This is NOT investment advice.
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Is The 'Melt Up' Officially On?
Will Bitcoin dance with QQQ and TiNA or blossom bound to brewing bellicose bonds? No way I can look past the fact that yields globally are surging. VOL has been laughably subdued. Equities go up every single day. Something has to give at some point. My senses tell me Bond VOL will not remain subdued for much longer.
Not certain of my own answer much less 'the answer' . . . . . . . I can't help but ask myself consistently if the proverbial switch has been flipped for the 'Melt Up'. So, what is the 'Melt Up'?
- CBs globally easing and increasing liquidity
- FX wars race to the bottom on weakening currency to gain exports
- Fiscal spending increases globally in effort to grow out of the debt problem
- Assets, especially hard and scarce assets, should be in the driver's seat
- Equities have the wind in their sails seemingly at all times
More on this moving forward and below. Bond VOL and the euphoric state of equities with Spooz between 5900 and 6000 will determine a lot in the near to intermediate term perhaps.
With regards to Bitcoin . . . . . . . . all eyes to see how it reacts. A brewing storm with global debt seemingly plays perfectly for Bitcoin, but how will that impact Risk On and the correlation with QQQ, etc.?
Of course I understand and realize the 'Melt Up' already started years ago, but I'm talking now more about the precise 'switch' or pivot point if you will.
Bonds Price In Bessent Option B
Blue Circle in the below 4HR chart for the UST 10YR is the basis trade meltdown. That was an event that shined a light on how vulnerable bonds, and the markets in general, can be where things can change on a dime in a very bad way. However, what I see below is the market essentially drifting back up to those levels. It seems to me the upward pressure on yields is there, but why?
US10YR 4HR
Since the basis trade event, the market has seen the following:
- Risk firms up and looks past tariff threats to tariff growth opportunities
- capital headed to the U.S. in excess of a few trillion
- Bessent tells the market Option B is a go
- Econ hard data holds and soft data inches up towards the hard data
- DOGE and budget deficits data offers some 'hope' but nothing that changes the reality of the math facing bonds
Is the market starting to fully digest and discount the reality that America will need BOTH strong growth and proficient spending to grow nominal GDP at a rate that exceeds the growth rate of the pile of debt? Is the market asking more who and how this is going to get paid for? And bonds are screaming "Not me!!!!".
In a matter of 6 weeks or so Bonds are undergoing a shift from expecting a much weaker economy to one that is firming up perhaps. The turn only increases the challenge posed by Net Interest Expense and the Credit Risk facing America ('riskier' than China and Greece according to the market right now). It's a major shift. Yields are absorbing stronger growth, more long term inflation pressure, rising Net Interest Expense, increased credit risk, and a long term plan for an "upward growth shock" that will require fiscal spending (hopefully on tangible and worthwhile projects).
US30YR 4HR
And we have not forgotten about Japan and their all time high yields on the 40YR JGB. Note the blue below during the period of extremely high Bond VOL, and now another big rip higher. But, the BOJ just started flip flopping so isn't everyone front running that and getting levered long JGBs? Worth watching closely here as usual to see how and why the market is shunning the BOJ flip flop to Dove and hammering JGBs. That's not the typical pavlovian response.
Bond VOL may not have gone away permanently, and yields are screaming higher globally:
Bitcoin Weekly
Market is waiting for that big volume thrust of more strong accumulation or a pullback. 99.5K/100K/105Kish/107Kish key levels. It is very obvious it is fixated on that 103Kish we tabbed which is highly connected to the Volume Profile.
Bitcoin Daily
Overall, still looks bullish but being strung along . . . . . . . .waiting for what's next. Note the Money Flow on the Daily switching to Red.
Some great data from BitcoinMagazinePro.com showing large holders digging in and building:
Time to check in with Glassnode, which brings it again with some spectacular data and information on the Bitcoin market. First, Glassnode's conclusion for the current situation:
It's not all bad news, with respect to Realized Profits, especially for ST holders, there is still the proverbial 'room to run':
Excellent data and chart here below from Glassnode. They have identified some areas/zones where "a lot of the heavy action took place" and I agree. These are fairly closely aligned to Volume Points of Control and insight gained from the Volume Profile. As I stated previously, working through that 95Kish-98Kish area was a big, powerful, and significant move. Can it hold that area if we see a correction or pullback?
A little closer look at one hot spot, and note how this aligns with the 91Kish we have likely bored you to death with discussing and the 91K/92K we currently see on a Higher Time Frame Liquidation Heat Map:
The action inside the 'Trading Pits' . . . . . . . generally bullish tone on Coinbase with selling easing up significantly on Binance:
Yup, the ETF was and is a big deal . . . . . . easy come and easy go . . . . .
Liquidation Heat Map - Higher Time Frame
Bitcoin Bottom Line:
- Obviously the market is currently obsessed with that 103Kish level we have noted many times, currently hasn't decided if it will firmly reject and correct/consolidate or if it is behaving similar to the 'ole 'Three Weeks Tight' type of action where it trades in a tight range building its torque up
- My senses tell me how equities react to their currently uber bullish extremes and the reality of yields rising globally unabated into more Bond VOL will play a major role in the macro impact on Bitcoin
- Will we go back and test 99.5Kish/100Kish and resume? Spike up above the current zone and then retrace? Tease everyone with tight range bound action like now for a longer period of time and then run higher? Time will tell.
- Let the market show/tell us what is next
Risk On/Off
QQQ been on fire, no doubt. Spoos above the 5900 and threatening the 6000 level. Market hasn't encountered much distribution at all in recent sessions, almost like it will never go down.
Nobody wants any puts because the market will go up every single day for the rest of our lives, apparently:
Rally forcing people to be long:
Semis tend to swing back and forth for all sorts of reasons, what's next here?
Market is paying more for SKEW with Spoos mooning meaning expectations rising for draw down as it rises:
Risk On/Off - for me I want to see how the S&P works with this 5900/6000 zone and how that fits in with other markets. My long oriented outlook remains but vigilance is up for sure.
German Wishes Wither as Wind Whistles at a Whimper
My senses tell me nearly all people on this planet want what's best for the planet and the environment. Maybe some of us just want like an actual conversation centered around plausible and sustainable options???? Just a thought.
Germany is dealing with the reality of intermittent wind power and betting the farm on one or two solutions that are perhaps "clean" (or are they?) and check some virtue signaling boxes for you.
Mastercard Moonshots Stablecoins
Mastercard is teaming up with Moonpay to further drive stablecoin adoption. Bullish.
Saudis Swarm Strategy
Binance reports that the Saudi Central Bank has disclosed a position in MSTR.
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