Weekly Update: How I’m Playing Bitcoin
Good evening, and welcome to this week’s edition of Stealth Trades!
With the stock market marching steadily higher, we are clearly in a “risk on” environment.
Every time this happens, Bitcoin soars. It is the ultimate risk asset.
Despite being marketed as a currency and market hedge, it has repeatedly failed those tests. No one uses it to buy things, and it gets annihilated in bear markets.
But in bull markets… it comes roaring back.
The chart above shows Bitcoin against the Nasdaq over the last market cycle.
I have made clear for the last four weeks that I thought the low was in for stocks and this was the time to buy.
Bitcoin is further evidence of that. It is up 36% and climbing since the April lows.
One of the great things about Bitcoin, at least from a trading standpoint, is that it moves purely on supply and demand. There are no surprise earnings announcements or CEOs abruptly stepping down.
And because of this, it trades beautifully. It trends well and breakouts are easy to spot.
Last month, BTC broke through the $90k support and resistance level with force.
After a brief consolidation where it formed a bullish pendant, the cryptocurrency broke out again on Thursday breached the 100k level with ease.
Based on its past price history, I expect to see bitcoin hit the $130k level.
The ideal setup would look something like this:
A stall at the 110k level would not be surprising. There is a lot of supply from late 2024 from buyers who bought the highs and have been underwater all year.
I would like to see this supply absorbed over 1-2 weeks to free Bitcoin up for a powerful move higher. In this scenario, the upside target would be more like $150k.
And there are multiple ways to play this move…
Outside of buying Bitcoin directly through a crypto broker like Coinbase, investors have the option of buying an ETF that holds bitcoin. ETFs (exchange trade funds) trade just like stocks and can be purchased in any brokerage account. The most common Bitcoin ETFs are IBIT, GBTC and ARKB.
Another way to potentially profit from the move is with Bitcoin mining stocks.
Just as gold miners profit from higher gold prices, these stocks do the same thing.
One I like right now is MARA.
I bought shares yesterday and doubled down this morning on the breakout above $15.
MARA has a history of making big moves coming out of these consolidation patterns off the lows (see below).
We have a risk-on environment, Bitcoin in the early stages of a powerful move higher, and one of the leading Bitcoin mining stocks emerging from a low base.
What more could we ask for?
Investors also have the option of buying a stock like Coinbase (COIN). Even though Coinbase’s stock price is not directly tied to Bitcoin, they tend to do more business and see more volume during crypto bull markets.
I took a position in COIN this morning as well.
We spent a good amount of time watching for areas of strength in the market.
My analyst, Jean Fede, is especially sharp in the crypto space. He has forecast nearly every major move in Bitcoin over the last two years, and our members have profited handsomely off both events.
He alerted me to this move as well. Hopefully, it is equally fruitful.
Best wishes for your trading,
