Today’s post-holiday candle on the Bitcoin (BTC) chart from BitMEX doesn’t seem like much.
However, appearances can be deceiving.
Using hand kept Gann work, we found a setup for another major rally. By touching $10,750 on July 5 (Figure 1), Gann work shows there is potential for another massive leg higher in $BTC to start this weekend.
There has also been an important development in the equities world. Before the holiday, the VIX index of equity market fear closed below its bottom Bollinger band on two consecutive days (Figure 2). In our experience, when VIX closes below its bottom Bollinger, it signals a top in equities and a bottom in VIX.
If equities go sideways or go lower, any fund manager holding Bitcoin (BTC) will likely outperform their peers. In our view, this sets up a situation where hedge fund portfolio managers may be forced to buy Bitcoin (BTC) all at once.
We also think the debate over the next Fed rate move helps Bitcoin (BTC). If the Fed cuts rates, the Dollar falls and Bitcoin (BTC) should rise. If the Fed does not cut rates, equities and bonds may fall. That may drive portfolio managers towards Bitcoin (BTC) en masse.
Bottom Line: We have good reason to very constructive on Bitcoin (BTC). We would go as far to say Bitcoin (BTC) is cheap near $11,000.
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