday gift to the markets.

How does this relate to Bitcoin swing trades or investing? As I have pointed our numerous times on my recent streams, Bitcoin is HIGHLY correlated to the stock market (the S&P in particular). The reasons why are not important, the fact that there is a clear relationship IS. A happy stock market will likely lead Bitcoin into the range high resistance, but do not lose sight of the bigger picture, the stock market has yet to prove any kind of broader trend change which means resistance levels are still likely to hold and lower prices likely to be tested. Where the stock market goes, Bitcoin follows.

The bond market, (which leads the stock market) has YET to prove that interest rates have peaked. Current prices of the 10 YR Note futures are still fluctuating around a major resistance. When bond prices start breaking major levels, and present a more bullish structure, I will be more convinced. I look for particular evidence which can be found on charts, I don't listen to what ANYONE says.

Here is what all this means for Bitcoin: A short term squeeze into the low 18Ks is likely to unfold over the next couple of weeks. Do not lose sight of the broader consolidation which is defined by the 15,500 AREA LOW and 18,500 AREA HIGH. As far as swing trades go, I am open to sharing a swing trade short idea IF a setup presents itself around the low 18K AREA. If 18K is cleared, I do nothing and reevaluate the levels.

If there is a squeeze into the low 18Ks, there can be many day trade opportunities on the long side. For swing trades, the location is far from ideal, and risk is too high for both longs and shorts. So NO swing trades off the current higher low formation.

What about investing? If the FED proves to be less hawkish and the economic situation shows significant weakness, the next couple of quarters will be an opportune time to accumulate risk assets but in SMALL bites. Now is a good time to formulate a portfolio plan. I am looking to assemble a speculative growth portfolio that will consist of high potential stocks and alt coins that will be categorized by the degree of risk. I will share some specifics publicly. Just something to note, when it comes to Bitcoin and the alts, we are still facing significant regulatory changes which brings a very high degree of uncertainty. So do NOT get too hopeful and excited. Even if monetary policy becomes supportive, this space has much to contend with. This also means any portfolio allocations will be SMALL.

Thank you for considering my analysis and perspective. I hope you find it helpful.