#usdollarfallstothreemonthlow What is the medium- to long-term read on this week's BTC rally? Firstly, anyone drawing a trend line will notice a break in the downtrend on the daily chart. But what does the magnitude of the move tell us
? Once you volatility-adjust the move (Bitcoin has been in a structural volatility downtrend), this week's 2-day move is the fifth-largest since 2018 (a 4.4 sigma move).
It doesn't read as a normal countertrend rally. The 2018 & 2019 lows both had a volatility squeeze, followed by a big impulse move higher. Both were large in % terms but not as big as this one in volatility-adjusted terms.
So a cycle inflection, not a counter-trend bounce, and the forward statistics support that. Bitcoin has been higher >70% of the time 30/90/180 days after moves like this, compared to roughly a coin flip in a random study. Also, the median return is much higher than random. Fourteen prior instances is a small sample, so before the "n=" crowd start arking up, this is probabilistic tilt, not a certainty.
What makes the timing interesting is what's happening in the bond market. Long yields are creeping higher again after the Treasury's move this week.
Bitcoin's role as an early warning for a coming liquidity impulse is now firing. Since Q4 liquidity momentum had rolled over hard and was on the precipice of going negative leading into these 2 Treasury interventions. You simply can't have debt issuance exploding at the rate it is while the liquidity floor under it erodes. But nothing the Treasury has done changes the supply equation. They have affected the dollar and the curve, but it won't be enough.
$IQ
$IR
$OP
? Once you volatility-adjust the move (Bitcoin has been in a structural volatility downtrend), this week's 2-day move is the fifth-largest since 2018 (a 4.4 sigma move).
It doesn't read as a normal countertrend rally. The 2018 & 2019 lows both had a volatility squeeze, followed by a big impulse move higher. Both were large in % terms but not as big as this one in volatility-adjusted terms.
So a cycle inflection, not a counter-trend bounce, and the forward statistics support that. Bitcoin has been higher >70% of the time 30/90/180 days after moves like this, compared to roughly a coin flip in a random study. Also, the median return is much higher than random. Fourteen prior instances is a small sample, so before the "n=" crowd start arking up, this is probabilistic tilt, not a certainty.
What makes the timing interesting is what's happening in the bond market. Long yields are creeping higher again after the Treasury's move this week.
Bitcoin's role as an early warning for a coming liquidity impulse is now firing. Since Q4 liquidity momentum had rolled over hard and was on the precipice of going negative leading into these 2 Treasury interventions. You simply can't have debt issuance exploding at the rate it is while the liquidity floor under it erodes. But nothing the Treasury has done changes the supply equation. They have affected the dollar and the curve, but it won't be enough.
$IQ
$IR
$OP