This Is How The Bitcoin Price Will Be Affected By Macro

In a new interview, Charles Edwards of Capriole Investments shared his Bitcoin theses for 2023. Looking back at the past few months, the renowned expert said those have put the market in a position where Bitcoin offers “a great position for long-term investors.”

As Edwards noted, almost every sentiment metric imaginable fell into the “biggest or second-biggest bearish” range in macro, equities, and crypto. “Pretty much anyone would have said on Twitter last year that we are in a recession or it’s coming to a recession,” the analyst continued.

While Edwards acknowledged that the risk of a recession is far from gone, many key metrics have come back quite a bit. Among them is the housing market, which is slowing and often leads the overall economy.

“So there are a number of metrics which suggest things are slowing down a bit. You got all the big tech names laying off employees and you see this in crypto as well. 10% to 20% cuts have not been unusual in the last months,” the founder of Capriole Investments asserted.

Furthermore, he pointed out an interesting fact: every time inflation peaked above 5% and then fell by more than 20%, the U.S. central bank pivoted. This observation holds true for the last 60 years. “So I think there is a high probability the Fed stops raising rates or reducing rates,” Edwards concluded and further said:

And then we have this deep value situation in crypto which has been playing out the last 3 or 4 months. […] And all that sets up a great opportunity for long-term investors in crypto and equities, as well, risk assets in general.

Fed Pivot Will Propel Bitcoin Upwards Within 6 Months

In general, it is difficult to predict when there will be a regime change at the Fed. However, Edwards believes it will happen within the next 3-6 months. After the forced liquidations in the Bitcoin market over the past 12 months, there is currently no longer any significant selling pressure.

Therefore, according to the Capriole Investments founder, there will be a liquidity crisis on the sell side once larger amounts of Bitcoin buyers return to the market, leading to a squeeze to the upside. “And we saw that kind of short-squeeze play out in the first weeks of January.”

As for the Fed pivot, investors should keep an eye on specific data. While the consensus now seems to be that the Fed will change monetary policy, there are still some risks. Edwards pointed to history in this regard, warning that inflation could rise…