Chart of the Day - Thursday, May 20th, 2021

Today’s Chart of the Day comes from Renaissance Macro Research (@RenMacLLC). It’s a point & figure chart of Bitcoin. The spectacular rise in Bitcoin over the past year has sucked in a new class of hodlers’ like a rip current in the ocean. But yesterday, a lot of those new market participants found out what risk was for the first time. We’ve been following this trend since last May, and there has been no reason to fight it up until recently when it began losing strength relative to other assets like Stocks, and Gold. Bitcoin lives and dies by momentum. Once that momentum is gone, the script flips from “Buy the Dips” to “Sell the Rips.” As of writing, Bitcoin has already rebounded more than 30% from yesterday’s low of $30k, back to $40k. Renaissance points out that the ongoing reflex rally could carry higher towards $50k. However, there is a significant amount of overhead supply around that level that will likely put pressure on it.