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Blocksmith Says: BTC Bounce is Unconvincing

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The last few days have seen increased event and announcement volatility. This has led to some scrambled repositioning and we have seen some big moves up and down.

My view is that it’s too soon to call a firm direction until everything settles down. Also, mid-term election results still lack clarity as many votes are still not counted and there may have been actual fraud in some states. The consensus appears to be that if the Dems hold on to House and Senate majority, then markets fall and dollar rallies, which means crypto falls – more inflation, more money printing, to name just two concerns. If GOP gains a majority then good for stocks bad for dollar. Which means bad for crypto.

Additionally, there was a lower than expected US CPI print (0.4% increase) which caused a kneejerk repositioning: the dollar dumped, stocks rallied. It is way too soon to say if these trends continued and my view is likely not and the dollar rallies again from maybe next week.

The 240 minute Bitcoin chart here more or less tells the tale. The sharp drop through the bottom of the August channel to circa US$16,000 went on to bounce, but very unconvincingly. This dead cat bounce may lead to more upside near term but the preferred view is back down again once this bounce starts getting exhausted.