🧪 The Big Short

Plus: Meme stocks are back

May 15, 2024

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Good Morning!

Traditional markets are on fire! The Nasdaq just posted its seventh record close of 2024, jumping 122.94 points (0.8%) to end at 16,511.18. The S&P 500 wasn't far behind, gaining 25.26 points (0.5%) to hit its highest close since March, while the Dow rose 126.60 points (0.3%) to finish at 39,558.11.

All eyes are now on today's April CPI report, which could shake things up as we learn more about the Fed's next move on interest rates, this has implications for all markets including Crypto.

In other news, meme stocks are back with a bang, GameStop soared nearly 60%, and AMC had a wild ride, erasing over 40% of its gains yesterday. Our analysts Reynard and Sherlock are doubling down on a big Bitcoin short. Despite bullish institutional news, Bitcoin's price action suggests it's time to bet against the trend.

Let’s get into it 👇

🌡 Market Temperature Check

Traditional Markets were strong yesterday, including:

  • The Nasdaq posted its seventh record close of 2024, jumping 122.94 points (0.8%) to end at 16,511.18.

  • The S&P 500 gained 25.26 points (0.5%), closing at 5,246.68, its highest since late March.

  • The Dow rose 126.60 points (0.3%) to finish at 39,558.11.

Investors now eagerly await the April CPI report, expected to shed light on the Federal Reserve's interest rate plans today at 8:30 a.m. EST. Economists predict a headline CPI rate of 3.4% and a core CPI rate slowing to 3.6%.

Other Headlines

$1 Crypto Stock Just Disrupted the Industry

Iron-fisted regulations on bitcoin mining loom over the industry, as high energy consumption leads to concerns about its environmental impact.

And this carbon-neutral mining stock has positioned themselves to take over.

In many cases… they already have.

Read Bullseye Trade to learn more.

👾 Crypto Catalyst

Both Reynard and Sherlock from our TradingLab community are continuing to short Bitcoin. Here’s the breakdown:

The Big Short

  • 1ST ENTRY: Market Price ($62,800)

  • 2ND ENTRY: $63,900

  • 3RD ENTRY: $64,900

  • STOPLOSS: $65,512

  • TARGET: $57,600

The Catalyst

Despite a slew of bullish news, Bitcoin has failed to break out from a short-term downtrend. Notably, the State of Wisconsin reported $164 million in investments in spot Bitcoin ETFs. In a recent SEC filing, it was revealed that the Wisconsin Retirement System held over 2.4 million shares in BlackRock iShares Bitcoin Trust and more than a million shares of Grayscale Bitcoin Trust, totaling roughly $164 million. This significant institutional investment should theoretically buoy the price, yet Bitcoin's performance tells a different story.

Additionally, data from Farside Investors indicated massive outflows from Hong Kong-listed spot crypto ETFs on Monday. Investors pulled nearly $40 million out of the six spot Bitcoin and Ether ETFs on the first day of the week. Such outflows reflect a lack of confidence in the near-term prospects of these assets.

Our Take

Bitcoin's failure to capitalize on bullish news and its continued struggle to break out of a downtrend with multiple lower highs signals a bearish outlook. Sherlock's analysis suggests this is the perfect time to go short. The institutional interest from Wisconsin and the massive outflows from Hong Kong-listed ETFs create a mixed sentiment, but the price action itself confirms the bearish scenario.

Going short at the current market price of around $62,000, with additional entries at $63,900 and $64,900, sets up a robust position. With a stop loss at $65,512 incase the trade becomes invalidated and Bitcoin breaks out to the upside.

If you’re planning to hold the trade long term, you can even look for levels below the target of $57,600. However, as always with Crypto, sentiment can shift fast.

If you're not already a member of TradingLab, now's the time to join our community. Get insights like this directly from our top analysts and stay ahead of the market trends.

✍ TL;DR

  • Current Market: Nasdaq hits 7th record close of 2024; S&P 500 and Dow also up, awaiting April CPI report.

  • Bitcoin Short:

    • Entries: Market Price ($62,000), $63,900, $64,900

    • Stoploss: $65,512

    • Target: $57,600

    • Catalyst: Despite bullish news, Bitcoin fails to break out from downtrend.

    • Wisconsin Investment: $164M in Bitcoin ETFs not boosting price.

    • Hong Kong Outflows: $40M pulled from spot crypto ETFs, signaling bearish sentiment.

Stay ahead, stay informed, and most importantly, stay profitable.

‘til next time,

TradingLab