Bitcoin Due To Correct 20%?

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After testing all-time highs around $19,800, Bitcoin prices have stalled today, but it seems like the huge resistance at all-time highs will be a significant barrier.  Either a strong breakout or consolidation through all-time highs will set the stage for the next big crypto bull run in 2021.  Whether prices come down from here or reach $20-$21k a 20% correction may be imminent to set up for a more consolidated and sustained bull market.  Hence a 20% correction from the current peak might be a good target for market entry and a trade.  

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Bitcoin dominance (as measured by Tradingview) reached a high of 67% around Nov. 19th, but a surge in Ethereum and altcoin prices have taken Bitcoin dominance down as low as 60% before settling right now at 63%.  In a crypto bull market altcoins may be poised to outperform Bitcoin in the first half of 2021 similar to the 2017 cycle.  Hence this latest altcoin move may be an indication of a setup phase for the next bull market, but requires more confirmation with sustained outperformance and is something to pay attention to after the next crypto correction.   

Fed Goes Brrr..Stock Markets Elevated, But Gold Soft?

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The first significant macroeconomic chart this week is the M1 money supply growth continues at a torrid pace.  People often call this Fed monetary printing so the Feds printing presses are in full effect.  Perhaps the Fed is trying to stay ahead of unnecessary lockdowns and resulting economic weakness and unemployment?  Regardless new money will have to find a home. 

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As a consequence of Fed money printing, the banking system is also creating money in the system through loans and we can see M2 money supply increasing significantly as well. So with all this money going around where is it going?  All assets  such as stocks, bonds, real estate, gold and crypto should receive demand from this new money. 

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The SP500 is still just at all-time highs and seems to be consolidated around that level.

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The Nasdaq 100 is getting closer to the all-time high again.

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Surprisingly the new money is not going to gold.  A lot of money is flowing to the bullish stock markets instead, and perhaps also Bitcoin?  Gold will likely still be a safer place than bonds to maintain value. 

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The 10yr yield has gone down.  New money also seems to be going into purchasing bonds.

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Credit spreads have reversed and decreased from a short uptrend 10 days ago and the money printing seems to have activated more increased speculation.  

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Conclusion

Fed money creation should result in positive tailwinds for Bitcoin for 2021, but prices have moved so quickly there should be an expectation of a 20% correction sooner than later.  That may be a good time to buy more Bitcoin and crypto.  Altcoins may lead the bull market similar to 2017.  Lastly all assets have been supported by money creation.  The speculative appetite for risk has helped stock markets, but has hurt gold and the dollar remains near its lows.

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