IN THIS ISSUE
- $AXS takes the market by storm!
- Crypto Fear & Greed Index remains embedded in “Extreme Fear”
- Bitcoin shows early signs of reversal near range lows
- Ethereum tags weekly support
You can smell the fear in the market again this week as Bitcoin price dropped to start the week, reaching as low as $31,555 overnight, before bouncing back through the NYKZ this morning. The Crypto Fear & Greed Index has dropped back into “Extreme Fear” territory again and the never ending wave of bold predictions continues on Crypto Twitter.
There is a volatility squeeze taking place right now that has most technical analysts on their toes, expecting a “big move” soon. I have to remind myself that such squeezes can last days, weeks or even months. So I’m not sitting, finger on the trigger, trying to react to every quick impulse on the chart.
I made up fresh daily charts for this week’s newsletter and while I certainly understand the reasoning behind calls for a big nuke to the downside, as a trader, there’s nothing for me to do with that information. We are well below any reasonable level for shorting on the high timeframes so for me it’s still a buy or hold location on the chart.
I’m not alone in that thinking it seems, as Capital Group Cos. (who manages more than $2,000,000,000 in assets) recently acquired 12.2% of the outstanding MicroStrategy common stock. Given how much Bitcoin Michael Saylor’s company is holding on their balance sheet, this can be seen as an indirect way to gain exposure to Bitcoin. Another large player in the market is now positioned to profit if Bitcoin price rises. The saga continues.
Amidst the cacophony of noise on social media this week there were a few bright spots I’d like to share with you. Luke Martin (@VentureCoinist) on Twitter put out an excellent podcast episode covering the incredible rise of Axie Infinity ($AXS).
The play-to-earn nature of the game is an exciting concept that will surely become a popular target of copycats in the coming months and years. So if, like me, you feel as though you’ve missed the train on AXS, keep your eyes peeled for the echo plays this year. I’m sure there will be plenty to choose from. But it will take time for them to catch AXS user growth and revenues (if they can).
The @AxieInfinity episode with @YanLiberman just dropped…— Luke Martin (@VentureCoinist) July 13, 2021
•How the game works & why it's going viral
•Higher revenue than any Defi
Everything you need to know about the top performing coin this month: https://t.co/569LfchWWM
I am heavily focused on TA as an analyst & trader in general, but situations like this remind me of the importance of analyzing fundamentals also. It’s refreshing to see strong fundamentals playing out in price.
If you follow my Twitter, you’ll recall I actually shorted AXS last Friday, and while I managed to snipe the local high, and spent the weekend feeling like a genius, my TP proved too ambitious and my reduced SL triggered just HOURS before I learned more about the project listening to Luke’s Podcast, and realized how bullish the fundamentals are. Unfortunate timing, but losing a trade is a big part of trading, and with proper risk management, the -.5% loss on account, had minimal impact.
One of the previous guests on Hxro Labs LIVE, @KoroushAK on Twitter, released an outstanding 101 guide on all things crypto that is worth a share if you know anyone who’d like to learn about crypto without committing to any paid courses/resources. There are a number of helpful guides linked here and while I didn’t have time to look through all the TA resources, I’m confident the concepts being covered are sound.
We love the idea of delivering high-quality, objective, educational & free resources, so it seems fitting to share this guide here with you today!
I published a new trade idea on our Tradingview account this morning. TVK is another NFT play that has shown very impressive buy volume off the lows over the last couple of weeks. There is a Bot long setting up that could reward bulls who are looking for a continuation trade in the coming days/weeks. Like most of my recent trades, I’ve capped my potential risk to just 1% and will sleep soundly, regardless of how this plays out.
I will look to add to my position if price tags 589 sats this weekend. Check it out: https://www.tradingview.com/chart/TVKBTC/eNYoMfPJ-TVK-continuation-trade-is-in-play/
Bitcoin has looked very sleepy on its recent slow grind back down towards range lows. As I mentioned above, I don’t see any value in shorting it from this area, but I must admit, the weekly timeframe looks horrendous for anyone who wants to long an asset during a bull market. That one will take time to clean up.
There is however a view on the daily that makes me think the reversal could be cooking up here around range lows. A strong move off the dip back on June 22nd, followed by a bleed back into the RLZ of that range setups up potential longs, risking against the lows. This would be a setup to front run confirmation of a reversal, which wouldn’t take place until the daily closes back above ~$36,000, at least, depending on how you view the chart.
At this point, I wouldn’t be shocked by a big move in either direction. It feels like both would look “obvious” in retrospect. My overall plan hasn’t changed. I’ve got spot Bitcoin off exchange and drypowder available for a visit to the mid 20k’s if that comes. Trying to be all-in or all-out in anticipation of the next move is far too risky on both sides for me. I’m comfortable not knowing and positioning myself for both outcomes.
There are a few ways this could playout on the hourly if this turns out to be bullish. Straight continuation (green), slight pullback then continue (teal), drop to new local lows then bounce (red).
If the red scenario plays out over the weekend, I’d need to see signs of bullish divergence on the MACD & RSI (higher lows) to be interested in taking up a fresh long position. For now, the overnight lows came in on strong hourly bull divs and I’m happy to look for a long on either the S/R flip above (green) or the dip to local RLZ (teal).
I don’t have any bearish setups to consider at this level, except for perhaps on the lowest timeframes, but since my plan is to just wait to buy more if we nuke, there isn’t much point in entertaining a chart that highlights what we already know… The HTF trend is pointing down! Also, friendly reminder, there is nothing wrong with sitting out and waiting for confirmation of a new trend. Trading this chop is not for the faint of heart!
Ethereum is setting up a similar opportunity on the daily with a .702 tag coming in right on weekly support this morning. Like with Bitcoin, if this proves to be the reversal point (or we nuke lower), in hindsight, it will look obvious.
If it wasn’t for the confirmed bearish weekly market structure on ETH/BTC, I’d be looking long on Ethereum here also. For now though, my primary focus is BTC + a few altcoins.
ETH/BTC failed to reach the HTF short reload zone that I was hoping to catch a short entry on last week. It could still get up there, so I’m watching closely, but for now, the bulls were too few and far between to make it happen. If we continue lower from here, the weekly 20-SMA is down at 0.0529 and marks the next area of interest for me to the downside.
Bitcoin Dominance hasn’t moved much since confirming bullish market structure. But this is a weekly reversal, and could take a while to playout. I still think the most likely (and best case) scenario for a continued bull market this year would start with strength in Bitcoin, kicking off a new liquidity cycle.
If that happens, and price moves up to new highs later this year, Ethereum and other altcoins would suffer vs. BTC in the mid-term. That’s the way it has gone in the past, but sooner or later, as the market matures, we’ll see a paradigm shift and the cookie-cutter liquidity cycles where capital flows into BTC->ETH->High caps->Mid caps->Low caps->Micro caps will be no more.
I wouldn’t be shocked if that happens here, and BTC dominance doesn’t start a bull market continuation. But I’m not one to BET on the new paradigm. I’d rather position myself for what has worked in the past, and adapt to new developments if and when they arise. For now, Bitcoin remains King, so when the market is in a fear state, I stay close to home in USD and Bitcoin + a few short term altcoin trades.
I’ll continue to keep you updated on the state of the market each week! Until next time, have a great week, and whatever you do, always play from a position of strength!
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The following commentary is provided for informational purposes only and may not represent the views of Hxro Games Ltd. or its affiliates, and should not be viewed as legal, tax, investment, financial or other advice. Digital asset transactions are inherently risky, and you are fully and solely responsible for evaluating your purchasing decisions at your own risk. Past performance is not indicative of future results.
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