Presenting Bitcoin Observations - a weekly roundup of stuff I noticed in the world of Bitcoin or otherwise connected in some way via the economy, financial markets, and/or culture and society. 

This is NOT investment advice. 

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Another Bond Auction Not So Great

These auctions fluctuate and seemingly the minute we see a disaster, the next week's auctions come back hot as a pistol and look "so much better".  Nonetheless - we all know the fiscal situation is deteriorating by the minute globally in terms of sovereign debt and the inevitable avalanche of monetary and fiscal responses.  Here's another bond auction that wasn't so hot as reported by ZeroHedge:

Here's the action in the 10yr UST, up almost a 100 bps since the Fed first cut.  Many seem baffled by this.  Looks to me like the market is acknowledging that the much needed relief on the short end (as Yellen piles even more into the short end of the curve) will perhaps add to inflationary and growth expectations pressuring the long end even more.  And don't even start thinking about sovereign risk (BTC reserve anyone?). 

Bitcoin Strategic Reserve

Discussions around a Bitcoin Strategic Reserve are picking up as of late as well. 

Clearly anything political and related to Donald Trump gets a lot of attention and heated views from both sides, so we realize that and pass everything through a filter always.  That said - this is a big deal.  The proposal not only states America would be buying 200K Bitcoin a year but also that the Fed would be forced to use the first $6B it earns to buy Bitcoin.  If any of you have been around since 2013 like us, this is breathtaking and mind boggling.  To think that the corrupt criminals in DC would now be pushing legislation to auto-buy BTC is astonishing.

Part of the larger implications go back to allocation as we discussed in this piece on Bitcoin allocation.  The proliferation of 401Ks and IRAs (the government "allowing" you to invest) put a constant bid under bonds and equities as evidenced by PE multiple expansions and a 30yr bull market in bonds.  Fund managers have to buy.  Can you imagine if the U.S. Treasury and Fed "have to buy" on an automated schedule?  What about other nations and entities?  Game theory.  This is a very, very big deal potentially. 

Bitcoin Rockets Towards 100K

People are getting a bit giddy around these levels so let's see what happens.  BTC remains well elevated above the 20EMA ribbon and has been since the 73k/74k area.  Don't be shocked with a retest of 89k/90k at some point.  But, it could certainly ignore that and keep going straight up. 

Bitcoin Magazine PRO released some more good data recently taking a look under the hood.  Retail warming up in the bullpen and open interest not spiking with the exchange rate. 

The above depicts new address creation warming up a bit but not anything close to an exuberant spike or the retail herd trying to pile in all at the same time (local top). 

The below shows the exchange rate for Bitcoin hitting new highs but open interest NOT aligning with the same.  There are a million ways to look at open interest, etc. - but it is intriguing that unlike past moves we aren't seeing it so consolidated in the derivatives.  Makes this move "feel a bit cleaner" and perhaps more durable and sustainable. 

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