IN THIS ISSUE
- Crypto Fear & Greed Index climbs to “25” (Extreme Fear)
- Bitcoin is trading back above range EQ
- Ethereum confirms HTF bearish structure vs. BTC
- Bitcoin Dominance confirms weekly bullish market structure
The market-wide cleanup continues this week as we wrap up Q2! Bitcoin is trading back above range EQ and once again, the lows that came in over the weekend provided traders with optimal long entries for the coming week.
In the news this week, Andreesen Horowitz launched a new $2.2b crypto fund. This is not the first time a16z Crypto has made a sizeable crypto investment, but it’s their largest bet to date (by far).
In case it has ever been in question, this is a good time to point out that the Crypto Industry is alive and well. It’s growing at a pace that exceeds the growth and adoption of the internet and nothing about the price action of late, should be cause for concern with regards to the long-term outlook.
While we are all enjoying the volatility (actually I'm pretty impressed how people are taking it as par for the course and aren't overly freaked out!), here is what we are actually investing in – the fastest rate of adoption of any technology in all history. Volatility is noise. pic.twitter.com/ZyaYN6chJD— Raoul Pal (@RaoulGMI) June 21, 2021
With a strong weekly close, it looks like the late bears are headed for more pain as Bitcoin explores price in the upper half of the range it’s been trading in for just over a month. The bulls managed to push price up into the weekly close just enough to form a higher low. Although it’s tough to see at a glance, that $50 should not be ignored.
If I were building a long position in the low 30k’s over the last few weeks with plans to push the market higher in the coming weeks, it would be incredibly important to me to have that higher low come in. So, in this case, thinking like a whale who’s hitting the bid, we have to acknowledge that the weekly close came in exactly where the bullish whales needed it to.
There is still a great deal of fear in the market. A lot of people sidelined, sitting in stables, farming on DeFi platforms and otherwise waiting for a signal that the bull has returned. Everything I’m seeing points to more upside in the near future.
My next area of interest on the long side for a scalp (short-term trade) is on a pullback to ~$35,000. The most recent S/R level that we flipped. If I can get a fill there, I’ll be targeting range highs in the coming week(s).
For my BTC spot longs, I’m looking to the range highs ($40,900), daily 200MA ($43,700) and weekly breakdown level ($49,000) as a series of take profit objectives. I still think the probability of price interacting with the daily 200 MA somewhere above current price in July or August is quite high, and amid the chaos, I’m happy to keep it as simple as that for now.
The USD Index (DXY) is testing the downtrend line again this week and could upend my bullish position on Bitcoin in the near term if it breaks out. For now, it’s still trending down and of no real concern to me. I’ll put an update out on my twitter if that changes between weekly publications of this newsletter. It’s just one part of the bigger picture, but a significant one none the less.
Ethereum looks much weaker than Bitcoin right now, as you’d expect given the recent confirmation of bearish market structure on the ETH/BTC pair. Price did however, close back above a key bullish throwback level on the weekly, so there is room to squeeze higher here as well in the coming weeks.
I’m not really looking to trade anything other than Bitcoin to the long side given what I’m seeing in the market, specifically with regards to the Bitcoin Dominance chart. I’ll continue to analyze the other charts for signs of invalidation of my thesis or the emergence of a new trend.
In this current market state, where there is no clear trend (except perhaps a bearish one on the daily). If I’m going to be long, I’m much more comfortable focusing on one asset. Especially when that asset is Bitcoin which we know is always driving the bus in crypto. If I’m wrong, I have one trade to execute (sell BTC to close position).
If I’m right, and we’re bullish for a few weeks or more, I think there is a good chance that Bitcoin outperforms most alts. Simplifying my exposure in this way will make for an enjoyable summer and give me a chance to scoop up depressed altcoins later in the year. The best-case scenario as I see it, is that we enter into a new liquidity cycle and the bull market continues this year. If that happens, BTC will be leading the charge. It always has, so until it doesn’t that’s an easy bet for me to make. I’m not in the business of betting on new paradigms.
ETH/BTC confirmed bearish market structure on the weekly could be headed up here in the short term to squeeze the late bears. A move up as high as 0.072 could present an opportunity to short this pair. For now, I’m just watching. Invalidation of this bearish thesis would only come on a close back above candle body highs at 0.076, so if I’m going to be short, I need to wait until price is closer to that level.
On the other side of the pendulum, Bitcoin dominance confirmed bullish weekly structure and looks poised to break into an uptrend. There could be some noise along the way, but I’d be shocked if this doesn’t “trade” at least back up to 50% sometime in Q3.
It’s less of a question of “how high will it go?” and more of a question of “what direction is the trend?”. The trend is now UP on the weekly, so until that changes, as per my plan, I’m very comfortable limiting my exposure to altcoins and holding on tight to my Bitcoin with regards to long exposure in the market.
If there is a trend change on the DAILY, back to bear, I may re-consider my capital outlay. For now, if I’m long, it’s still Bitcoin only, aside from perhaps, a few LTF trades on alts.
ALTCOIN & DEFI PERP
I’m including the Altcoin and DeFi perp in this week’s edition to give you a visual comparison. As you can see from the above charts, Bitcoin looks stronger than Ethereum. And as you can see from the charts below, Ethereum looks stronger than the Altcoin & DeFi perps. This all fits with the broader thesis that if there is a bullish position to take, it’s best taken in Bitcoin. Neither the Altcoin or DeFi perp held onto the bullish throwback levels that Ethereum did, and both have shown a much weaker recovery thus far.
I still think altcoins are the best way to make outsized returns in the market, but it’s absolutely critical to wait for the appropriate market state to do so. This just isn’t it. Not yet, and likely not soon. I’ll be sure to share here when the time comes. Hopefully, later this year!
I’ll continue to keep you updated on all the hottest opportunities I can find in the space, 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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