The Old Man’s Views
Is This the Calm Before The Storm?
This week, I am back in the UK to see my old Mum and catch up with family before the tourist season takes off in Portugal.
In a few weeks, we will be invaded by what the locals call Seagulls: Visiting tourists who make a lot of noise and leave shit everywhere.
As expected, cryptocurrency and equity values have remained depressed over recent weeks. Although they haven't reached downside targets yet and the outlook remains negative, there is some reason to be cautious.
If Bitcoin were a "normal asset", I would be comfortable suggesting further movement on the downside. We are all aware of the technical indicators, which point to $32,000 or possibly $28,000.
However, I am still concerned with how the practice of hanging on for dear life might affect this particular group of assets.
In most high-volume, speculative markets, we have plenty of buying and selling, people getting in and out on each move, the occasional pump, and other times when we witness heavy bouts of selling with stops get hit at strategic levels.
In the case of Bitcoin, many investors have bought and seem happy to hold their positions come hell or high water.
This unusual, blind obsession with holding on to an asset makes me cautious about the downside potential. I will be interested in seeing how things pan out if values go much lower. Is there a magic number at which current bitcoin holders will give up and start dumping their positions?
I am also thinking of what the institutions will do with their BTC portfolios.
My strong suspicion is that they will use their positions to try and manipulate the market, as they do everywhere else.
Unlike most people in the crypto community, institutions like Black Rock or Goldman Sachs don't care about the community or the currency.
They have one objective for trading assets:
If it moves, fuck it! Make whatever you can, for as long as you can, however you can.
In the case of Bitcoin, which has its enemies, we know these large institutions will happily work with governments if the result is a few billion extra dollars in their bank accounts. To those who talk about how wonderful it is that large institutions have started buying more BTC. I say, ‘beware of what you wish for’!
Moving away from the crypto arena, we have seen significant strength in the dollar over recent weeks. But perhaps that is not the correct headline. Maybe what I should have said is we have seen European currencies continue to nose-dive.
We have learned from this war in Ukraine that the European economy doesn't appear to have much resilience when it comes to unexpected shocks. You know you have problems when your currency is diving against one controlled by Joe Biden.
At the moment, I don't know what is worse, holding Euros or holding Sterling?
I certainly wish I had bought a few Russian Rubles!
That's it for this week.
I've got to stop because Mum wants her dining table back!
So, until next week, stay safe and tread carefully.