Bitcoin Dominance Season Incoming

IN THIS ISSUE

  • Bitcoin dominance signals HTF reversal as price blasts up to 58k$
  • Ethereum approaches key level vs. BTC
  • Coinbase announces plans to launch NFT marketplace
Analysis by @RandomTask555

Bitcoin is trading above $55,000, altcoins are all over the place and extreme greed has once again come roaring into the market. We appear to be in the early stages of a major shift in the crypto market this month, so now, more than ever, it’s critical to have a plan in place. I’m talking about Bitcoin Dominance.

The market is signalling a potential mid-term pivot on the BTC.D chart that, historically, has been one of the most important trends to pay attention to for altcoin traders and speculators alike. For anyone who just discovered crypto this year, you’ve been living in a one sided, altcoin friendly, dream world (May/June/July aside). Bitcoin dominance peaked at the yearly open and has pretty much been in freefall ever since.

But for those of you who have been around a little longer, you know all too well the heavy-handed consequences that altcoin holders must endure when “The King” comes back to claim his throne. There will be few places to hide if Bitcoin goes into price discovery. We could of course see continued consolidation in a wide range on BTC dominance where altcoins get to enjoy the party along the way. The massive increase in USD pair liquidity over the years and the rise of DEX/AMM’s certainly make this a very real possibility.

Regardless of what you think is going to happen, just make sure you have a plan. Consider the possible outcomes, weigh your appetite for risk. Is your goal to grow your portfolio in USD terms? BTC terms? ETH? Know what you’re trying to accumulate, so that you can trade against your base currency effectively.

 

 

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If trading to accumulate more BTC, hunt for key levels on the ALT/BTC charts that you’re in and look for signs of a trend reversal. Even if I think BTC will “only 2x” from here on a run up to 100k, and that might not sound very appealing. The most likely outcome is that as that’s happening, my favourite altcoin will be losing 50%+ of its value vs. BTC. So, while it might still come back and 10x later, there is an opportunity for me to capture this mid-term swing and avoid getting trapped in a situation where I may capitulate a bag in the late stages of the swing.

I’ll be covering this topic more in depth on Hxro Labs LIVE this Friday at 3:00PM EST, it’s much easier to dissect with charts and visual examples! Don’t miss it!

In the news this week, Coinbase announced plans to launch their own NFT marketplace by the end of the year. Kicking off with an Ethereum based NFT focus, they also indicated plans to expand to support other chains in the future. Given the vast userbase of the USA’s largest cryptocurrency exchange, this will no doubt be a massive boon for the NFT sector later in Q4. I’m already seeing signs of a resurgence in NFT hype over the past couple weeks on Twitter and in the chats.

I do wonder how long these algo-generated “10,000 mints” can persist, given that it’s basically just become an entertainment and art experience with pre-determined rarity based on a handful of randomly generated traits at mint. I will admit they’re a lot of fun, and despite not hitting any big winners, I’ve participated in a bunch of them.

There’s no doubt in my mind that NFT’s are here to stay, in one form or another, but my guess is that this rinse repeat “algo-generated” NFT mint trend will go down in history as a fad, and that over 90% of them will fizzle out and die (like the ICO craze in 2017).

We’ll inevitably hit a saturation point, where there are just too many new mints, and not enough new capital to support sustain the upside that early NFT participants have become accustomed to. Being selective, and looking for projects with staying power, is more important now than ever. What I’m focused on as a trader/speculator is NFT’s with a use-case that goes beyond “looking rare”.

The NFT/Gaming sector is exploding right now with 100’s of new projects set to launch through the end of the year and throughout 2022. I’m still in the early stages of researching these and carving out an edge for myself in the space but will share my journey with you along the way.

One that stands out for me right now is Star Atlas. Naturally it’s the chart that piqued my interest at first, but I also got word that their in-game NFT’s are worth looking into. I haven’t bought any yet, just sharing for interests’ sake.

There’s still some work to be done here for a bullish setup to fire, and given all I said above about BTC dominance, I’m hesitant to make big bets on alts right now, but this chart certainly looks appetizing right now. Patience for me. I’ll be keeping a close eye on it this month!

ATLAS USD daily chart

The Delta-Fi panel shared their perspective on NFT’s a couple weeks ago for anyone who missed it: https://youtu.be/LrMTkv924G4?t=2790

 

BTC/USD

Bitcoin has arrived in the high-timeframe Short Reload Zone (RLZ) this week and has once again made clicking the “buy” button feel smart and easy. It’s incredible to experience the emotional swings that come with each new rally/retracement. Just two weeks ago, buying more BTC “felt” incredibly uncomfortable. Ironically, now that it’s in an area where many sharp “range traders” will be looking to hedge exposure/take profits or otherwise short it, clicking the “buy” button not only feels easy, but it also almost feels stupid NOT to.

 

The buy volume on the daily has been fairly underwhelming to this point, despite the healthy, strong uptrend we’re seeing in price. I’ve been averaging in little bits here and there, but at this point, I’m comfortable waiting for the “washout”, whenever that comes. Without fail, at some point, there will be an open interest flush, and the overzealous bulls will get a harsh reminder of the risks that come with leveraged trading as the liquidation cascade wipes them out.

On that day, I will look to deploy some capital at key throwback levels. For now, I’m eyeing the weekly support around $50,000.

BTCUSD Daily chart

 

ETH/USD

Ethereum is trading between two key support/resistance levels this week after reclaiming the daily level that it had lost in September. I’m still waiting to see a proper breakout in volume on the daily. For now, the ETH bulls appear to lack conviction, which makes sense considering the looming Bitcoin ETF decisions and upcoming Taproot upgrade for the BTC network.

A reclaim of the $3,700 level for ETH/USD would be a very strong signal for bullish continuation and spur me into buy the dip mode, where I’d be looking for a ride into price discovery!

 

ETHUSD Daily Chart

 

ETH/BTC

ETH/BTC dipped right into the local RLZ that’s been on our chart for the last few weeks. Still no real sign of the bears where volume is concerned. Low volume/drippy price action speaks to the indecision in the market with who should be leading the next major leg.

As a proxy for the broader altcoin market, I’d like to see this chart maintain it’s bullish market structure which means it shouldn’t trade below 0.055. A weekly close below that level would likely co-inside with a brutal shift in market dynamic that would see BTC dominance run wild, and altcoins re-visit high timeframe reload zones, or possibly even new lows vs. BTC for some of the weaker names.

ETHBTC Weekly chart

 

Bitcoin Dominance

It feels like it’s been ages since the BTC.D chart confirmed bullish market structure on the weekly back in June. That was the first hint that perhaps we’d be faced with a trend reversal sometime soon. The next key level to watch, as highlighted on this chart was the local Reload Zone that was established by measuring the bounce off the lows with the Fib tool.

The reaction to that level followed by last weeks strong close above the 20-week moving average leaves little doubt in my mind that we’re headed into a mid-term shift towards BTC season. Spotting the signs early, is a critical part of trading a swing like this effectively. As with all decisions in my trading, I reduce the pressure of “getting it right” by making small, calculated moves into or out of a position. The all-in or all-out approach puts way too much pressure on a trader and is one thing I learned (the hard way) to avoid completely.

I’ve been slowly shifting my portfolio exposure towards Bitcoin over the last couple weeks, but still have much work to do in that regard. There will be bounces and dips along the way, so I just keep my eyes open and wait for key throwback levels on my holdings to cut a little more and move to BTC.

I’ve been blessed this month with a uniquely challenging situation which is that the vast majority of my altcoin exposure rests in TIME, ICE, SPELL & SCRT. All of which, thus far, have been greatly outperforming Bitcoin and only one of which trades directly against it. Most of those are holds for me, despite their explosive rallies of late, because I don’t think they’ve come close to the valuations I’m targetting. Outside of those positions, I’m looking to grow my Bitcoin exposure to balance things a bit.

BTCUSD Weekly chart

 

DeFi Perp

The Defi perp is compressing between the local downtrend line and weekly support. A break upwards with some volume to back it would be a great mid-term swing signal that would have me hunting entries on next pull back. I don’t trade this perp specifically but will do a scan and come up with a shortlist I can go over on stream if and when the time comes. For now, there’s no clear signal pointing to one direction or the other.

DeFi Perp Daily chart

 

 

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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Disclaimer:

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.

©2021 by Hxro Labs

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