The Top Is In: Cashing Out Of Our Bullish View On Crypto

In early 2023, we wrote a series of reports examining the crypto market, offering a much more bullish stance than the consensus at BCA or in the wider investment market at the time.

• Since then, Bitcoin prices have quadrupled, and the consensus has shifted to our view. Institutional investors are now embracing crypto, with discussions around pension fund allocations and Bitcoin price targets reaching extreme levels.

• But is this the right time to enter? We do not think so. The surge in memecoins, record-breaking Bitcoin ETF inflows, and retail speculation suggests excess optimism, historically a warning signal.

• Less fiscal policy than expected, moderating growth, and declining inflation could also create a less favourable macro environment for crypto in the coming months.

• While we remain long-term positive on Bitcoin, we believe now is a prudent time to take profits and wait for a more attractive entry point.

• To hedge against the possibility that financial markets have fully embraced the absurd, we are launching Liquidity Trap (LTRAP)—a memecoin that is, quite literally, a trap for your liquidity.

Bottom Line: We are cashing out of our bullish Bitcoin view for now. We will be more willing buyers once Bitcoin drops closer to $75,000.

We maintain an optimistic outlook on Bitcoin and believe it has a role in a diversified portfolio. That being said, market sentiment is important, and even the finest asset should not be purchased at any price. Therefore, we feel it is wise to start taking profits and holding off on any further investments for now. We would be more inclined to buy again when the price approaches $75,000.

There are two key risks to our perspective:

The first is that Trump may fulfill his campaign promise and establish the Strategic Bitcoin Reserve, which betting markets estimate has a 12% chance of occurring. To clarify, this Reserve will not entail purchasing additional coins. The US government currently possesses approximately 200,000 bitcoins acquired through law enforcement seizures. The Reserve would solely commit the federal government to retain these coins. Nevertheless, the news would be slightly positive in the short term, though we believe it would signify the peak of the cycle.

The second risk is that, contrary to our expectations, we may have entered a new era where memecoins serve as the primary means of raising capital. A scenario where all financial regulations are completely disregarded, allowing anyone with a few social media followers to raise billions easily.