Rapture #264: Move to Premium and Market Commentary
As I alluded to in Rapture #263, I will be moving this newsletter to a paid subscription modal. This newsletter will be the last one of the free versions.
If you are interested in continuing to receive these newsletters, you can click "account" in the top right corner on the home page of rapture.ghost.io. Then, you can click view plans and choose the yearly or monthly plan.
Now, lets talk about what everyone is focusing on: the surge in crypto prices.
Significant rally
Over the past 7 days, BTC is now up more than 11% while ETH is up 13%. Crypto has shaken off about 50% of the market effects of the FTX implosion. Even more impressive, this rally has come with significantly higher volumes, which is what one would want to see in order gain conviction that we are now entering a bull market. Twenty four hour volumes for BTC stand at nearly $47 billion, approximately 3 - 4x higher than the daily volumes we have experienced over the past couple months. ETH twenty hour volumes stand at approximately $14 billion, which is around 2 - 3x higher than the daily volumes for the past month.
If volumes continue to increase steadily and/or maintain their relatively higher levels before pushing even higher, the bear market might indeed be over.
Many of the largest trader influencers, from @DegenSpartan to @bitcoinpanda69, stated that they have either been accumulating or that the crypto market is bottoming out. General influencer trader sentiment is incredibly bullish right now as the major traders think this move is the one that gets us out of the bear market.
There were definitely signs if indeed the bear market is really over, from The Economist putting the title of "Crypto's Downfall" on the cover of their November 19th edition to inflation starting to come down in the US to equity markets rallying.
From a fractal point of view, this bear market rally looks very similar so far to the one that got us out of the 2018 - early 2019 bear market.
What I think
I am still positioned in around 95%+ cash and have not redeployed. Consequently, I have missed this rally.
My base case is that there is still more pain to come for crypto because the macro environment is still deteriorating; I think the Fed will continue to raise rates, the war between Ukraine vs. Russia will worsen, oil/gas prices will rise, and inflation will be tougher to wrangle than what initially appears. Therefore, I think this rally has a shelf life and we will return to test the bear market lows. Furthermore, there are still 42 tokens that have a market cap of at least $1 billion. In my opinion, there are not even close to 42 tokens that should be valued at $1 billion, especially in a high interest rate environment. I would think that the bear market would do more damage to the vaporware projects.
Still, I am the least confident on this call compared to my confidence in my positioning over the past 6 months. The FTX implosion did not hurt the markets nearly as bad as I thought it would, meaning that most would be sellers have likely sold and consequently there are likely few major sellers left in the wings. Additionally, miner capitulation is over.
I am watching for if ETH breaks first $1,650 with major volume and then consequently $2,000. I am also analyzing the overall change in volume profile for the entire market.
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