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April 29, 2023

🥛 How to be a better BTC investor…👀

GM. This is Milk Road. We’re like those little cookies you eat on a plane – it only takes a few minutes to consume us, but we slap so hard.

It’s Saturday, y’all. Let’s do this:

  • What’s the Milk Road Fear & Greed Index? ⚖️

  • Visual of the day: Binance BTC hits ATH 📈

  • Countdown to the halving ⏱️

  • The $3.4B fine 🍪

Prices as of 9 AM ET.

HEY MILK ROAD, WHAT’S THE FEAR & GREED INDEX? ⚖️

Lemme ask you a question, Roadies.

You know the Milk Road Fear & Greed Index you see first thing when you read us every day? And have ever since we started the newsletter?

Well, (because we love you) we dug in DEEP on how you can use it as your own personal crystal ball into the BTC market. 🔮

Let’s dive in…

What is it? A Fear & Greed index looks at quantitative factors (volatility, momentum, etc.) and qualitative factors (Twitter chatter, etc.) to sum up how investors are feeling about BTC.

All of those factors are boiled down to a single number between 0 & 100 every day. If it’s low, that means the market’s fearful AKA bearish, & BTC traders are trying to sell.

If it’s high, we’ve got some greedy bulls on our hands. This is when investors are optimistic about BTC’s price.

So, is it correlated with BTC’s price? Not entirely.

The Fear & Greed Index looks at BTC’s market momentum, volatility, social media, Google Trends, how much BTC is dominating the crypto market, & surveys.

So it’s gonna have more ups & downs than the Tower of Terror compared to BTC’s price alone.

Why should you care? This index shouldn’t be the only thing you consider, but it’s a solid indicator and can turn you into a better investor.

The standard way of reading the index is “be greedy when others are fearful.” But following that advice to a T would probably lose you money.

Def don’t buy or sell with each price change. Instead, look at periods of greed – historically, they’ve come before BTC’s best performances.

After the index has been in a state of “Greed” or “Extreme Greed” for 7, 14, or 30 days straight, returns have ranged from 126% to 255% in the 90 days after these streaks.

*level unlocked*

Wanna dive even deeper into the Milk Road Fear & Greed Index & how it can make you a better investor? Read our full analysis here. 

VISUAL OF THE DAY: BTC HOLDINGS ON BINANCE HIT ATH 📈

There are 692K BTC ($20.1B) on Binance right now. 50K BTC ($1.5B) were added to the exchange just in the last four weeks.

So what’s going on? Could be 3 things:

1/ Investors could finally be feeling more comfortable keeping their holdings on centralized exchanges like Binance.

That confidence really went out the window after FTX. In early December, there were only 580K BTC on Binance.

2/ There are simply more BTC holders with so much distrust in the Fed

SVB, and now FRB this week… people’s faith in the banking sector is on the floor. So maybe there are more people wanting alternatives to the dollar.

Enter decentralized assets like Bitcoin.

3/ There’s a sell-off coming

I’m sorry to say, y’all but… this might be the most likely reason.

Holders, including all these decade-old wallets waking up, are putting BTC onto exchanges to sell now that the price is finally ~$30K.

Can we blame them? It’s been BLEAK for HODLers – the last time BTC was this high was June 10, 2022.

Seeing that sweet sweet $30K might be too much to resist…

THE NEXT BITCOIN HALVING IS ONE YEAR AWAY ⏱️

Every 4 years a major event shakes up the crypto world, the Bitcoin halving. And after a rough 2022, crypto investors are looking a full year ahead to the next one.

The stage is set for the next halving to occur on April 28, 2024.

What’s happening? Every halving cuts the amount of new Bitcoin that enters circulation in half.

While the total supply of Bitcoin is fixed at 21M tokens, only ~19M tokens have been mined (created) so far. The remaining ~2M will be awarded to future miners, which dilutes the supply over time.

But the level of this inflation is going down:

And in 2024, that reward will be cut again to 3.125 BTC. At current prices that would reduce $5B of new supply from entering the market each year.

Why should I care? The halving has been a major price catalyst in the past. Check out how Bitcoin has reacted to the last three halvings:

Coin Metrics

  • In 2012, BTC rose 365% leading up to the halving, and 8,000% in the year following it.

  • In 2016, BTC rose 142% leading up to the halving, and 284% in the year following it.

  • In 2020, BTC rose 17% leading up to the halving, and 559% in the year following it.

It’s all about supply and demand. Now we just need the demand to return.

MILK & COOKIES 🍪

Elizabeth Warren’s crypto bill was postponed. The anti-crypto army has not been able to find much support.

Robinhood launches “Connect” to enable external crypto wallets. Users will be able to access their crypto in Robinhood and use Dapps without opening the Robinhood app. 

The CFTC just doled out its biggest fine ever to a Bitcoin commodity pool operator. The victim of the $3.4B fine is currently locked up in Brazil for fake identity charges. Do Kwon vibes.

Tornado Cash founder shares first tweet after incarceration. “Sorry I was afk for a while, what did I miss? 👀”

MILKY MEMES 🤣

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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.