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Bitcoin exchanges hands for almost 40% less than the modelled price “energy value,” Charles Edwards of Capriole Investments’ quantitative crypto hedge funds says that a confluence between technical, fundamental, and policy signals suggest the market is turning. Charles Edwards, founder of the quantitative crypto hedge fund Capriole Investments has released his latest report. newsletterEdwards claims that newly formed “Triple Put”—simultaneous backstops from the White House, the Federal Reserve and the US Treasury—has altered the risk profile for all risk assets just as on-chain and macro indicators for Bitcoin flip decisively higher.
Bitcoin Flips Bullish
Edwards starts with the sentiment. “in the pits.” The American Association of Individual Investors’ bull–bear spread, he notes, is “as bearish as 2009 and the 2022 lows, and significantly worse than the 2020 Covid crash,” even though both Bitcoin and the S&P 500 have fallen less than fifteen percent from their recent peaks.
The CNN Fear & Greed Index has registered its bleakest reading “in years,” Capriole’s Active Manager Sentiment Gauge shows that equity managers are underexposed to a near record level. “Simply put, investors are panicking today,” He warns that extreme readings are not acceptable “typically coincide at the mid-late stage of a major price bottom.” Edwards refers to this combination of leaves as “blood (and fear) on the street,” In full, he quotes the Rothschild maxim: “the time to buy is ‘when there’s blood on the streets, even if the blood is your own.'”
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Bitcoin’s technical price reversed sharply just a couple of days before. A breakout candle to $94,000 reclaimed the entire $91,000–$100,000 range that had capped the market since February. Edwards describes the move as an “significant range reclaim,” Add to that “for Bitcoin, such bullish range reclaims rarely see price look back.”
The market will not deliver unless it delivers “a daily close under $91K,” He is a writer. “it’s hard to get a technical chart more bullish than this.” This breakout is also coincident with the Bitcoin Macro Index of his company, which has been in neutral for months, now turning positive. It combines more than 70 on-chain variables, as well as macroeconomic and equity market factors. Price is excluded from the index to prevent feedback effects. The model was updated last week. “reset to ‘fair value’ and then resumed a bullish trend,” A shift Edwards Calls “a very promising fundamental data reading.”
The ‘Triple Put’
Third, policy development is the key. On April 2—the so-called “Liberation Day“—the United States imposed sweeping global tariffs, only to halve them and add a 90-day pause once equities sold off by roughly fifteen percent, the VIX jumped above 30, and credit spreads widened.
Edwards explains the rapid reversal of the polarity as an inaugural “Trump Put,” Proof of the existence “if markets decline too much, Trump will step in, enact policy and backstop them.” The Federal Reserve had begun its work on April 1 a day earlier. slashing the pace of quantitative tightening by 95% (the “Fed Put”CME FedWatch traders now expect three rate cuts by year end.
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Treasury Secretary Scott Bessent also told reporters the deleveraging was the main reason for the decline in Treasuries, not foreign sales. “had tools to mitigate the situation, including scaling up buybacks if necessary” (“Treasury Put”).
Edwards states that “we now have three major financial market puts in place, all ready to backstop financial markets. Together the US President, Federal Reserve and US Treasury represent the Triple Put,” The volatility backstop is unprecedented in terms of its scope.
Is BTC Undervalued?
Caprioles Own “Chart of the Week” This argument for valuation is a strong one. The Bitcoin Energy Value—an in-house metric that prices the network using aggregate miner electricity consumption—surged above $130,000 for the first time this month.
Spot market trading near $94,000Bitcoin is therefore a cryptocurrency that sits in an “almost 40% discount to fair value,” Edwards refers to a “depth of undervaluation” “quite rare” After a 50% reduction, the cost of living will double in the following year. “a very welcome sight.” The energy value historically has been a force that pulls prices down. This gap in size was narrowed during every previous cycle.
Edwards adds caveats to his bullish outlook. “Political and volatility risk remain, and new policy changes are the greatest risk to derailing markets at present,” Capriole writes, adding that he will be watching to see if Bitcoin can defend $91,000 in a closing weekly and if the Macro Index continues to grow.
But his tone of voice is certainly optimistic. “As it sits today, the outlook for Bitcoin is very bullish with confluence across technicals, fundamentals and sentiment,” He ends. Edwards says that if this week is above the levels of last year, he will not be surprised. “suspect[s] we will be pushing new all-time highs on Bitcoin quite soon.”
BTC was trading at $93,723.
Featured Image created using DALL.E and chart from TradingView.com
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Source: www.newsbtc.com
