Listen to the audio version of this article (generated by AI).
Managing Editor’s Note: Today, we’re hearing from our contributing editor Mike Burnick in his weekly feature.
Mike has over 30 years in the investment and financial services industry – from operating as a stockbroker, trader, and research analyst, to running a mutual fund as a registered investment advisor and portfolio manager, to being Research Director for the Sovereign Society, specializing in global ETF and options investing. And he’s been senior analyst at TradeSmith for three years, running Constant Cash Flow, Infinite Income Loop, and Inside TradeSmith.
Here’s Mike…
Why Bitcoin May Soon Go Risk-On Again
BY MIKE BURNICK, CONTRIBUTING EDITOR, MARKET MINUTE
Bitcoin may be many things to many investors – digital gold, or an alternative to paper currencies – but at the end of the day, Bitcoin acts like a risk asset.
When markets are in risk-on mode, Bitcoin performs well. But when markets are risk-off, Bitcoin struggles. It’s as simple as that.
And with the stock market going nowhere since August, stuck in a frustrating trading range, Bitcoin has been rangebound, too.
But that may be about to change, in a good way.
Our Trade Cycles chart above shows Bitcoin is now making a long-term cycle low. And its next move should be a cyclical upturn from November into the first quarter of 2027.
And if the king of crypto does keep following this historical cyclical pattern, it means Bitcoin could soon go risk-on once again.
The first sign of a big turn in asset classes like gold, crude oil, or cryptocurrencies is often telegraphed in advance by stocks within the sector.
Gold and silver mining stocks tend to perk up before a big move in gold, for instance. And the same is true for Bitcoin.
The Bitwise Crypto Industry ETF (BITQ) is a fund that tracks stocks that are prime movers in the cryptocurrency sector. BITQ itself is still in the TradeSmith Health indicator red zone, as is Bitcoin.
But several stock holdings within the BITQ ETF have recently turned green as you can see below.
TradeSmith subscribers can view this detailed data on short- and long-term health for every stock and ETF we track, including the stock holdings of ETFs.
Just type in the ticker symbol (BITQ) and click on the Holdings tab to view the table above.
For instance, Strategy (MSTR), the original Bitcoin treasury stock, just flashed a buy signal by moving into the short-term health green zone in late September. And Coinbase (COIN), a leading crypto exchange provider, just did the same.
Bottom line: It looks to me like Bitcoin could soon be back in risk-on mode again. Several leading stocks within the crypto industry are indicating this already with renewed uptrends including new flash buy signals for MSTR, COIN, and others.
Good investing,
Mike Burnick
Contributing Editor, Market Minute