GM. This is Milk Road, the crypto newsletter that's the pressure washer blasting the grime off confusing crypto news.
Here’s what we’ve got for you today:
- ✍️ BTC’s up 22% and John’s holding cash?
- 🎙️ The Milk Road Show: Tom Lee: The Next 5 Years of Crypto Will Be About Ethereum.
- 🍪 BTC’s volatility hit historic lows right before the squeeze.
On Sept 23, Milk Road's Martin sits down with Alumni Ventures to talk about blockchain and private markets. Save your free seat here.
Prices as of 2:00 p.m. ET. Powered by CoinGecko.
BITCOIN RIPPED 22% AND JOHN'S STILL SITTING ON CASH 🤨
Bitcoin just had its biggest week since late 2024.
It ran from about $62,800 to nearly $80,000, and plenty of people were ready to call the bear market over right there.
But our crypto analyst, John Gillen, isn't quite there yet - he’s still sitting on a good chunk of cash.
Here’s where we’ve come from/where we’re at:
On August 19, the U.S. Treasury said it would at least double the size of its long-end buybacks, from $2B to at least $4B per operation.
(A buyback is the government purchasing back its own longer-dated debt, to keep that market functioning when nobody else wants to step in.)
Bond yields dropped on the news. The 30-year fell 9 basis points to 5.196%, having just touched its highest level since 2007.
Cheaper money is good for crypto, so crypto went nuts.
But two things complicated the whole thing…
First, the bond market handed a lot of its progress back inside a day, with the 30-year climbing seven basis points to 5.26%. Right back above where it sat before the announcement.
Second, roughly $2.7B of bets against crypto got force-closed. I.e. a big chunk of that green candle was traders being made to buy, not choosing to.
Which brings us to the level John actually cares about…
The 200-week moving average (blue) is the average price over roughly the last four years. In bear markets it tends to cap rallies, and in bull markets it catches the dips.
Bitcoin's sits just over $64K, which it has now reclaimed and held above. That's the properly bullish part.
But it's still stuck under the ceiling that capped this market back in May: the $83K level (white dotted line).
Get a weekly close above that, and John thinks higher prices become more likely than lower, with a path into the 90s and maybe even $100K.
Until then, he thinks $74K comes first.
But the main reason he won't call the bottom has almost nothing to do with Bitcoin...
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BITCOIN RIPPED 22% AND JOHN'S STILL SITTING ON CASH (P2) 🤨
ETH spent about 30 weeks below its own 200-week average, which John puts at roughly $2,493.
Call it $2,500.
By his count, it's been rejected from that level four separate times in major market moves - and five separate times since Saturday.
But still, no definitive break:
John wants a confident break above $2,500 if he’s going to call the bear market dead.
That said… he does think the bottom is in.
Right now, momentum is fading under resistance rather than building over support, so he expects a pullback before the next leg up.
What he's watching is whether that pullback makes a higher low, or breaks the old ones. He thinks higher, because there’re enough sidelined buyers waiting to step in.
He's treating the dip as a re-test, and plans to buy into it.
Two dates to watch from here:
Sept 9: when the bigger Treasury buybacks actually begin (they run through Nov 4).
Sept 15: the Senate's procedural vote on the CLARITY Act.
The two prices to watch:
A weekly close above $83K on Bitcoin, and a weekly close above $2,500 on Ethereum.
According to John, whichever way that second one breaks tells us whether we’re back or not.
Btw - John's Bitcoin position is up 22% and his staked ETH is up 33%, both were bought before this run. And he's still holding cash for the re-test.
You can track his deployments as they happen in Milk Road PRO for $1, here.
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Novogratz: Every major TradFi institution now accepts one thing - no more "crypto assets" vs "TradFi assets" - almost everything gets a tokenized version.
Raoul Pal: Gold bugs have been doom-mongering for 30 years and missed everything.
John Gillen: BTC’s volatility hit historic lows right before the squeeze. "94% of BTC’s history, it’d been trading with more volatility than it was prior to this short squeeze."
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