March 18 REX Wire Market Outlook

Bitcoin corrects: Likely a temporary setback on the way to $100k.

How long will the "everything bubble" last?

TradFi markets continue their climb, with only minor pullbacks. Gold, in particular, made a new all-time high last week, topping just short of $2,200 before consolidating. This is despite gold ETFs experiencing significant outflows in favor of the BTC ETFs; while retail is less interested at present, central banks are buying.

Last week's unexpectedly high CPI print (3.2% rather than the forecast 3.1%, with core 0.1% higher than expected at 3.8%) does not seem to have changed anything in particular. Key inflation figures are also expected from the UK later this week. For now, the "everything bubble" continues to inflate.

Bitcoin Backs Off

It's not all green candles. Bitcoin saw a significant correction at the end of last week. Following a new all-time high around $73,800, BTC crashed below the prior ATH of $69,000 and continued as low as $65,600: An 11% drawdown.

It recovered to close the week at $68,400, meaning that old all-time high ($69,000) is now acting as resistance. In prior cycles it has taken a little while for bitcoin to break its last ATH and consolidate above it; it looks like this one is no different.

Meanwhile, the ETFs continue to stack bitcoins, rain or shine. There appears to be little correlation between bitcoin's gain or losses and the size of inflows on any given day. There is a strong narrative around bitcoin as diversification and a store of value, and ETF buyers (many of whom are presumably purchasing IBIT for their retirement accounts) have a high time preference. In fact, last week saw the second-highest inflows since launch.

BTC ETF inflows

Nonetheless, there were signs that the market was getting overheated, in the short term at least, and possibly with wider consequences. Certain on-chain indicators are flashing, with one analyst writing that a key indicator is firing:

The first cross of the 23 value line hasn't represented the top in the past, it is typically just a temporary resting place in a parabola. But what it does tell us, is that we are entering the end game. Not long after profit gets this high have we seen a first cycle top (weeks to months), and a final top not much after that.

Every cycle is different, but this is another piece of information that suggests the current market cycle might end up being left-translated (that is, with an early peak around the end of the year or beginning of 2025, and with a longer-than-usual bear market).

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