A lot of people seem to be caught off guard by crypto's recent rally. These people were likely waiting for lower prices ($10K to $14K) and tend to comment on how the macro economy is bad -which is true- so it doesnt make sense to rally. Quotes like "always expect the unexpected, I guess" are common.

I do not really understand why so many people are surprised that crypto pumped. Why do I say that? Let me elaborate with two simple arguments:

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(1) Bitcoin generally follows the stock market and the stock market is up from the lows

We know that there is a strong relationship between the stock market and Bitcoin. Bitcoin generally does what the stock market does, but in bigger extremes, as in Bitcoin falls harder and pumps harder relative to stocks.

What has the stock market done?

• The S&P 500 retraced almost 40% of the fall from all time high since the low in October. The S&P 500 is up 14.5% since the low.
• The Dow Jones Index retraced almost 70% of the fall from all time high since the low in September. The Dow Jones Index is up almost 20% since the low.
• The Nasdaq 100 index retraced about 18% of the fall from all time high since the low in October. It is up 10% since the low.

So, the main stock indices are up significantly from the lows. It only makes sense that Bitcoin also pumps then. And the whole crypto market moves when Bitcoin moves.

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(2) Bitcoin has an inverse relationship with the strength of the Dollar (DXY) and the DXY has dumped hard

We know that Bitcoin has its pumps when the Dollar (DXY) is losing strength relative to other popular FIAT currencies. What has the dollar done recently? Well it has been losing value. Since the end of September 2022, the DXY lost the parabolic trend and upwards channel and is down 11% in a quick fall that looks like a topping structure.

DXY

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There are more arguments, like inflation topping out, but Ill keep it short.

Hence, if anything, I am surprised that crypto did not move up faster. We might have FTX to thank for that, because that was the only serious instance of decoupling from the stock markt last year.

Do I know if the rally lasts? Of course not. I would argue it depends on the stock market and DXY. But I do not really understand why people are so surprised by a rally. Every bear market has rallies, often of over 100%. And yes, I also said this at $16K.