Market Milestones: Bitcoin Breakout

Over the past week, the SPY has moved sideways, consolidated at our long-term trend line, and began a slight sell-off on Thursday afternoon. Last week, we discussed the market's euphoria and the need for a pullback before making another upward push. Thursday’s selling could be the start of that correction.

SPY

With everything so extended, we have to ask ourselves: where will the market find support after the inevitable pullback? The SPY, QQQ, IWM, and DIA are all approaching the Trump Gap, which will be the first significant level of support. If the gap holds, we could see a steady grind higher into year-end. If it doesn’t, a retest of the major moving averages is likely. As long as the 200-day SMA on SPY remains intact, a new all-time high is likely in the first quarter of 2025. However, if the 200-day SMA doesn’t hold, something’s up, and the risk of a larger correction will be elevated.

QQQ

A crucial factor in determining the pullback level in the market will likely be NVDA’s earnings next Wednesday. As the world’s largest company, NVDA has considerable influence on the stock market. It currently looks exhausted, with bearish divergence on the RSI and declining volume for the last several months. The entire semiconductor sector is propped up by NVDA right now, but even with NVDA at all-time highs, SMH is looking weak.

We still have a few days until earnings, so this could change, but if NVDA gaps up big on earnings, I expect that to mark the top, similar to the TSM gap in October. If it gaps down, as long as it holds the 100-day SMA, it could still run to $162.75 in early 2025. If the 100-day SMA breaks, NVDA probably topped in June and is tracing an expanding flat correction, meaning it could bottom between $90.00 and $70.00. As an NVDA bull, I’d actually prefer the latter option for an amazing buying opportunity on a key player in the A.I. revolution. For anyone holding NVDA shares, a $160/$135 collar over earnings looks pretty great.

NVDA

Even if you don’t follow financial markets closely, you’ve probably heard about Bitcoin’s latest breakout. After consolidating since March 14th, after a powerful bull run sparked by the launch of the spot Bitcoin ETF, Bitcoin is once again on the move. The Bitcoin ETFs have become the most successful in history, but more on that later. It’s pretty standard for Bitcoin to consolidate after a halving event, and this cycle has closely mirrored the 2016 halving in terms of timing. Back in the April 19, 2024, Market Milestone, I shared the chart below and commented:

"There is no doubt Bitcoin will continue to be an extremely volatile asset, but if history is any guide, the overall trajectory is up and to the right. The big question will be whether global liquidity and macro conditions are willing to play ball once again and allow for that rip-roaring 'Fun Zone' we have seen in the past. Only time will tell, but the risk-reward on Bitcoin right now is still pretty solid and will be very attractive with another drop into the $50,000 region.”

BTC Chart from April 19th 2024

Well, Bitcoin did just that, dipping into the $50,000s and even wicking down to $49,050 on August 5th. This post-halving consolidation period was an ideal time to accumulate and stack Bitcoin before the next leg of this bull market. We’ve since updated the chart slightly, but the main thesis holds strong—Bitcoin should hit $100,000 or higher before March 2025.

Bitcoin has a way of leaving people behind, triggering serious FOMO—not just among retail traders, but now on Wall Street too. BlackRock, for example, recently bought $91 million worth of its own Bitcoin Trust ETF (IBIT). Don’t expect Bitcoin to just hand you a perfect entry on a dip; with players like BlackRock, MicroStrategy, and even entire countries jumping in, we might not retest as much as most people would like. Even if we see a pullback soon, $74,000 is likely the lowest we see bitcoin again this year with $79,000 being a more likely bouncing zone.

BTC Chart Today

With Trump as president, there is a high probability of a Strategic Bitcoin Reserve. This would mean the U.S. government starts adding BTCUSD to its balance sheet and what’s $50 or $100 or even $250 billion to America? Barely a dent in annual expenditures. This kicks game theory into action, as nations now compete to acquire Bitcoin. Hats off to El Salvador for leading the charge and racking up $260 million in unrealized gains.

If this cycle continues to play out like the others, we’re in for a bull run that should at least stretch into March 2025. In the 2020 cycle, BTC shot up 400% between November 2020 and March 2021. This time, diminishing returns could mean something closer to 100% to 200%, which would still bring Bitcoin to at least $135,000 by the end of this cycle.

With spot Bitcoin ETFs, getting exposure to Bitcoin has never been easier. BlackRock’s IBIT now has $33 billion in assets—more than their gold ETF, which launched in 2005. You don’t even need a Coinbase account to invest in Bitcoin, the strongest-performing asset of our lifetimes.

IBIT

Bitcoin has appreciated at an average of 82% per year since January 2016, when Trump first took office and it’s likely to continue outpacing nearly every other asset. With Bitcoin, there’s no worry about P/E ratios or earnings calls—it’s all supply and demand. Sure, a crypto-friendly administration helps, but Bitcoin’s trajectory is up and to the right because it’s the first truly scarce digital asset. Built on a foundation of mathematical certainty, with a fixed supply of 21 million coins, it’s immune to inflation and currency devaluation.

Bitcoin represents a new form of property and new asset class. It’s money that can be sent across the world in minutes, independent of central banks or government control. Bitcoin is like digital real estate in cyberspace, a place where your wealth can’t be diluted by anyone’s printing press. As institutional adoption ramps up and people recognize the value of a decentralized, deflationary asset, Bitcoin’s role as a dominant force in the financial system only strengthens. It’s not just an investment—it’s a store of value that appeals to everyone from retail investors to entire nations.