Gordon Johnson
Founder & CEO of GLJ Research
History and correlations point to elevated near-term risk for bitcoin. Measured against Wrightson ICAP's estimate of net T-bill issuance, the chart suggests bitcoin bottoms out around $70K by the end of October. @MichaelMOTTCM notes the Fed has stopped its reserve management purchases, meaning no more QE; if that is accurate, it is a serious blow to bitcoin. x.com x.comÂ
Bitcoin looks set to fall as Treasury swings back to heavy bill issuance, because it has traded for a year like a derivative of Treasury cash management. Twice this year issuance flipped from paydowns to heavy selling and bitcoin followed, from the low $90Ks to the low $60Ks by February and from $80K to under $60K by July. Across 99 bill settlement dates it averaged -0.99%, falling about 70% of the time. Wrightson ICAP projects a roughly $60B swing to net issuance by late October. x.com x.com x.comÂ
Bitcoin's pre-FOMC pump looks vulnerable because such moves usually retrace afterward and sweep below prior lows. That pattern now points to roughly $78K. Earlier, liquidations into FOMC and Bitcoin's strong hold near $80K despite another $79K test had suggested the correction might be over and that it could be a bad time to be bearish. x.com x.comÂ
Bitcoin's rebound faces constrained upside from dealer hedging and weak US spot demand. Seventy percent of dealer gamma sits at $75,000-$82,000 ahead of Friday's $11B options expiry; the Coinbase premium had no positive days in October and an $83,000 fakeout keeps traders defensive. The Fed hold spurred relief, ETFs added $110.34M and $176M, and record US debt drives long-term accumulation. A hot PCE print would raise December hike odds and pressure Bitcoin through higher yields. x.com x.comÂ
Bitcoin's near-term macro backdrop is not yet favorable because the Fed balance sheet is stuck at $6.75 trillion, so patience is warranted. The Fed will eventually have to step in for debt markets. ETF inflows leave time for October to turn positive, while Bitwise raised its 2036 target to $1.6 million and says institutions may allocate 1% to 5% as adoption and debasement-hedge demand rise. A U.S. Strategic Bitcoin Reserve may start buying very soon once crypto rules are settled. x.com x.com … Show more
Bitcoin may need sustained demand above all to outweigh selling pressure, since even favorable catalysts have coincided with declines. BTC fell despite rate cuts, a pro-crypto president, institutional adoption and rising liquidity; it now faces rate hikes, war in Iran, inflation, AI-bubble fears, quantum risks and AI-driven crypto hacks. x.comÂ
The Fed's continuing inflation focus and prospect of expensive money for longer are eroding Bitcoin's initial relief from the rate hold. At the 3.75%-4.00% hold, two officials voted to hike; Warsh left further tightening open but did not commit to a December hike. BlackRock's Bitcoin ETF drew $136M yesterday, its third straight inflow session, showing buyers are still present. x.com x.com x.comÂ
Bitcoin's past midterm-election selloffs each marked a cycle bottom, making Tuesday's election fear a buying opportunity at $78K-$75K. The declines were about 50% in both 2014 and 2018, then 25% in 2022; this time a drop of more than 10% looks unlikely as the drawdowns have moderated. x.com x.comÂ
Bitcoin is likely to be hit hard in the scenario expected next year, with the dollar index now seemingly certain to reach 108-110. @AtlasShrug1 warns that a dollar index at those levels would make it tough for bitcoin and could bring a retest of the lows. x.com x.comÂ
Bitcoin still needs demand and short open interest before a bottom can be expected. Price reversed after taking liquidity at $84.6K; the nearest liquidity below is $79.6K, while $87K remains the strongest zone above and $90K is now the next target. Patience is warranted until that demand and short interest arrive; no bottom is expected yet. x.comÂ
Bitcoin could draw big institutional money once it gets a real slot in bank model portfolios; a bullish research forecast alone is not enough. JPMorgan projects 10% annual returns over 10-15 years, ahead of US large-cap stocks at 7.5% and gold at 5.5%, but excludes Bitcoin from its main risk models because its links to other assets are unstable. Bitcoin could top $100,000, but keep exposure small: JPMorgan expects 55% annual volatility and models an 11.2% annual loss in its bad case. x.com x.com … Show more
Falling US bank reserves are a liquidity headwind for Bitcoin. Reserves rose back to $3.03 trillion around September 16 but dropped to $2.96 trillion last week; if they keep falling, that would weigh on Bitcoin. Caution is warranted from mid-to-late September and especially in late October, which may be the year's liquidity low, with more room for optimism toward year-end. x.comÂ
