Big Breakout In Bitcoin

Spreadsheets make everything look linear and controlled, but the real world oscillates, overshoots, collapses, and rebounds. A company with operational and financial flexibility—what we mean by staying power—is able to exercise options that are quite valuable at different points in the cycle. Without the firm handle on that flexibility that credit analysis provides, we’d argue you can’t fully understand the wealth-creation process as an equity investor.  ~ Mitchell Julis

In this week’s Dirty Dozen [CHART PACK] we check out the technical setup in bitcoin, look at the year-to-date performance in precious metals, contrast that with the worst rolling returns in commodities since the Great Depression, muse on what could kill the current dominant trends and thus cause the most pain, and end with a long shipping trade, plus more…

Let’s dive in.

***click charts to enlarge***

1. Bitcoin (BTCUSD) just broke out of one of its tightest coils in a long while. Compression regimes such as these often lead to powerful expansionary ones (big trends). There’s a number of fundamental reasons to like the play right now, as well. The second round of $1,200 stimulus checks to fund retail speculation is one of them. Now may be a good time to put on a position if you don’t already have one…


2. Gold has put in its best year-to-date returns in 30-years (orange line). While we’re sure to see a shakeout at some point, the macro fundamentals very much support this trend and it’s ultimately going to go much higher (see my framework for analyzing precious metals here).


3. The bull market in gold is coinciding with the worst 10-year rolling returns from commodities since the 1930s. It’s anybody’s guess when this deflationary regime will end, exactly. But the trends that will be born out of the next regime reversal will be incredible.

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Dieudonne DJIMI 2 months ago Member's comment

A very good analysis.