GM, this is Milk Road PRO – the ‘Google Maps of Crypto’, here to guide you through this current market downturn.
There’s a lot of discussion around the question: “Are we entering a bear market?”
You can reference various points of onchain data, sentiment, price action, or macro data to make the case that we are.
At the same time, you can manipulate the same data to point to being in a typical pullback, offering a great opportunity to buy at low prices.
So…which is it?
In this report I’m going to share my take on where we are in markets and where I think things will head in the short, medium and long-term.
At the end, I will share thoughts around positioning your portfolio.
Because the game has changed and it’s time to recalibrate our thesis.
Right now, it's very apparent that the markets are controlled by the political and macro environment – not what’s actually happening in crypto.
We’ve had some of the best news in this industry’s history with the US Bitcoin Reserve, The SEC dropping every case against large crypto companies and the recent clarification of the OCC allowing banks to engage in crypto activities.
In any normal environment, these massive structural changes to the industry would send prices skyrocketing, however not today, not when there is so much uncertainty in the markets.
With this in mind, I think the analysis of if we are in a bear market should remain specifically in the domain of the macro world.
Let’s start with uncovering what led us to the market shitshow we currently sit in.
THE MACRO BACKDROP
Back on December 7th, we shared this PRO report titled “Is a 30% pullback near”.
The answer was yes – we’ve since pulled back almost exactly 30% in Bitcoin from when we wrote that report.
The reason why we suspected a pullback was coming had nothing to do with crypto (though sentiment was definitely getting quite euphoric) but was instead due to macro conditions.
The analysis we had at the time was clear:
- We had experienced a pullback in global liquidity
- The dollar was way too high (China couldn’t print & financial conditions were too tight)
- Rates were too high
- Inflation had slowly been rising, while growth remained strong and unemployment relatively stable, holding back the FED’s ability (or need) to lower rates
Even with the struggling macro backdrop listed above, markets continued to push higher on the hype of Trump taking office.
We felt strongly a pullback was coming and that played out through December, January and February.
The next part of our analysis in that report was that we did not believe this was the end of the cycle and markets would move higher as the macro conditions began to clear up.
We still believe this is true today.
The macro set up today however looks a bit different than what I mentioned above. Let me show the data without commentary, then I will discuss what is happening.
Global M2 has bottomed and is on its way back up…
The DXY has seen one of its largest drops in recent history…
Rates are still too high, but they are beginning to drop as seen in the 10-year treasury yield, from 4.8% down to < 4.2%.
And while the CPI numbers lag and are only released monthly, if we look at Truflation for live data we can see inflation has since fallen off a cliff.
Plus both CPI and Core CPI came in lower than expected on Wednesday.
A lot of what we thought would happen, has since happened. That said, the way in which it’s happening is NOT necessarily as we’d expected.
Unfortunately, the current situation is coming with a lot more “chaos” and “fear” (to put it lightly) leading many to think the cycle is over and we are heading into a bear market.
While there is definitely a chance this could be true, I’m now going to comment on what I think is happening and where I see the light at the end of the tunnel.
(Aka: why I think the bull market continues from here.)
Uh, Oh… 😧 The rest of this report is exclusive to Milk Road PRO members!
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WHAT’S LEFT INSIDE? 👀
- Our thoughts on Trump’s plan/current approach
- What comes next after all of this madness?
- Will we pull back even further??
- How to position yourself in the current market
- Tokens we think are running at bargain prices
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