Risk-on sentiment continues: we are buying the dips

Let's outline the topics we'll be diving into today, which we'll then follow with a more general market breakdown and what we expect for price action. 

Topics

• ETF flows
• Fed-speak
• Market Breakdown

ETF flows

As we previously mentioned, we felt that for prices to keep going higher from this low $50k area, we would need to continue to see very positive inflows to the ETF, similar to the ones we saw in early and mid-February. 

Unfortunately, these inflows have begun to wane. Yesterday's inflows were relatively positive, though, so again, this is really key for us to continue watching and tracking. 

We did somewhat expect that as price went north of $50k this early in the cycle, considering we're still two months out from the halving. Things don't usually start getting tasty until 3-6 months post-halving. That’s potentially why these ETF inflows are now slowing down, as a $53k BTC may feel somewhat expensive at this point in the cycle. 

However, we still expect that if BTC were to pull back to $40k-$44k, it would likely be heavily bought up, so we still feel this is a dip buying market, with the real spicy price action coming in the second half of this year.

Fed-speak

Over the past week or so, we have seen a fair amount of Fed-speak. In this, we have seen most members come out and push back on rate cuts anytime soon. Most have suggested that rates are at their peak despite the inflation data showing increases. 

We’re now seeing that potential rate cuts are being pushed out, not to the May or even June Fed meeting, but it may be July when the first rate cut comes. If inflation continues moving higher, then this may provide further issues. But, if higher inflation does see the market for risk assets pullback, we'll be buyers. 

Market breakdown 

We'll start here with Nvidia and Earnings. 

Ultimately, earnings across the board have been positive, with the market really looking to Nvidia on Wednesday, whose earnings were phenomenal, with the stock price closing up 14% the next day and adding over $250 billion in market cap. 

Crazy. But, this is the general story of markets: Earnings are ok/good, the fiscal spending is still very high, and the Fed is making some progress on inflation, so overall, this is positive for markets, and again, why we're going to be buyers of dips if there are any major dips in the S&P and this then transfers into Crypto and Bitcoin. 

Focusing on crypto, we still see many on-chain metrics showing BTC may be due for a slight pullback. These metrics are a bit over-extended, particularly for where we are in the context of the cycle. This has been followed by weaker ETF inflows this week, although yesterday's was positive.

Cryptonary's take 

There are several ways we can go about this, but when re-reading the 'Market Breakdown' above, we must ask ourselves, "Is it worth trying to be too clever here?" Essentially, we think not. 

Fiscal spending is strong, companies’ earnings are positive, and so far, the Fed is winning the inflation battle. Although there could be slight problems on the horizon with this, for now, all is ok. 

So this then enables risk assets to perform well, which also translates into Bitcoin. We then pair this with a new ETF, which has been phenomenally successful when compared to other ETFs, along with a halving in 2 months - dips are for buying.

So, what area are we targeting for dips? 

Honestly, we see dips as being shallow now. Let's look at dip buying areas: 

$44k to $47k  for Bitcoin.

$2,400 to $2,700  for Ethereum.

$80 to $100 for Solana.

Let's keep it simple.

Meanwhile, the picture looks relatively decent for now. We're dip buyers, and we expect, in 12-18 months, prices to be well higher than they are today. 

Let's go!!!