1. Bitcoin's Critical Weekly Close and Market Reaction [1]

thumbnail The upcoming weekly close for Bitcoin is crucial for determining the market's direction in the fourth quarter, specifically whether the recent rally is a genuine bull market or a fakeout.

1.1. The Importance of the Weekly Close [10]

  1. The weekly close of Bitcoin is extremely important for understanding what will likely happen in the fourth quarter of the year [10].
    1. A close below the May high would be considered very bearish, suggesting the rally was a fakeout to trick people into thinking there would be no drop in Q4 [11].
    2. A close above the May high would show that the bull market is being accepted further [12].
  2. The speaker previously did not believe Bitcoin would surpass the May high and admits to being wrong about that prediction [13].
    1. The speaker advises people to react to the market's movements rather than trying to predict them [19].
    2. If Bitcoin closes above the May high, it would mean it closed above the 50-week moving average and extended beyond it, making more people bullish [31].
    3. If Bitcoin falls back down, it would look like a fakeout [33].

1.2. Comparing Bitcoin's Current Movement to Silver in 2012 [34]

  1. The current Bitcoin situation is similar to what happened with silver in 2012 [34].
    1. In 2012, silver had a strong rally, then dropped, set a low, and then rallied again to a previous high [37].
    2. Silver closed just below its prior high, then had a big move up, rallying about 6% above that high [40].
    3. Bitcoin has also moved about 6% above its prior weekly close high, similar to silver [43].
  2. If Bitcoin closes below its prior range high (around $82.8K to $83K), the speaker expects weakness in Q4 [45].
    1. This prediction does not change the fact that the speaker was wrong about the initial rally above the May high [49].
    2. The speaker understands why people might ignore a bearish view, given his previous incorrect prediction [53].
  3. The current market conditions, such as rising bond yields (the 30-year yield is at 5.5% and possibly heading to 6%), could cause a fakeout [57].
    1. In 2012, silver's fakeout happened because investors were betting on more quantitative easing (money printing), but the Federal Reserve was more hawkish (less likely to print money) than expected [64].
    2. This caused the "debasement trade" (buying assets because money is being printed) to unwind [67].

1.3. The Dollar's Strength and Bitcoin's Resilience [69]

  1. The speaker previously stated that the market was wrong about the dollar, predicting it would go up, despite initial drops and criticism [69].
    1. The dollar is now rising because yields are increasing, which suggests more rate hikes than the market expects [74].
  2. If Bitcoin can ignore the rising yields and dollar and close above its range high, it would be a very bullish sign, weakening the bear case [75].
  3. However, if Bitcoin cannot shrug off these factors and drops back down, it might mean the recent rally was a fakeout to convince people that there would be no Q4 weakness [77].
    1. Sometimes, weakness happens after everyone is convinced it won't [79].

1.4. What to Watch for in the Weekly Close [80]

  1. The speaker advises watching the weekly close and reacting to it, rather than predicting it [80].
    1. If Bitcoin closes below the May high, it will likely head back down to the range lows, similar to what silver did [82].
    2. Currently, Bitcoin has only retested the point it broke out from and has not yet given back its gains [86].
    3. If Bitcoin falls below $82.8K, it would likely drop into the high $70s before trying to bounce back up before the weekly close [90].
  2. The current situation is difficult because it's a week before Q4, and Bitcoin has had a golden cross (a bullish signal), followed by a dump and then a rally [92].
    1. Technically, Bitcoin's chart looks similar to the 2019 and 2023 bull markets after their lows [94].
    2. If Bitcoin closes below the May high, it's important to react, especially for those making money in the altcoin market [100].
    3. Altcoins would be hit hardest in a drop because they are betting on a future bull market that hasn't been confirmed yet [102].
    4. The speaker has always said that two weekly closes are needed for confirmation: one close above and then follow-through the next week [105].
    5. While it looks like there's follow-through now, the week isn't over [108].

2. Distinguishing Bitcoin's Current Position and Future Outlook [113]

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The speaker clarifies differences between Bitcoin's current situation and the silver analogy, emphasizing the importance of the weekly close for Q4 predictions and acknowledging his own past incorrect predictions.

2.1. Differences from the Silver Analogy and Consequential Close [113]

  1. One key difference between silver in 2012 and Bitcoin now is that silver was still below its 50-week moving average, while Bitcoin had a weekly close above it [113].
    1. The speaker emphasizes that the situations are not exactly the same, but the principle of watching the weekly close remains [120].
  2. If Bitcoin closes below the May high, it is likely a fakeout, and the market will get a clear signal for potential Q4 weakness by late September or early October [122].
  3. This week's close is one of the most consequential because:
    1. If Bitcoin closes and accepts above the May high, it would be bullish, showing Bitcoin is rising despite negative macro factors [125].
    2. If it closes below, the speaker believes it will lead to typical Q4 weakness, especially after everyone expects it not to happen [129].
  4. The speaker's previous incorrect prediction about the May high does not change the objective bearish outlook if Bitcoin closes below it [130].
    1. A massive wick up followed by a close back down, leading to months of dropping to previous lows, as seen in the silver chart, would be a bearish sign [133].

2.2. Adjusting Expectations and Market Dynamics [138]

  1. The speaker acknowledges being wrong about the May high and understands why some might doubt his current views [138].
    1. He suggests that if a drop occurs, it would be wise to pivot back to the idea of Q4 weakness, but adjust the expectation that it must reach a new low [145].
  2. Historically, Bitcoin's weakness after the first rate hike in a cycle often doesn't appear immediately [148].
    1. In a midterm year in September, the window for weakness is typically 50 to 90 days after the rate hike [150].
    2. For example, in 2018, the low was 81 days after the September rate hike, and in 2022, it was 49 days after [151].
    3. On average, the low occurred 81 days after the rate hike and was 29% down from the rate hike's price, potentially putting it near or slightly below previous lows [153].
  3. If Bitcoin holds the May high, the speaker will be less certain about a Q4 drop and will have to adjust his views further, recognizing that the market doesn't have to meet his expectations [159].
  4. The speaker finds the current market perplexing because bond yields, energy prices, and the dollar are all rising, yet Bitcoin continues to shrug off these negative macro factors [165].
    1. Markets don't always have to make sense, which is part of their nature [170].
    2. The speaker is open to accepting continued upward movement if Bitcoin shows follow-through after closing above the May high, but acknowledges that things can change quickly [172].