Hi YXI friends,

In our last update, we covered how Bitcoin more or less stood the pressure of the Tariff risk-off compared with the alts, but failed to attract safe-haven inflows like Gold.

While Bitcoin is still comfortably above the Feb 3 low ($91k), the price action seems to be meandering sideways rather than making a decisive breakthrough.

We will first review the global liquidity, coupled with Bitcoin’s February seasonality and wider risk-on signals. We examine Bitcoin’s price technicals for clues of the next move.

We then further examine the path of Ether, Solana, and Ripple in terms of price technicals.

Finally, we review Coinbase’s earnings in depth and evaluate its latest price target. We have triggered a trade setup today for COIN, with details in the Coinbase section.

Housekeeping: I am increasingly bundling earnings review with the thematic updates. This provides a richer content experience with more frequent updates on our investment themes. As a result, my article length is likely longer than before, but we can move through the market commentary more efficiently.

Table of Contents

• 1. Bitcoin: Calm Before The Liftoff?

  • Bitcoin vs G5 M2 (in USD) - 11 week lag

  • Bitcoin February Seasonality

  • ARKK As A Risk-On Signal

  • ETF Flows, Strategic Reserve, Gold Standard

  • Bitcoin Technical Analysis

• 2. Ether, Solana, Ripple

  • Ether

  • Solana

  • Ripple

• 3. Coinbase Earnings Review

  • Financial Performance

  • Valuation is attractive

  • Price Technical Analysis

  • COIN Trade Idea

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. Bitcoin: Calm Before The Liftoff?

Bitcoin vs G5 M2 (in USD) - 11 week lag

We observe that Bitcoin moves directionally in line with the rise and fall of the G5 M2 Money Supply, but denominated in US Dollars. The same relationship exists with Gold too but with a much shorter lag (see detailed analysis here).

While the G5 M2 (USD) fell sharply in October-December, Bitcoin actually has performed much better than where the relationship would have predicated.

First, it made a new high on January 20, which always a bullish sign, despite common investors having an innate fear of buying at new highs. While today’s price of $96k is not euphoric, it is well above many people’s prediction of Bitcoin crashing to $80k. That in itself says something about Bitcoin’s resilience and investor appetite.

Crucially, with the 11-week lag, we are now over the most damaging period of G5 M2 falling due to a strong USD. The chart above shows that liquidity has stabilised and in fact risen since January, having already provided conditions for Gold to achieve new highs.

Bitcoin February Seasonality

A second factor I am looking at near term is February’s Seasonality for Bitcoin. Typically speaking, February is a neutral month for equities. However, Bitcoin’s record is very favourable, returning an average of 13% between 2012 and 2024.

While a very small sample size, Februaries of the year after “Halving” (2013, 2017, 2021) all saw very strong returns.

So far this February, Bitcoin is down 6% from January’s close. Is this time different?

ARKK As A Risk-On Signal

ARKK vs BTCUSD Daily since April 2024

The relationship between ARKK and Bitcoin was initially flagged by TomasOnMarkets on X. Cathie Wood’s ARKK is a Covid-era investment darling and a massive Tesla bull. Her holdings focus on unprofitable growth technology companies that could benefit from the Cloud and AI transformation of the next 10 years. By tracking her fund performance, we could actually derive clues about the risk-on sentiment in the market. ARKK going up big likely indicates investors embracing a higher risk appetite.

We see that ARKK actually tends to lead Bitcoin in its moves, but not by much of a lag. In the past week, ARKK broke above its latest high, now trading at $67.

Could ARKK be leading Bitcoin again in the near term?

ETF Flows, Strategic Reserve, Gold Standard

Spot Bitcoin ETF Flows

There was a lot of crypto excitement after the November Election, evidenced not only by the direct price appreciation in Bitcoin, but also large ETF inflows, especially for BlackRock’s IBIT.

The sentiment did cool, however, before Christmas. There was some large inflows around the latest new high (January 20th), but we have not sen large inflows or outflows in the past two weeks.

When Strategic Reserve?

Trump’s Administration has dangled some carrots over the Crypto industry by having a digital asset working group to study the potential for a US digital asset stockpile. The timeline is to come back with a report by July. But there are no concrete plans so far for a Strategic Bitcoin Reserve, which has disappointed the crypto market.

Moreover, in recent days, Bessent said the Treasury may “We’re going to monetize the asset side of the U.S. balance sheet for the American people”. The market has taken this to mean the US Treasury will revaluate its 8000 tonnes of Gold locked in the NY Fed’s vault, which may add $800 billion to the Treasury General Account. This may become a “free windfall” that can be injected into the economy and markets. Instead of getting the Crypo fireworks going, Gold has now stolen the thunder with one new high after another!

My take is that Bitcoin owners should not count on the US Government’s initiative for its price appreciation. Such an initiative will take a long time to materialise over political and regulatory hurdles. They should be the icing on the cake, not the cake itself.

Bitcoin and Gold are both financial assets that help their owners combat monetary debasement over a long period of time. As long as the Bitcoin network remains resilient and the global central banks are printing money, which I foresee continue indefinitely, Bitcoin’s price should keep rising over time.

BTC Liquidation Chart

Since Feb 3rd, there has been very little liquidation activity for both longs and shorts.

Bitcoin Technical Analysis

Combined with signals from the G5 M2, Seasonality, and ARKK, and muted liquidations, I favour the next major move to be up.

BTCUSD (https://www.tradingview.com/x/elolgpQk/)

The market displaying a continuous sideways price action that is pushing out the impatient traders.

Since November, Bitcoin has tested but held the key support region of $89-91k numerous times. I favour the February 3rd drop as the wave ii of the final leg of this cycle. Given the price movement of waves i and ii, I project the wave iii target to be $121-$127k, before a wave iv pullback. This is the 1.382-1.618 extension of wave i from the wave ii low.

Breaking below $89k would invalidate this view.

2. Ether, Solana, Ripple

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