HODL — Pullback Looks To Deepen
Buying Window May Be Opening For A Limited Time Just Ahead
Yes, it appears that a particularly scrumptious feeding time is near!
It appears to me that the odds currently favor a BTC move down to the strong support between $30k to $35k.
My GTC LIMIT orders to BUY are already resting comfortably within that range waiting to be filled if and when prices may arrive down there.
On the market open of January 11, 2024 (the BTC Spot ETF approval day), I immediately sold a portion of my GBTC as planned. Then, seeing that the GBTC operator, Grayscale, had only reduced its annual fee from 2.00% down to 1.50%, I sold some more to purchase a few of the newer entrants charging the much lower fees of 0.25% for Blackrock (IBIT), and Fidelity (FBTC), 0.21% for Ark21 (ARKB), 0.20% for Bitwise (BITB) and 0.19% for Franklin (EZBC).
That is what has been done, what may come next, and what to do.
Now some of the “why’s” for those with inquiring minds among us.
First, the volume of selling of GBTC has been a large factor in the decline so far. Why is that? Most likely that is primarily due to the fact that the highest fees among the newcomers (.025), are still a full 83% less expensive than GBTC (1.50%). Investors have no control over the markets, but we have full control over selecting the providers which offer the lowest overall costs to HODL!!
Grayscale is not completely crazy to think they can keep their fees for GBTC so much higher than the new competition, at least in the short term, because currently the tax liability on the unrealized capital gains of their average customers is likely to far exceed the difference in fees for one or a few years.
They are likely aware that, eventually (and perhaps gradually), they will need to reduce their fees to grow their business. But they are likely correct to say that many of the new entrants will not survive the tough competition and will close their ETF’s. That will be a far better time for Grayscale to re-focus on growing GBTC’s assets under management. And while waiting for that time to arrive, they will gain great benefit by collecting the 1.5% on the 80% of the GBTC assets that still remain (still 10x bigger than their next nearest competitor) even after the recent torrent of selling ($5 billion) of GBTC.
So with the heaviest selling of GBTC likely behind us . . .
Why do I think the decline still has further to go before it is complete?
Let me count the ways:
- The volume on the small 7 day recovery from January 23, 2024 appear to be lacking in terms of enthusiasm in either volume or price;
- Too many analysts have been too anxious to call the end of the decline, which I believe they have done prematurely;
- Too many are counting too soon on the power of the upcoming halving of the block reward for miners (which in the past has always led to big increases in the price of BTC), to support prices in the here and now;
- Too many are likely to be further disappointed by the current lack of clear signs of the anticipated tsunami of new institutional money;
- There is now much more resistance (in this $43k area of the chart) than there is support (the first strong support is now down at around $34k).
The “halving” is surely very important and will continue to become much more important as the actual day of its occurrence comes closer. But for now, the halving is still likely to be 2 or 3 months away, giving the decline plenty of time to deepen before the next takeoff arrives this spring with double tailwinds.
What does that all mean for savvy investors?
This anticipated decline may be the best ever buying opportunity because:
A. The SEC approval of the ETF’s has finally given institutional investors a clear path to add the BTC asset class to their portfolios and their clients;
B. In the world of institutional investment, things move very slowly, but may well begin ramping up by the time of the halving in the Spring;
C. So with those two tailwinds (the halving and the institutional investors) soon to gather increasing speed until becoming a huge force in the Spring, while this opportunity comes at much higher prices that last Spring when I first began writing to you about it, it is arguably the best opportunity ever, because it now comes with the gargantuan benefit of the SEC approval already in hand!!!
Bottom line: There is likely a truly epic opportunity to buy just ahead of those two anticipated significant catalysts (the halving and institutional inflows), for a soon upcoming and potentially far bigger rally!
I will buy any further weakness as a rare gift. You may wish to do likewise.
Why? Because based on my observations and outlook from considering all of the above, it seems likely that early 2024 may very well present the very last opportunity in history to buy BTC below $40,000 . . . ever.
While it is always painful to watch open profits and account balances melt away during the typical declines, I will remain a steadfast HODLER in the anticipation that BTC (and derivatives/ETF’s) will soon be continuing the inexorable climb to and through a very long series of all-time new highs above $69,000, and far, far higher as its adoption continues to broaden, deepen and progress.
Finally, if the market may happen to continue to strengthen from here, how will I know when to abandon my short-term decline scenario? At this point in time, I would rely upon the indication that strength has been reinvigorated, which would be shown by a BTC closing above $46,525.
LEGAL DISCLAIMER:
Nothing written here is advice of any kind. For financial advice it is recommended that you consult with a Registered Investment Advisor. Rather, this is information and speech including the (possibly clueless) opinions of the author for education and/or entertainment purposes only.
