Raoul Pal wants Bitcoin investors to mobilize their trades against Elon Musk. The macro investment strategist advised traders to either accumulate or preserve their Bitcoin (BTC) holdings just as the flagship cryptocurrency suffered massive declines over the weekend and at the beginning of this week.
In retrospect, bulls came under pressure after Elon Musk started rattling the cryptocurrency market. On May 12, the billionaire entrepreneur reversed his company Tesla's decision to accept Bitcoin payments for its electric vehicles, citing environmental issues related to the Bitcoin mining industry.
Nevertheless, he noted that Tesla would keep holding more than a billion dollars' worth of Bitcoin on its balance sheet. The company had revealed the said crypto investment in a filing with the United States Securities and Exchange Commission in February.
But over the weekend, Musk hinted at another U-turn. He engaged with an alleged cryptocurrency scammer on Twitter when the latter discussed the prospect of Tesla dumping its entire $1.5 billion Bitcoin stash on the market. Musk responded with an "indeed," prompting traders to believe that he would indeed sell all of Tesla's Bitcoin holdings.
Musk later clarified that Tesla has not sold its Bitcoin.
But the damage was done. As Bitcoin's price fell, Musk's comments lead to an out-and-out Twitter spat with the Bitcoin community, prompting prominent investor and crypto influencer Anthony "Pomp" Pompliano to call the Tesla CEO an "emotional billionaire."
On the other hand, Pal suggested Bitcoin traders ignore the "weekend FUD" and focus on the cryptocurrency's strong technical setup that indicates a bullish breakout, stating:
"After the weekend FUD fest and shit fighting, let's get back to the important stuff. BTFD. BTC is forming a wedge most likely...perfectly normal correction and healthy. [...] So, if you have dry powder, add. If you don't. HODL."
Anatomy of Pal's Bitcoin tweet
"BTFD" is an acronym for "buy the fucking dip" — saying that traders should accumulate more assets as their prices go down. Meanwhile, Pal appeared very bullish on the latest Bitcoin correction after spotting a falling wedge pattern.
Falling wedges are bullish reversal patterns. They appear when price trends lower inside a range defined by two downward sloping trendlines — as the reaction highs and reaction lows forming on them converge.
It typically leads to the price breaking above the upper trendline by the maximum wedge length. The technical theory serves as the basis of Pal's bullish bias on Bitcoin.
A mirrored image of Pal's BTC trade setup from TradingView shows that the BTC/USD exchange rate could rise by almost $14,000 on the next upside breakout move.
Meanwhile, fundamentals such as network hash rate and other metrics continue to flash bullish in the Bitcoin market. However, some macroeconomic factors may also provide a boost for Bitcoin, particularly as the dollar slumps.
Additionally, the U.S. Federal Reserve will release the minutes of its April meeting on May 19, which are expected to say that the central bank will keep interest rates near zero, purchasing government bonds and mortgage-backed securities at the pace of $120 billion per month — at least until 2023.
"We expect the minutes ... to reiterate that policymakers consider the pick up in inflation to be transitory," commented Kim Mundy, a currency strategist at the Commonwealth Bank of Australia in Sydney. Mundy also told Reuters:
"The upshot is that we do not expect the (Fed) to consider tapering its asset purchases soon. The dollar is expected to resume its downtrend this week after last week's CPI-inspired boost."