{"id":11437,"date":"2025-04-25T18:43:04","date_gmt":"2025-04-25T16:43:04","guid":{"rendered":"https:\/\/wsj-crypto.com\/?p=11437"},"modified":"2025-04-25T18:43:04","modified_gmt":"2025-04-25T16:43:04","slug":"bitcoins-price-plummets-a-hedge-funds-take-on-the-triple-put-scenario","status":"publish","type":"post","link":"https:\/\/wsj-crypto.com\/index.php\/2025\/04\/25\/bitcoins-price-plummets-a-hedge-funds-take-on-the-triple-put-scenario\/","title":{"rendered":"Bitcoin’s Price Plummets: A Hedge Fund’s Take on the ‘Triple Put’ Scenario"},"content":{"rendered":"

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Bitcoin is trading at values nearly 40% lower than its predicted \u201cenergy value,\u201d yet a rare convergence of technical, fundamental, and policy indicators indicates that the market might be shifting, according to Charles Edwards, the founder of Capriole Investments, a quantitative crypto hedge fund. In his recent newsletter<\/a>, Edwards asserts that a newly-established \u201cTriple Put\u201d\u2014concurrent safeguards from the White House, the Federal Reserve, and the US Treasury\u2014has changed the risk dynamics for all risk assets just as on-chain and macro indicators for Bitcoin decisively trend upward.<\/p>\n

Bitcoin Turns Bullish<\/h2>\n

Edwards starts with market sentiment, describing it as \u201cin the depths.\u201d He notes that the American Association of Individual Investors\u2019 bull\u2013bear gap is \u201cas pessimistic as 2009 and the lows of 2022, and considerably worse than during the 2020 Covid crash,\u201d even though both Bitcoin and the S&P 500 have decreased by less than fifteen percent from their recent highs.<\/p>\n

The CNN Fear & Greed Index has recorded its darkest reading \u201cin years,\u201d while Capriole\u2019s own Active Manager Sentiment measure indicates equity managers are at near-historic low levels of exposure. \u201cTo put it simply, investors are in a state of panic today,\u201d he writes, cautioning that such extreme indicators \u201cusually align at the mid-to-late phase of a significant price bottom.\u201d This combination results in what Edwards describes as \u201cblood (and fear) on the street,\u201d echoing the Rothschild principle he cites in full: \u201cthe time to buy is \u2018when there\u2019s blood on the streets, even if the blood is your own.\u2019\u201d<\/p>\n

Further Reading<\/span><\/h2>\n<\/p>\n

Technically, Bitcoin recently exhibited a sharp turnaround. A breakout candle to $94,000 recaptured the entire $91,000\u2013$100,000 range that had restricted the market since February. Edwards categorizes the movement as a \u201csignificant range reclaim,\u201d adding that \u201cfor Bitcoin, such bullish range claims infrequently look back at pricing.\u201d<\/p>\n

\"Bitcoin
Bitcoin technical analysis | Source: Capriole<\/figcaption><\/figure>\n

Unless the market produces \u201ca daily close below $91K,\u201d he writes, \u201cit\u2019s difficult to obtain a technical chart that is more optimistic than this.\u201d The breakout aligns with his firm\u2019s machine-learning fundamentals model, the Bitcoin Macro Index, suggesting a positive outlook after months of neutrality. The index incorporates over seventy on-chain, macro-economic, and equity-market metrics; price is intentionally excluded to prevent feedback loops. Last week, the model \u201creset to \u2018fair value\u2019 and then resumed a bullish trajectory,\u201d a transition Edwards describes as \u201ca very encouraging fundamental data reading.\u201d<\/p>\n

The \u2018Triple Put\u2019<\/h2>\n

Policy advancements present the third aspect of the narrative. On April 2\u2014the so-called \u201cLiberation Day<\/a>\u201d\u2014the United States enacted extensive global tariffs, only to reduce them and implement a 90-day pause after equities declined by approximately fifteen percent, the VIX surpassed 30, and credit spreads widened.<\/p>\n

Edwards characterizes the swift reversal as the initiation of the \u201cTrump Put,\u201d indicating that \u201cif markets fall excessively, Trump will intervene, implement policy, and support them.\u201d The day before, on April 1, the Federal Reserve commenced reducing the speed of quantitative tightening by 95%<\/a> (the \u201cFed Put\u201d), effectively concluding a four-year contraction of the balance sheet; derivatives traders utilizing the CME FedWatch tool now allocate the base-case to three rate cuts before the end of the year.<\/p>\n

Further Reading<\/span><\/h2>\n<\/p>\n

Simultaneously, Treasury Secretary Scott Bessent informed reporters that the decline in Treasuries was driven by deleveraging rather than foreign divestment and that the department \u201cpossessed tools to alleviate the situation, including boosting buybacks if required\u201d (\u201cTreasury Put\u201d).<\/p>\n

Edwards wraps up by stating that \u201cwe currently possess three major financial market supports, all prepared to undergird financial markets. Collectively, the US President, Federal Reserve, and US Treasury constitute the Triple Put,\u201d an unparalleled volatility support in its extent.<\/p>\n

Is BTC Mispriced?<\/h3>\n

Capriole\u2019s own \u201cChart…<\/p>\n

of the Week\u201d highlights the valuation perspective. The Bitcoin Energy Value\u2014an internal measure that evaluates the network based on total miner electricity usage\u2014spiked above $130,000 for the first occasion this month.<\/p>\n

With the spot market trading close to $94,000<\/a>, Bitcoin currently stands at an \u201capproximately 40% discount to intrinsic value,\u201d a level of undervaluation that Edwards refers to as \u201crather unusual\u201d in the initial year post-halving and \u201ca very encouraging sight.\u201d Historically, the energy value has influenced price direction; discrepancies of this magnitude have decreased in every past cycle.<\/p>\n

\"Capriole\u2019s
Capriole\u2019s Bitcoin Energy Value | Source: X @caprioleio<\/figcaption><\/figure>\n

Edwards tempers the optimistic scenario with warnings. \u201cPolitical and volatility risks persist, and alterations in policy pose the greatest threat to market stability at present,\u201d he notes, specifying that Capriole will monitor Bitcoin\u2019s ability to maintain $91,000 on a weekly close and for the Macro Index to continue its expansion.<\/p>\n

Nonetheless, his overall sentiment is undeniably positive: \u201cAs it stands now, the outlook for Bitcoin is extremely bullish, with alignment across technical indicators, fundamentals, and market sentiment,\u201d he concludes. If the week concludes above current figures, Edwards \u201cbelieves we will be approaching new all-time highs for Bitcoin very soon.\u201d<\/p>\n

At the time of reporting, BTC was priced at $93,723.<\/p>\n

\"Bitcoin
BTC consolidates above key support, 1-day chart | Source: BTCUSDT on TradingView.com<\/a><\/figcaption><\/figure>\n

Featured image produced with DALL.E, chart from TradingView.com<\/p>\n<\/p><\/div>\n


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