Gareth Soloway: Bitcoin, Stocks Ready For 'Big Moves', Here’s What’s Next

Latest Economic Data and Market Action

This section discusses the latest economic data and its potential impact on market action. It also explores how the Federal Reserve might respond to the data and its implications for Bitcoin, stocks, and specific trades.

Jobs Numbers and Market Reaction

• Non-farm payrolls increased by 209,000, showing resilience in the job market.

• Stock markets are up with S&P 500 rising by about 60 basis points and NASDAQ up by 0.9%.

• Bitcoin is relatively flat for the day so far.

• The strong ADP private sector number from yesterday caused initial market concerns of potential rate hikes.

• Today's jobs number came in slightly under expectations, calming investor nerves.

• The Federal Reserve may still hike rates but may not have a strong incentive to continue hiking if jobs numbers weaken.

Unemployment Rate Improvement

• The unemployment rate fell to 3.6%, indicating an improvement in the labor market.

• Headline numbers drive retail crowd sentiment, but institutional investors are more cautious.

• Initial stock market action is often driven by institutions making their trades.

• Small investors tend to bid up the market later in the day when institutional traders have finished trading.

Fed's Response and Stock Market Outlook

This section focuses on the Federal Reserve's response to today's economic data and analyzes the current stock market outlook.

Fed's Potential Rate Hikes

• Futures markets do not expect a change in course from the Federal Reserve after today's numbers.

• There is a 92% probability of a July rate hike according to futures markets.

• Jerome Powell indicated that two more rate hikes are possible, not just one in July.

Market Sentiment

• There is an overall feeling that nothing can bring the market down.

• Momentum in a light volume summer market tends to create a mob mentality, pushing the market higher.

• As long as jobs numbers remain within a Goldilocks range, the market can continue to float.

Bitcoin Update

This section provides an update on Bitcoin and discusses its recent price movements.

Bitcoin's Price Level

• Last month, Bitcoin was inching up towards $30,000.

• The key level to watch is $30,500 for at least five consecutive days.

• The criteria for potential moves in Bitcoin have not been met yet.

The transcript provided does not cover any further sections or topics.

New Section

In this section, the speaker discusses the current price range of Bitcoin and potential scenarios based on its movement.

Bitcoin Price Range and Potential Scenarios

• The price of Bitcoin has been ranging between $30,000 and $31,000 for about two to three weeks.

• If Bitcoin breaks below $30,000 on a daily closing basis, it could indicate trouble for the market and a potential drop to $26,000 or $28,000.

• On the other hand, if Bitcoin breaks above $31,000 and holds above $30,500 for five consecutive days, it could head towards $35,000.

New Section

In this section, the speaker explains why there is resistance around the $30,000 level in Bitcoin.

Psychological Resistance at $30,000

• The number 30,000 is an even number and psychologically significant. People who held Bitcoin from lower levels may be more likely to sell at this round number.

• Additionally, those who bought at lower levels and are now up a significant percentage may decide to take profits at this level.

• The resistance at $30,000 is influenced by both technical factors and psychological factors.

New Section

In this section, the speaker discusses key psychological levels in the stock market with a focus on the S&P 500.

Psychological Levels in the Stock Market

• The all-time high is an obvious psychological level for the S&P 500. However, there are also other technical levels that play out on a psychological basis.

• There is a trend line that has been significant since the COVID low. It has acted as support and resistance multiple times.

• The NASDAQ has continued to grind higher while Bitcoin has stayed relatively flat. This divergence may be due to specific stocks or company reasons driving the index.

New Section

In this section, the speaker discusses factors influencing the stock market and Bitcoin's performance.

Factors Influencing Stock Market and Bitcoin

• The AI narrative has driven stocks like Nvidia, with mentions of AI in conference calls correlating to stock price increases.

• The summer months, characterized by light volume, can be influenced by retail investors. This may contribute to the momentum-driven stock market.

• Bitcoin's underperformance compared to stocks may be a result of both specific factors driving stocks higher and its own unique dynamics.

Bitcoin and M2 Money Supply

The speaker discusses the uncertainty surrounding Bitcoin and highlights the importance of considering the M2 money supply and liquidity in the market.

Bitcoin's Uncertainty

• The speaker mentions that there is still a question mark regarding Bitcoin.

• They suggest that struggling with understanding Bitcoin is a current challenge.

• It is emphasized that analyzing the M2 money supply is crucial when evaluating Bitcoin.

• The speaker points out that liquidity in the entire market, not just stocks, has been decreasing.

Correlation between M2 Supply and Risk Assets

The speaker explores the correlation between M2 money supply and risk assets, particularly in relation to the stock market.

M2 Supply and Risk Assets

• The speaker notes that there has been a significant drop in M2 supply.

• They highlight a correlation between M2 supply and how risk assets perform.

• A divergence between the stock market and overall market liquidity is observed.

• This divergence suggests that at some point, either M2 will rise to meet the market or the market will fall to meet M2.

Bitcoin Dominance and Altcoins

The discussion revolves around Bitcoin dominance and its impact on altcoins.

Bitcoin Dominance

• The speaker mentions Ben Cowan's perspective on Bitcoin dominance.

• It is stated that Bitcoin dominance has been rising, currently at 52%.

• Money from altcoins has been flowing into Bitcoin, leading to this increase in dominance.

Bleeding of Money from Altcoins into Bitcoin

The conversation focuses on observing money flowing out of altcoins into Bitcoin.

Shift from Altcoins to Bitcoin

• The speaker confirms that money has been bleeding out of altcoins into Bitcoin.

• They mention the absence of big funds or institutional investors buying altcoins.

• In contrast, there are instances of significant investments in Bitcoin.

Bitcoin Dominance and Price Impact

The discussion revolves around the potential impact of Bitcoin dominance on price movements and the relative performance of altcoins.

Bitcoin Dominance and Price

• Both the speaker and Ben Cowan use different metrics to analyze Bitcoin dominance.

• Despite using different metrics, both indicators suggest that Bitcoin dominance may reach around 58%.

• The question arises whether this will cause a collapse in altcoin prices or if Bitcoin will rise significantly while altcoins experience less growth.

• It is suggested that for mid-term investment (6 to 12 months), holding Bitcoin may be the best option for returns.

Performance Comparison between Bitcoin and Altcoins

The conversation explores why altcoins have not outperformed Bitcoin during its recent upward trend.

Altcoin Performance

• The speaker acknowledges that although $30,000 is not near its all-time high, Bitcoin has seen substantial growth since its lows last year (around 80% to 90% increase).

• They express curiosity about why altcoins have not performed better during this bull run compared to previous trends.

SEC's Influence on Altcoin Market

The discussion focuses on the influence of regulatory uncertainty from the SEC on the valuation and performance of altcoins.

SEC's Impact

• The speaker highlights that fear stemming from regulatory uncertainty by the SEC is affecting the market.

• Investors are uncertain about how to value altcoins due to lack of clarity regarding their security classifications.

• This uncertainty is keeping a significant amount of money on the sidelines.

Valuation and Potential of Altcoins

The conversation delves into the potential impact of regulatory clarity on altcoin valuation and whether certain altcoins may be undervalued or overvalued.

Valuation Uncertainty

• The speaker suggests that if there is regulatory clarity, altcoins like Polygon or Cardano could be undervalued.

• On the other hand, it is also possible that they are currently overvalued.

• Investors lack information to make informed decisions about altcoin valuations.

Historical Perspective on Altcoin Performance

The discussion reflects on how the relationship between Bitcoin and altcoins has changed over time due to factors such as SEC regulations.

Changing Relationship

• Two years ago, the narrative was that altcoins would move in the same direction as Bitcoin but with higher volatility (higher beta).

• However, this relationship seems to have shifted due to factors like SEC regulations and legal issues surrounding altcoins.

Factors Influencing Bitcoin's Breakout from $30,000 Range

The conversation focuses on potential factors that could cause a breakout in Bitcoin's price from its current range around $30,000.

Breakout Factors

• A potential breakout could occur if a Bitcoin ETF gets approved.

• Continued rally in the stock market and overall risk-on sentiment could also drive Bitcoin's price up.

Negative Factors for Bitcoin's Price Movement

The discussion explores negative factors that could hinder Bitcoin's price movement and potentially lead to a breakdown.

Negative Factors

• If the stock market starts topping out and experiences a significant correction, it could lead to panic selling and a breakdown in Bitcoin's price.

• The speaker suggests that there are more negative factors to consider than positive ones.

Timestamps have been associated with the corresponding bullet points as requested.

Bitcoin's Performance and Investor Concerns

In this section, the speaker discusses Bitcoin's performance during the COVID-19 pandemic and expresses concerns about its inability to sustain a price above $30,500.

Bitcoin's Performance During COVID-19

• Bitcoin is often considered a risk-off asset, similar to gold, during market sell-offs.

• Investors should assume that if there is a stock market sell-off, Bitcoin may also experience a decline.

• Despite the overall growth of the NASDAQ, Bitcoin has not been able to break out of its current range.

Investor Concerns and Trading Strategies

• The speaker expresses concern as an investor about Bitcoin's inability to sustain a price above $30,500 for five consecutive days.

• Short-term traders may consider sitting on the sidelines or taking cautious positions until there is more clarity in Bitcoin's price movement.

• Waiting for consolidation or momentum gain before entering a trade can be a safer approach for retail traders.

Swing Trading and Sideways Consolidation

This section focuses on swing trading strategies and how they can be applied to assets experiencing sideways consolidation like Bitcoin.

Swing Trading Approach

• Swing trading involves analyzing sideways consolidation patterns in assets over weeks or months.

• Traders look for bullish consolidation patterns and potential breakouts to enter trades.

Sideways Consolidation in Bitcoin

• The speaker acknowledges that while there is some bullish consolidation in Bitcoin currently, they remain skeptical due to its lack of performance compared to the NASDAQ.

• If Bitcoin follows the expected pattern and breaks out above key levels, it could present an opportunity for traders.

Longer Consolidation Periods and Potential Price Movements

This section explores how longer periods of consolidation can lead to significant price movements in either direction.

Impact of Longer Consolidation

• The longer an asset consolidates, the bigger the potential move on the upside or downside.

• Analogously, if a marathon runner takes a longer rest period between races, they can perform better in the next race.

Potential Price Movements in Bitcoin

• If Bitcoin breaks out of its consolidation range, there is a possibility of reaching $30,500 or even $35,000.

• The speaker emphasizes that waiting for clear confirmation and momentum before entering a trade is a prudent approach.

Risks Ignored by the Stock Market

This section discusses risks that the stock market may be ignoring and highlights the euphoric sentiment often observed at the end of market cycles.

Euphoric Sentiment and Ignored Risks

• The stock market tends to exhibit euphoric sentiment towards the end of a cycle move.

• In 2021, investors disregarded potential risks until the Federal Reserve started hiking rates and triggered a correction.

Risks Currently Ignored by Markets

• China's relationship with Taiwan is one of the risks that markets may be overlooking.

• There are other unknown risks that could impact markets but are currently being ignored.

Timestamps have been associated with relevant bullet points as requested.

New Section

In this section, the speaker discusses factors to keep an eye on in terms of trade and macro data. They mention that the market wants slightly weaker job numbers to prevent a recession with inflation, which would be detrimental for the stock market and investors. The speaker also notes that despite existing risks, the VIX remains relatively low, indicating that markets and investors are currently ignoring these risks.

Factors to Consider in Trade and Macro Data

• The market wants slightly weaker job numbers to avoid a recession with inflation.

• The VIX (Volatility Index) remains relatively low, suggesting that markets and investors are disregarding potential risks.

New Section

In this section, the speaker discusses the performance of certain sectors in 2023 and highlights the influence of tech stocks on market gains.

Sector Performance and Influence of Tech Stocks

• Consumer cyclical and communication sectors performed poorly in 2023's second quarter.

• Cyclicals usually perform poorly during or before a recession. However, tech stocks have been driving up the index despite this trend.

• Seven stocks referred to as the "Magnificent Seven" have controlled a majority of the gains in the market. This concentration is not healthy for overall market stability.

New Section

In this section, the speaker presents charts comparing past market rallies after significant declines to caution against assuming a new bull market based solely on recent gains.

Historical Market Rallies After Declines

• The NASDAQ Composite fell 37% from its all-time high before rallying back 37%. A similar pattern occurred during the dot-com era.

• The Dow Jones Industrial Average fell 49% during the 1930 depression before rallying back 51%. These examples demonstrate that significant rallies can occur within a larger downward trend.

New Section

In this section, the speaker discusses potential scenarios that could change their perspective on going long in the markets and expresses skepticism about a soft landing for the economy.

Factors That Could Change Perspective on Market Long Position

• If the Federal Reserve (FED) successfully lands the economy softly with GDP staying up and inflation coming down, it could change their stance. However, they believe the probability of this scenario is low.

• The FED's track record has been questionable, often being incorrect in their actions and predictions. Additionally, there are many variables to consider regarding inflation and its impact on consumers and the economy.

• A soft landing could actually be bearish as it would mean an end to quantitative easing (QE) and free money from rate cuts, potentially affecting market sentiment negatively when economic conditions eventually worsen.

Technical Analysis of Tesla

In this section, the speaker discusses the technical analysis of Tesla's stock and highlights potential resistance points and indicators for a possible pullback.

Measured Move Analysis

• A measured move analysis shows that Tesla had a significant rally from its lows.

• The speaker demonstrates a measured move from the lowest point to the peak, indicating a 112-113 point move.

• Similarly, another measured move from recent lows suggests a move of around 120 points.

• This indicates that the measured move has potentially topped out, suggesting a likely pullback.

• There is also technical resistance around $280 on Tesla's stock.

RSI Weekly and Market Influence

• The RSI weekly indicator has significantly increased and is due for a correction.

• The speaker questions whether the rest of the market is bringing up Tesla or if stocks like Tesla are driving up the index.

• They mention that certain stocks like Tesla and other "FANG" stocks have been carrying the load in the market.

National Security Risk with China's Influence on Tesla

In this section, the speaker raises concerns about China's influence on Tesla as a national security risk. They discuss how China's control over sales and potential demands could impact Elon Musk's net worth and pose risks to US interests.

Chinese Influence on Sales

• More than half of Tesla's vehicle deliveries were made to buyers in China.

• If China were to shut down Tesla from selling vehicles, it could lead to a significant drop in Tesla's stock price (potentially 50-60%) and affect Elon Musk's net worth by over 30%.

National Security Risk

• The speaker draws parallels between this situation and national security risks, suggesting that China could leverage its influence over Tesla to manipulate social media algorithms favoring China or shutting down Tesla.

• They highlight the potential risk if Twitter algorithms favor positive things about China while the US population remains unaware of negative aspects or potential invasion plans.

• The speaker emphasizes that this situation needs to be evaluated as a national security risk for the US.

Potential Impact on Stock Market and Chinese Demand

In this section, the speaker discusses the potential impact on the stock market if Tesla were banned from being sold in China and highlights concerns about Chinese demand for Tesla vehicles.

Stock Market Impact

• The speaker suggests that if Tesla were banned or faced restrictions in China, it could lead to a significant drop in Tesla's market cap, potentially causing a 5% decline in the NASDAQ.

• They emphasize that Chinese demand plays a crucial role in Tesla's success and any decline in demand would negatively affect the stock.

Chinese Companies and Copying

• The speaker mentions that Chinese companies are already making headway in producing electric vehicles (EVs) and raises the possibility of a Chinese company copying Tesla's success.

China's Integration with Tesla

In this section, the speaker discusses China's integration with Tesla, including their gigafactories near Shanghai and employment of domestic workers. They also address potential consequences for China if they were to shut down or kick out Tesla.

Integration with China

• China is closely integrated with Tesla through gigafactories near Shanghai and employing domestic workers.

• While shutting down or kicking out Tesla would have some cost for China, it would be relatively minor compared to their entire economy.

Combining YouTube, Google, Facebook, and Social Media Companies

In this section, the speaker briefly mentions combining YouTube, Google, Facebook, and other social media companies due to their predominantly US-based workforce. They discuss how China's influence on Tesla may not necessarily require kicking them out but could still impact the company.

Combining Social Media Companies

• The speaker suggests combining social media companies due to their US-based workforce and potential implications for China's influence on Tesla.

• They mention that while China may not need to kick out Tesla, they can still exert influence over the company through various means.

Competition for Tesla in the Electric Vehicle Market

The competition in the electric vehicle market is increasing, with Toyota delivering over 50,000 electric vehicles in one month in the US. This poses a challenge for Tesla as an investor may find it difficult to choose to invest in Tesla when faced with tough competition.

• Toyota delivered over 50,000 electric vehicles in one month in the US.

• Increasing competition makes it hard for investors to choose Tesla as a long-term investment.

Narrowing Edge of Tesla Over Competitors

The edge that Tesla had over its competitors, particularly German luxury automakers like Audi and Mercedes, is narrowing. These competitors now offer electric vehicles that perform just as well or even better than Tesla's cars. This raises questions about why someone would choose to buy a Tesla when they can get something nicer with equal performance.

• Competitors like Audi and Mercedes now offer electric vehicles that perform just as well or better than Tesla's cars.

• The argument arises about why someone would choose to buy a Tesla when they can get something nicer with equal performance.

Optimus Robot Line and Elon Musk's Vision

Apart from making cars, Tesla also has a robot line called Optimus. Elon Musk believes that Optimus will be more significant than their car division in a few years. While this statement raises curiosity, it remains uncertain how significant Optimus will become compared to their current revenue from cars.

• Elon Musk believes that the Optimus robot line will be more significant than their car division.

• It remains uncertain how significant Optimus will become compared to their current revenue from cars.

Revenue Dependency on Cars and Hype of AI

Currently, the majority (99.9%) of Tesla's revenue comes from cars. While they also have charging stations, it is not expected to be a massive source of revenue. Similar to Nvidia being overpriced due to the hype around AI, Tesla may also be overpriced based on the current hype surrounding its technology.

• 99.9% of Tesla's revenue comes from cars.

• Charging stations are not expected to be a massive source of revenue.

• Tesla may be overpriced based on the hype surrounding its technology.

Stock Recommendation: Beaten Down Stocks with Potential

The speaker recommends looking at stocks that have been beaten down but still have potential. Examples include 3M and Pfizer, which have experienced significant declines but are considered good quality companies trading at lower levels compared to previous years.

• Beaten down stocks like 3M and Pfizer can offer potential opportunities.

• These stocks are considered good quality companies trading at lower levels compared to previous years.

Exit Strategies for Winning Positions

When it comes to exiting winning positions, there are two strategies suggested. Firstly, look for resistance on the chart and consider taking profits when the price reaches significant levels. Secondly, set sell orders at regular intervals (e.g., every 2-3%) to gradually take profits while letting some portion ride.

• Look for resistance on the chart as a signal to take profits.

• Set sell orders at regular intervals to gradually take profits while keeping some portion invested.

Decision-making for Losing Positions

When dealing with losing positions, it is important to have a clear thesis or rationale behind the investment. If the thesis becomes invalidated or no longer holds true, it may be necessary to cut losses and sell. However, if the thesis remains intact, it is possible to hold onto the position.

• Have a clear thesis for each investment.

• If the thesis becomes invalidated, consider cutting losses and selling.

• If the thesis remains intact, it may be possible to hold onto the position.

Following the Speaker's Work

The speaker's work is expanding, making it more challenging to determine where to follow their updates. However, they express gratitude for this positive problem and encourage viewers to stay tuned for future updates.

• The speaker's work is expanding, making it difficult to determine where to follow their updates.

• Viewers are encouraged to stay tuned for future updates.

New Section Investing Update and Farewell

In this section, Gareth provides an update on investing and shares exciting news for the future. The conversation concludes with a farewell message.

Investing Update

• Gareth mentions that investing is going well and there are many new exciting things to come.

Social Media Presence

• Gareth encourages viewers to check him out on Twitter as well.

Farewell Message

• David thanks Gareth for his time and wishes him a pleasant vacation or holidays. They plan to speak again in the future.

Please note that this summary is based on the provided transcript and may not capture all the details from the video.