I recently published this idea privately because I was unable to post it publicly at the time. Now, I’d like to make it public.
(Click the picture above to view the TA-Chart.)
I’ll be copying and pasting all the text from the original private idea here, along with the missing links I had prepared on April 2nd.
The purpose of this chart is just to illustrate how my three target levels align with my Fibonacci retracement levels — which is also the reason I selected them.
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We are currently in a complex situation. Markets have been experiencing a sell-off due to uncertainty surrounding Trump’s tariffs. Additionally, Trump needs to refinance a massive sum of government debt ($7 trillion) over the next 10 years. To achieve this, he must lower the 10-year yield to reduce interest payments.
One way to lower yields is by increasing government efficiency, thereby reducing borrowing needs and bond issuance, which in turn decreases yields. Another method is cutting interest rates, yet his tariff policies counteract this approach. This raises the question: does he want a recession? During a recession investors would flock toward bonds as a safe haven, ultimately pushing yields down.
Bad Signs
– Fed Atlanta GDPNow Gold adjusted at -0.8%
– PMI below 50
– Major uncertainty due to enormous tariffs
-> Michigan Consumer Sentiment (57) and Expectation (52.6) are at levels seen during the recession of 2022
– FED cannot cut interest rates due to persistently high inflation
Are we heading towards a recession?
People tend to overreact and overlook key indicators—one of which is liquidity. Examining the WTREGEN, we see a steep decline since mid-February, indicating that cash has been injected into the system.
This is further supported by the rising RRPONT since mid-February. Additionally, the Fed has been slowing down QT, meaning the liquidity injection is not being offset as much.
Additionally due to the tariffs countries like China could bring a liquidity stimilus into the markets to help their domestic markets.
In summary, liquidity levels should be sufficient for at least a blow-off top. The reason markets have not rallied yet is due to uncertainty stemming from Trump’s tariffs. This is reflected in recession-level Michigan Consumer Sentiment and the Fear & Greed Index.
A key bullish signal would be a falling RRPONT alongside a declining WTREGEN, as this would indicate that cash injections are flowing into risk assets, showing regained confidence. For confidence to return, we need a positive catalyst, such as an stop to QT, an increase of the balance sheet or an interest rate cut. However, the Fed is holding off on cuts due to high inflation and the tariffs.
But this is where it gets interesting:
According to Truflation, inflation has dropped significantly below the Fed’s 2% target since early March. The Bureau of Labor Statistics (BLS) data lags by a full month, so if Truflation’s data holds any truth, the upcoming inflation report on April 10 may reflect this decline. This could restore confidence and provide the Fed with room to give us a positive catalyst.
Where is BTC headed?
Compared to my expectations from early february (https://ibb.co/mCsjN8Cc) I expect BTC to first move into the $78K–73K range before rallying toward $115K instead of rallying now at 82k. This range aligns with my Fibonacci levels, and 73K was the high of March 2024. Additionally there is currently a fractality compared to the bottom of 2022 where the bottom now would be rougly at 75k.
To reach $115K, BTC must first break the black downward trendline and the double-top neckline at around $95K. My blow-off top target is $115K, and if BTC holds above $100K, I will eye $145K and $185K as the next targets.
Furthermore there could be a chance that the tariffs are just a negotiation tool since the tariffs do not make any sense % wise.
However if Trump does intend to impose these tariffs at the said % and other countries stab back with their tariffs, then we might actually see a stagflation if the Fed does not intervene-or intervenes too late.