Matrixport, a crypto services provider with over $3 billion in assets under management, has become cautiously bullish on Bitcoin (BTC) after its August slide. Head of research and strategy Markus Thielen suggests that traders should buy the recent price dip with a tight stop loss. With tight stop losses, we would be long Bitcoin, expecting lower Treasury yields and a rally in U.S. tech stocks, Thielen said. We expected a 10% correction by the end of the summer, which we have gotten, and with the appropriate risk management approach, traders can try to be long again.
Traders should keep an eye on Bitcoin’s price for a potential drop below $25,800, as that would trigger the stop loss on the long position. The yield on the U.S. 10-year Treasury note has dropped 18 basis points to 4.18% in the past seven days, which could be a bear breather for risk assets, including cryptocurrencies. Thielen believes that yields could continue to weaken as the U.S. inflation rate cools.
The Fed’s fastest rate hike cycle in 50 years will likely set up a multiyear deflationary boom and we expect new all-time U.S. stock market highs by the end of this year, Thielen said. Market makers could also buy Bitcoin to maintain a direction-neutral book should Bitcoin start rallying, which could accelerate price gains. Derivatives data shows a huge call ‘wall’ between 30K to 35K, and once a tiny rally gets going, the option gamma could cause a violent rally back to 30K as market makers will have to buy Bitcoin to hedge themselves, Thielen said.