Bitcoin Is Set for a Major Meltdown Due to Downward Pressure on the Global Money Supply (Expert Trader)
Take it from a master financier who uses fundamental and technical analysis over a 25-year career and has experienced around 100 bear markets across stocks, commodities, currencies and Crypto.
Source — Gareth Soloway
Identifying whether you’re a long-term investor or a short-term trader is like using a compass to guide you to success.
Uncertainty about which category you fall in leave’s you with your arse on two toilet seats.
Dipping in and out of narratives with Crypto and lacking confidence in your decisions is when you make mistakes like purchasing at high prices and then selling low.
Gareth Soloway is an experienced swing trader specialising in capturing short to medium-term price movements.
He identifies opportunities from market fluctuations and aims to profit from these price swings. His little nuggets of knowledge are insightful.
Unlike long-term investors who hold positions for months or years, swing traders typically rotate in and out of trades over several days or weeks.
Personally, I like to have conviction and not zig-zag in and out of investments. I buy assets I believe in the long term and then sleep on them. Trust me; it’s less stressful than travelling 150 miles an hour.
Through his analysis, Soloway tells you what you should look for as a buy signal. He researches charts and technical indicators to identify entry and exit points. Mostly looking for patterns, trends, support and resistance levels, and other indicators that suggest a possible price increase or decline.
Soloway was among the few traders who predicted the peak of the crypto market in the fourth quarter of 2021 and accurately predicted its decline.
You may have noticed that Bitcoin has been rising amid some positive news of BlackRock applying for an ETF, which is just a fancy word for a stock representing a basket of assets.
Soloway says that if you see a stock market sell-off, you should also expect a decline in Bitcoins price.
During times of market fear, as witnessed during the COVID pandemic, even Gold experienced a sell-off in its early stages. Gold is a classic example of a risk-off asset, so sell-offs with Bitcoin are highly likely.
Investors should assume if there’s a stock market sell-off, you’d also see Bitcoin experience a decline. Soloway advises you to remain on the sidelines if you’re a short-term trader because you’ll likely get a better entry point.
His scepticism comes from the fact that Bitcoin has consolidated in this position for some time now, and given that the Nasdaq has increased and Bitcoin, which should be correlated, hasn’t, it leaves him believing there’s more downward pressure on the price.
Gareth Soloway — Source
“As for my trading approach, I take risks as part of my profession. However, I recommend staying on the sidelines and observing the market dynamics for the average retail trader, particularly focusing on whether Bitcoin can surpass the 30,500 level in the coming days. If we break above that level, consider getting involved around 35K.
Being safer is always the better plan in the investing world. If people try to double their money overnight or in a month, they usually lose it.
Bitcoin reached a value of 31,000. Fast forward to today. The NASDAQ has been consistently rising, experiencing growth of at least five to six per cent since then, potentially even reaching seven or eight per cent.
Unlike the NASDAQ, Bitcoin has been unable to break out and show significant upward movement.
As an investor, this raises concerns for me. It’s an aspect that requires careful monitoring and attention.”
You Need To Pay Attention to One Important Data Point.
The M2 money supply is declining, and Bitcoin investing is increasing, which Soloway says is a worrying indicator.
The M2 money supply refers to the total amount of money circulating in the economy. It includes cash, coins, banknotes, and money in checking and savings accounts.
It’s important because it gives us an idea of the money available for spending and investment.
When the M2 money supply increases, more money enters the economy. This can stimulate economic activity as people have more funds to spend on goods and services.
There is often a correlation between an increase in money supply and the rising value of Bitcoin. In contrast, a decline in the money supply may result in fewer people investing in Bitcoin.
Looking at the charts, you can see Bitcoin and M2 slowly splitting away, which Soloway says is a sign that Bitcoin will come down too, as the money supply is unlikely to increase short term because of quantitative tightening.
The topline trending upwards is the Bitcoin chart
The bottom line trending down is the M2 money supply.
The Next Leg Up for Bitcoin Could Be Huge.
According to Soloway, long periods of consolidation are bullish indicators because they usually mean higher price climbs long term.
The market has consolidated its position. It may decrease, but it’ll be ready to take a leg higher during the next cycle. He uses the analogy of a marathon runner.
Gareth Soloway —Source
“Think about it: if you’re a marathon runner and just finished running a marathon, representing a big move, you would need to rest.
You need to refuel and allow your body to recover.
It would be quite challenging if you only get one day of rest and then they ask you to run another marathon. However, suppose you have a month off in between, which involves a lot of consolidation and sideways rest. In that case, you can approach that next marathon with renewed energy and perform exceptionally well.”
Final Thoughts.
Sometimes I listen to short-term traders who use charts of technical analysis and think, what the heck?
It’s guesswork.
Comparing unpredictable price movements in financial markets to everyday situations, like running a marathon, is a catchy analogy but not a reliable way to understand or predict how prices will behave.
I like how Soloway uses fundamental analysis and a common sense approach when making decisions. Like how much money is in the system for investing, why are the stock markets gains concentrated in only a few stocks?
He highlights indicators of downward price pressure with Bitcoin, and he’s right. The truth is no one knows where the price will go because human emotion is a factor we can’t measure.
Your best bet isn’t to try and time the market.
Dollar-cost averaging an amount you’re comfortable with on auto-pilot and going to sleep for five years is an underrated strategy.