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the cliff-notes:
- Bitcoin is in a clear bull flag formation, further upside is ahead if it can keep the channel and breakout
- The S&P 500 is rejecting a flip into bearishness
- The Rothschilds, the grandfathers of central banking, have purchased (a small amount) of bitcoin
Good afternoon, everybody.
Time for some pure price study. It is easy to get lost and confused in all of the other indicators we could be looking at. Let's exercise Occam's Razor today: the explanation that posits fewer variables is preferred to one that posits more.
Bitcoin is in a clear bull flag, a bullish pattern for asset prices, as the name suggests. The three parts of a bull flag are as follows: the flagpole, which is the very steep line where the asset's price rises, the flag, where downward consolidation takes place between two parallel trendlines, and the breakout, when the price breaks above the channel. The breakout is the only piece missing right now. I have marked a downward consolidation channel we experienced at the start of the 2020/21 bull run in red down below for reference, and the one we're in right now.
The last question: will it break out and push for higher highs? We will know soon enough. Adding this simple price study to the arsenal of other bullish catalysts in US financial markets we currently have, and it is a very encouraging setup for bitcoin as we head into the summer:
The S&P 500 is clearly rejecting a flip into bearishness. The RSI, an oscillator for strength or weakness in any given asset price, spent very little time below 50. A level of 70 is considered overbought, and 30 is considered oversold. Instead of trending down toward the oversold level, the benchmark US stock index swiftly reversed after falling halfway from 70 to 30 and is now advancing higher. Momentum is on the side of risk-taking in US financial markets:
Not just momentum, you could classify what the US stock market and other risk assets are experiencing right now as mania.
The man made famous for the GameStop short squeeze trade is back after a 3-year hiatus, announcing his return with a meme that got 19 million views in just 20 hours on Twitter. GME soared 110% on market open, had its trading halted 3 times during the morning for volatility, and has well and truly brought the speculative, gamified stock gamblers out of the woodwork after a long hiatus.
While the gamification of the stock market and speculation are heating up, I wouldn't say this necessarily points to the cycle top in stocks and other risk assets being close. The first GME craze happened at the halfway point of the last bull market for US equities. Mania. Yes, without question. Top? I don't think so. An election year, fiscal dominance, consumer sentiment sour but spending intact, and the Fed inevitably responding overnight if stock prices start seriously reversing lead me to believe that despite several signs of the market being overheated, there is plenty of tread left in the tires.
Now for the biggest development of the week. The deadline for investment managers to file their 13F, a report to the SEC that discloses its equity holdings, is this week, and many have come out ahead of the deadline to report.
Here is every major bank and asset manager, by size, that has disclosed positions into one or many of the spot bitcoin ETFs at the time of writing:
- JPMorgan—the largest US bank: $760,000
- Wells Fargo—4th largest US bank: $143,000
- US Bank—5th largest US bank: $14 million
- PNC Bank—8th largest US bank: $10 million
- Truist Financial—9th largest US bank: $2.25 million
Among many, many others not listed here.
The most notable of the new bitcoin holders had nothing to do with its size, it had to do with the holder itself: the Rothschild family.
It is held by Edmond de Rothschild Holding S.A., an investment house whose CEO is Ariane de Rothschild, and it is an extremely small allocation. Only $3.6 million split between Grayscale's GBTC and BlackRock's IBIT.
Jamie Dimon's very own JPMorgan holding bitcoin after relentless bashing of the asset for years is definitely cathartic, but not nearly as significant as the Rothschild family. They are not only one of the oldest and wealthiest families in history, but they are literally the grandfathers of global central banking.
Starting in the late 18th century, the Rothschild family, their empire spans banking, asset management, M&A, mining, energy, farming, and much more. At the end of the 19th century, they controlled half the world's wealth. They have had their finger on the pulse of controlling the world's money supply in a major and minor role for centuries. They were integral in the creation of the First Bank of the United States in 1791 and the Second Bank of America in 1816, and the Federal Reserve in 1913. Their influence in global finance is storied, deep, and undeniable.
For the same people responsible for the creation and proliferation of central banking all around the globe to be buying bitcoin, even as little as they did, is a seismic shift the likes of which very few understand. The world's foremost central planners are buying the very vehicle created to separate the money from central planners. Don't miss the forest for the trees. This is a tacit admission that the ship is sinking, and they are eyeing the only liferaft that does not have any holes in it.
If they are doing this because they want to keep their hand on the steering wheel, allocating to the one thing they can't control, they are in for a rude awakening. The old guard is used to amassing control over an asset by buying it in large quantities, but this is impossible with bitcoin, whose network and its operations are wholly separate from the ownership makeup of the asset being produced.
To clarify before I wrap until Friday's letter, I think the path of least resistance for bitcoin is a sideways, choppy summer. Check out my Twitter feed for more of my thoughts as markets unfold, as always.
Final thought: now is the perfect time to stack sats and store them tightly, Theya is the best place to do that. Bar none. Check it out.
Take it easy,
Joe Consorti
Theya is the world's simplest Bitcoin self-custody solution. With our modular multi-sig vaults, you decide how to hold your keys.
Whether you want all your keys offline, shared custody with trusted contacts, or robust mobile vaults across multiple iPhones, it's Your Keys, Your Bitcoin.
