Alpha Connoisseur
Alpha Connoisseur 5 minutes reading from Bitcoin

Gem Brace for a Macro-Crypto Market Bottom

My overview of the current decline in global growth and some indices I use to track macro risk off-on sentiment for BTC and crypto πŸ’°πŸ’°

A thread πŸ§΅πŸ§΅πŸ‘‡

1/ I have been vocally risk-off when looking at global markets thus far in 2022. ⚠️

We are slowly approaching a macro market bottom.

Before we can resume the long-term upwards trajectory, we first need to identify some key metrics to help us time entries. 🧠

2/ Relative movement of Lumber/Gold provides important information on economic growth + inflation expectations. πŸ’‘

Lumber’s sensitivity to housing (business cycle), makes it a unique commodity as it pertains to macro fundamentals and risk-seeking behaviour.

3/ Conversely, Gold historically exhibits safe-haven properties during periods of heightened volatility and stock market stress. πŸ’‘

The relationship between LBS and XAU helps to decide when to play defence/offence within the context of active portfolio management.

4/ This strategy results in stronger risk-adjusted returns than a passive buy-and-hold approach. πŸ“ˆ

Risk-on during periods when LBS is leading XAU. πŸ€‘

Risk-off during periods when XAU is leading LBS.

⚠️

At present we can expect XAU outperformance till early Q1 2023.

5/ Building on the above, I also look at the Chicago PMI data to gauge where we are in the wider business cycle.

We have been falling on this metric since late 2021 - @Trader_XO regularly views this on his livestreams.

A bottom here is a good gauge for risk-on + BTC strength.

6/ I also pointed out how the ratio of global exports to output is falling in my article describing why I felt we have not seen a bottom in markets -

This shows a decline in globalisation and slowdown in growth as we transition to a deflationary era. πŸ“‰

Have the Markets Bottomed?

7/ Lastly, I like to view the BDI (Baltic Dry Index) which tracks the price of moving major raw materials by sea. It also acts as a proxy for growth and globalisation. πŸ’‘

This has been falling since late 2021 and looks to fall further before bottoming early 2023 with BTC.πŸ’°

8/ All of this data should be used in conjunction with a fed pivot and viewed through the lens of liquidity conditions in the US which have been poor in 2022 through QT.πŸ’‘

Fed rate is currently 3.25%

IMO next hikes will be 0.75+0.50+0.25 to achieve the 4.75% target by Feb 2023.

9/ Feb 2023 is in-line with my Q1 2023 target that I have held since early this year for a Fed pivot.

A pivot means we are close (in time) to a bottom, but not in price. It is simply an early warning to allocate to BTC

AlphaConnoisseur.asymm on Twitter

10/ In this article I also gave some exogenous reasons for a potential bottom forming in the coming months with some game theory from a friend of mine @fejau_inc

A Seismic Event - The Great Repricing
This post is based on this twitter thread.

Comments

Please login to comment.