We continue to standby BTC swinging between low $30Ks to upper $40Ks. Each time BTC trends down, the altcoins without substance will have their market cap reduced aggressively. The crypto market can stay oversold longer than most buyers can stay solvent. Bitcoin needs to continue to clean out the system. For the short and medium term our plan is to pace out core coin accumulation, using funds built up from 2021 or recent sales of other investments. Our projected high for BTC this year is $80k.
Tug of war
BTC has been trading in the above stated range for months now and to expand further on the repeated forecast it's worth pointing out the factors holding prices back and those that push it up.
Holding prices back
RatesSince 1986, recent rate hike cycles have lasted about 3.5 years. We think the FED is more aggressive than they have been in the past at raising rates. With nominal rates and inflation seemingly at the opposite ends of the pole, they may feel pressure to normalize real interest rates. Inflation will likely sustain at high levels through the second quarter, and to reign it in one shouldn’t be surprised to see multiple 50bps rate hikes in successive FED meetings. Right now the market is pricing in a year-end reference rate around 2.5% and we feel it would only take one surprise hike of more than 50bps to turn investor sentiment drastically negative. If this happens we may see Digital Assets sell off, consolidate, and then continue on the path up and to the right.
GeopoliticsThe Russia-Ukraine war continues to wage with no imminent end in sight. Most of the world, rightfully, is on Ukraine’s side. However, one ominous effect of sanctioning Russia is a commodity crunch that could lead much of the world scrambling for basic necessities. Russia is a leading exporter of wheat and key inputs in fertilizer. Wheat is an important staple of diets around the globe and fertilizer enhances yields in order to meet demand. If Russia is shut off from the rest of the world then the lack of wheat and fertilizer imports could possibly lead to food shortages and famine in vulnerable countries. A global famine is not something that would be favorably priced into markets and could be the impetus for a Macro sell off.
Bidding up pricesTerra recently publicly announced and bought $1.4B worth of Bitcoin to back its stablecoin, UST. Do Kwon’s plan is to build the reserve up to $3B. They bought more than 21,000 BTC over a 9 day period in late March. Terra consulted with board member Jump Trading, an institutional trading firm, who reported that investor sentiment had changed and to pause buying so the market could cool. Kwon said they plan to finish buying the remaining tranche over the next 1-2 months.The use of BTC as collateral by other projects could also become increasingly more adopted should Kwon’s first large experiment become proof of concept. This would further increase the demand for Bitcoin.
DAIM TAMPA recent report by CNBC shows that more clients want their advisors to get them direct access to crypto. Advisors have had issues meeting this demand due to the lack of streamlined options that link TradFi to pure Direct Digital Asset exposure. DAIM has partnered with Gemini to accommodate this demand with an easy to use Turnkey Asset Management Program through BITRIA. With BITRIA, advisors have the ability to use DAIM as a Digital Asset subadvisor, while focusing on the remainder of a client’s portfolio. Advisors have access to a variety of pre-set portfolios that access Digital Assets trading directly on Gemini’s exchange. Clients are set up with their own Separately Managed Accounts (SMA) with features that simplify onboarding, USD movement, reporting, and asset management. Advisors and clients are given 24/7 auditing capabilities and furnished quarterly reports. All investments are liquid at any time with unlimited wire-in and wire-out amounts. The platform supports all types of retail investment needs from IRA’s and individual taxable accounts, to Trusts, Corporate and more complex structures.
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