US indexes all booked nice gains, with the Dow and S&P achieving another new all-time high.
There was a synchronized global rally led by China’s Shanghai and Shenzhen, both up over 2%.
Software, financials, industrials, General Electric, Nvidia, Goldman Sachs…
They all had one thing in common to start the week: new highs.
But it was the crypto market, more than anything, that was giving me the risk-on feel.
Alts are waking up here. Our custom altcoin index was up over 6% today.
More importantly, it looks like Bitcoin is about to break out of this range we’ve all been waiting for.
Here’s how I know:
This is a triple-pane chart of the three premier crypto market equities.
MicroStrategy, Robinhood, and Galaxy Digital have all been consistent leaders during this cycle. As such, I view them as preferred vehicles for expressing bullish bets on BTC and crypto.
They also offer a nice mix of crypto market exposure, with one acting as a juiced BTC fund, another as a brokerage/exchange, and the last almost like a crypto hedge fund.
Considering each of these businesses is very different, I think it is all the more bullish to see these three leaders breaking out in tandem.
Over the past few sessions, each of these stocks has made a decisive resolution out of a multi-month range.
In the case of MSTR, that range has been in place almost all year. The chart looks identical to Bitcoin itself… except for the breakout:
I’ve included a short-term correlation coefficient to show how rare dislocations in this relationship are.
Throughout the cycle, it has dipped into negative territory a handful of times… but each time, it was short-lived, and the reading ramped right back toward 1.00 (a near-perfect positive correlation).
After being negative for about a week, this is happening now. It looks to me like BTC has some serious catching up to do.
Here it is reclaiming its all-time high VWAP and breaking out of a 7-month descending channel.
I expect BTC to look a lot more like MSTR over the coming days and weeks.
The bottom line is the best-performing crypto stocks are tipping the hand for Bitcoin.
As long as those three breakouts remain valid, it’s only a matter of time until BTC follows and makes new highs as well.
I should mention that the strongest BTC miner is also making new highs right now. We just wrote about the breakout we’re buying in Core Scientific.
Another piece of bullish evidence is the weekly momentum crossovers that appear ready to trigger. We’ve been waiting on this signal for a few weeks. We wrote about it in regards to Solana, but BTC has the same look.
If we can hold above some key VWAP levels in Solana, Bitcoin, and friends, and get these weekly momentum crossovers in the books come week-end, it’s on.
I’m certainly positioned for it.
I think it’s almost a foregone conclusion at this point with the way stocks are breaking out across the board.
Rather than question if it will happen, we should be questioning how big the move will be when it does.
How will this Q4 stack up to the last one?
BTC returned about 57% from October to year-end in 2023. As for Solana, it tacked on a cool 375% in the same three months.
