Netizen Weekly | Bitcoin Market Update #9

WARNING - Read This If Your 401K Is Down

Repeat After Me: Don't Buy The Dip, Sell The Rip

I've been warning about RISK-OFF markets for weeks, and the wild swings since Liberation Day confirm we're in dangerous territory. Over the past five years, we've been conditioned in a Pavlovian manner to "buy the dip" whenever markets sell off, but now is not the time. If your financial advisor hasn't already had you de-risk your portfolio, you should seriously reconsider that relationship. Take a moment now to check your 401K and understand what you actually own—perhaps you're too heavily weighted in high-beta growth stocks at exactly the wrong time. Consider rebalancing to more defensive investments and using these bear market rallies to shift into cash or while you still can.

Monday's market plunge and fake news rally, followed by Wednesday's actual tariff pause announcement triggering the second-largest Nasdaq gain in history (+12%), highlights the extreme volatility we're experiencing. I'm not a tariff expert, but even if Trump's "art of the deal" approach successfully brings investments back to the US, the global trade-weighted tariff rate remains higher than before the 90-day pause. These violent market swings mirror the bear market rallies of 2001 (+14.17%) and 2008 (+11.81%), both of which preceded significant further declines—a pattern every investor should be aware of. Wall Street banks are pumping out bullish narratives, yet nothing fundamentally improved while the S&P 500 rallied 10% on hope alone. The fact that a single presidential tweet can move markets double-digits is not a sign of healthy bull market but rather a warning of underlying instability.

The bond market's wild ride this week—with 10-year Treasury yields surging from 3.87% to 4.51%, peaking suspiciously during Asian trading hours—signals something bigger is happening. The MOVE Index (measuring bond volatility) sits 51% above its 5-year average, indicating extreme fear in what should be our safest asset class. Foreign central banks have steadily reduced their Treasury holdings from approximately 25-30% in 2008 to around 12-15% today—a key sign of accelerating de-dollarization. This international shift away from the dollar explains why Gold continues to outperform Bitcoin; institutional money is positioning for a fundamental rewiring of the global monetary order. While I can't predict whether trade negotiations will succeed or fail, the risks are clearly skewed to the downside with the US potentially facing a recession if tensions continue to escalate.

TLDR: The extreme volatility across equity and bond markets signals a dangerously unstable environment that increases risk for all assets, including Bitcoin.

Digital Gold? Not With These Correlations

Despite all the "digital gold" narratives, Bitcoin maintains moderate positive correlations with both the S&P 500 (0.65) and Nasdaq (0.67), proving it still moves in lockstep with traditional risk assets. Even more concerning, since February, Bitcoin has developed a positive correlation with the US Dollar (0.45), temporarily inverting its historically negative relationship with the greenback. In this environment of global de-dollarization and extreme market volatility that we're seeing in the macro data, Bitcoin's current correlations suggest it will follow traditional markets downward rather than serve as the safe haven many expected.

TLDR: Bitcoin's price may very well retest the $65-70K range if broader risk assets continue their decline amid ongoing market instability.

ETF Outflows: Smart Money De-Risking

This week has already seen $430 million in Bitcoin ETF outflows, dramatically higher than last week's $165 million, marking the sixth negative flow week out of the last eight. We estimate the average ETF purchase price of approximately $71K—precisely at the bottom of our previously identified supply air gap—suggests increasingly anxious holders are hitting the exits despite the brief tariff-related rally. While Wall Street wisdom suggests "buying when there's blood in the streets," I'd correct that to "buy when you hear ambulance sirens coming to clean up the mess"—meaning wait for the Fed to provide stimulus before markets find a bottom.

TLDR: Without sustained ETF demand returning to the market, Bitcoin will struggle to find meaningful buying support in this volatility-driven environment.

$83-87K: Building Overhead Resistance

The recent surge back to $83.5K following Trump's tariff announcement has positioned Bitcoin precisely at a massive supply wall, where short-term holders have accumulated significant positions between $83K-$87K, creating decent resistance. The concentration of these jittery investors at current price levels virtually guarantees increased selling pressure as they rush to exit at breakeven, mirroring the institutional flight we're seeing in ETF outflows. With Bitcoin's volatility-adjusted momentum now BEARISH and markets remaining in risk-off mode amid extreme bond and equity volatility, any strength should be viewed as a de-risking opportunity rather than the start of a new bull phase.

TLDR: Bitcoin faces a likely rejection from the $83K-$87K supply barrier as skittish investors capitalize on rebounds to exit positions.

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Thanks for reading this week's note! See you next week – and as always, hit reply if you have any questions, comments, or suggestions!

Take care -Brian

Disclaimer: This newsletter is for informational purposes only and should not be considered financial advice. Always conduct your own research and consult with a qualified financial advisor before making investment decisions.