Finding the Light - Valkyrie

Finding the Light

Week of April 18th, 2022

On-Chain Commentary

Bitcoin continues to hold within the 2021 price range, from $30,000 to $60,000, as well as sit within the supply volume node at $47,000 and demand volume node at $39,000. Despite the +15%/-15% intra-week volatility since the beginning of the year, higher time frames suggest volatility contraction since the all-time high (ATH) in November. Multi-week range contraction has historically led to strong range expansion once a higher high or lower low is breached. Currently, based on weekly Bollinger Bands, bias leans bearish as price continues to close below the neutral 20-week moving average (MA), now at $42,700. Bollinger Bands expand or contract, based on two standard deviations from the 20-period MA. Since 2012, only eight such multi-week contractions of this caliber have occurred, each of which have resolved as expected, based on price’s relative position to the 20-week MA during volatility contraction. If strong bearish momentum does commence, the strongest historical support stands at the 200-week MA, currently at $21,000. Since 2015, all bear market lows have found support at this level. Remotely, the multi-month ascending triangle consolidation pattern, with a target of $50,000, still remains in play, so long as no further lower lows are established. This bullish reversal chart pattern possibility will likely expire by the end of May, based on remaining consolidation breathing room.

Macro Commentary

The shortened holiday week allowed investors to turn last Tuesday’s Consumer Price Index data to a more cautionary tone as persistent inflation worries continue to rattle markets. CPI rose 0.1% to 8.5% year over year, slightly higher than expected, while Core CPI, excluding energy and food, rose lower than surveyed to 6.5%. After an initial positive reaction to CPI with equities rallying and interest rates moving lower, volatility settled in with a 90 point drop by end of day Tuesday, followed by a 75 point rise Wednesday, then ending the week with a 70 point drop Thursday. The S&P 500 index has been trending lower since the end of March, declining about 250 points through Monday afternoon. The 10-year treasury traded in range last week, with a low of about 2.65% before rising to 2.83% Thursday, then a slight bump to the 2.85% level Monday. Rising interest rates will be a key market metric to watch this week ahead of Housing Starts and Existing Home Sales released indications. The average 30-year mortgage rate hit 5% last week for the first time since 2011. Housing market is expected to realize the first effects of the rising rate environment as mortgages become more expensive to maintain.

Commodity prices, including corn and liquid natural gas, continue to rise to prices not seen since 2008 in the setting of significant global inflationary pressures as well as on-going Russian-Ukraine war. Peace negotiations continue to hold at an impasse, as President Biden issued an additional $800 million in weapons for Ukraine last week, with the U.S. expecting further conflict in eastern Ukraine. Crypto donations have also made an impact on Ukraine’s defensive forces. The Ukrainian government has revealed $45 million in mixed crypto aid has now been spent on a variety of needs including but not limited to; clothing, equipment, fuel, and food.

Valkyrie in the Press

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The Portfolio Management Team

Steven McClurg, CIO
Bill Cannon, Portfolio Manager
Wes Cowan, Portfolio Manager, Head of Defi
Josh Olszewicz, Head of Research
Sean Rooney, VP Research and Trading
Will McDonough, Vice Chairman, Investment Committee
Leah Wald, CEO, Investment Committee
Shannon Smith, Head of Investor Relations