IN THIS ISSUE
- China kicks out Miners (likely good news overall)
- Crypto Fear & Greed Index hits 10 (Extreme Fear)
- Market endures over $1 Trillion drop in total MC
- Ethereum tags 20-week moving average
What a difference one week can make! After breaking the daily range low at $42,000 early last week, all hell broke loose. On the following morning, Bitcoin price tumbled all the way down to $29,150 in what amounted to another $8B+ in liquidations. Over 1 million traders accounts were completely wiped out.
The Fear & Green index took a dive and yesterday hit levels not seen since March 2020, bottoming at a dire score of “10”. It hasn’t been fun for most people, many of whom may have suffered losses they didn’t even think were possible in what has been nothing short of an incredible bull market this year.
It’s a stark reminder to everyone who’s taking risks in the market that things can change FAST and go higher, or lower, than you’d ever imagine. These are humbling experiences that can change who we are as traders and investors (usually for the better). Everywhere you go you’ll hear things like “Don’t risk money you can’t afford to lose”, “Manage Risk”, “Avoid using leverage” etc.
But for most (myself included), it’s only after learning the hard way, that we truly internalize the lessons in those statements. I made, and then lost, more than I’d ever imagined possible in just 2 years through 2017 and 2018. Ironically, the smartest thing I did through that was pull out enough to pay off my debts in Sept. 2017. Just months before BTC went up another 300% and peaked around $20,000. At the time it was admittedly a bit painful to watch, but when the dust settled, and I watched nearly 3 times what I’d taken out, turn into dust through the bear market. I knew, I had made the right decision, even if it wasn’t perfectly timed.
With those lessons learned, I have come to appreciate the value of taking profit, even when it seems “crazy” because everything is going up. I too suffered a large drawdown this past week, but it would have been much worse if I hadn’t picked up that valuable learning experience years prior.
My hope is that this week, even though it was nowhere near as bad as the 2018-2019 bear market, may be enough to get more people on board the risk management train. Because in the end, the most important thing in trading/investing, is making sure you can always play the game again tomorrow! The market isn’t going anywhere, but the participants are constantly changing. Sadly, there are likely tens of thousands of people who won’t be back after this drop. Wiped out, in the hole or otherwise dejected and ready to throw in the towel.
Those who take risk management seriously however, have put themselves in an enviable position of being able to buy the blood. Average back into some of the coins they sold at their take profit levels. There is likely no better place to deploy capital in a market than during periods of extreme fear. But that doesn’t mean a buy here must produce a profit.
The jury is still out on whether this has been a shakeout and the bull will continue, or if we’re now headed into a mid-long term bearish/consolidation market that will completely washout like we saw in 2018/19.
I for one am leaning towards new highs on $ETH and $BTC before the end of the year, but I don’t have a crystal ball, so will continue to manage risk so that no matter what comes next, I can come back and play the game again tomorrow.
I spent the weekend buying up spot positions in BTC and ETH, and will continue to focus mostly on those two assets until more confidence returns to the market, as I think this has crushed the speculative fervor, which usually spells cool down for altcoins.
From high to low, #Bitcoin experienced a 53.74% drawdown since the Coinbase listing back in April. Regardless of where we go in the next 3-6 months, this trend has been shocked into consolidation and that should play out on the charts as a sort of fib pong in the near term. Bouncing up and down between key levels while the bulls and bears debate what sort of market we’re going to get next.
For now, the volume indicator suggests that the bears are in control. I’ll be keeping a close eye on the $47,000 area as the next key battle area.
If we lose the recent lows around $30,000 in anything but a quick sweep and spring back up, we’d likely see a teleport down to the $25,000 are in shorter order.
Zooming into the 1hr, I’m watching price move through these local downtrend lines today and waiting to see bullish market structure again now that price has broken through them. A break back above $40,000 would confirm that we’re ready to retest some upside levels, ideally as high as $47,000-$53,000 in the coming days or weeks.
Ethereum doesn’t look all that bad at all from a technical perspective. Where BTC put in an “M top” and crashed following a confirmation of bearish structure, Ethereum simply dropped back down to recent breakout levels, closed back above the 20-week moving average and is otherwise still in a strong bullish uptrend.
I’ll be keeping a close eye on the buy-back volume in the days that follow to see how aggressive the bulls want to get down here in the mid $2,000’s. There is still plenty to look forward to for $ETH this year with EIP-1559 and ETH2 lingering in the not-so-distant-future. Both of which likely factored into the relative strength in Ethereum this week.
Zooming into the 1 hour you can see that $ETH has come into trendline resistance that it will need to break through and confirm bullish structure on the other side of before I’m prepared to add more to my holdings. I’m really bullish on this one in general, so am hunting dips as long as we don’t trade below Sundays lows around $1,700. If that happens, I’ll be forced mostly back to cash and will wait (as long as I need to) for the market to begin looking favourable again for the bulls. For now, I think it still does, and consider these levels to be excellent opportunities for me to hunt long setups.
ETH/BTC demonstrated once again, just how powerful the Chaos PRZ can be as a tool for hunting take profit levels. After tagging the 8.77 Chaos level, price dropped shortly after, all the way back down to the last key weekly level around .056 (also a 4.669 Chaos PRZ). It’s incredible to watch again and again as these fibs, as if by some magic, are met with significant reactions by price.
This one is still trending up strongly, and for now, is showing no signs of slowing down. I’ll keep an eye on the coming bounce to look for signs of exhaustion in the local short RLZ around .072-.076.
$BTC dominance finally showed signs of life after nearly 10 straight weeks of freefall in the face of market wide altcoin rally. It nearly tagged the 50% throwback level that I’d been watching this week, and will likely just consolidate somewhere around here while the market settles, and eventually finds a new trend.
ALTCOIN & DEFI PERP
The #Altcoin perp was decimated along with the rest of the market and dropped all the way down to the high timeframe reload zone, tagging the .618 and closing back above it. As painful as it may feel in the moment, there’s actually a silver lining here. The probability that this was a shakeout vs. the beginning of a slow bleed that will lead into a full blown bear cycle shifts slightly when we see sharp moves like this.
Ripping the Band-Aid off in this case, so to speak, may be all the cleanup this chart needed, and after a few weeks of consolidation we could be back to the bull. There’s no point in guessing at it right now though.
I’ll be waiting for confirmation from Bitcoin and Ethereum as discussed above, before I get too aggressive with scooping up altcoins here. I’m less concerned with getting a “cheap” entry, and more focused on being on the right side of the next big trend.
The DeFi perp is now trading below the 20-week moving average after making its own visit to the HTF reload zone as well. As with the Altcoin perp, I’m in no rush to put my capital at risk on this one until the BTC and ETH show signs of buyers stepping in to support price. I won’t get the best entries, but I’ll feel much more confident that I’m buying into strength, and that’s more important in the long run the way I’ve my trading plan is written.
TOTAL ALTCOIN MARKETCAP
There is no real structural damage to be seen on the Total Altcoin Marketcap chart. Price simply smacked down into the 20-week moving average, closed back above it and looks ready to resume business as usually. This is probably the most bullish looking chart in the newsletter today, along with Ethereum. Both trading above what I’d consider the most important moving average, and both looking like standard, shakeout, price action.
It’s incredible to see how fast sentiment shifted this week, despite many of the charts remaining in uptrends. It’s been a humbling experience to say the least, and is certainly not the fun part of being a bull in a bull market, but we’ll survive, and continue to grow and develop ourselves as traders an investors, so that we can be better positioned in the future for whatever this crazy market throws at us!
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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