IN THIS ISSUE
- The kick-off to Q4 breathes new life into the market
- Jerome Powell confirms “No ban” coming for Crypto in USA
- Bitcoin is up over $11,000 from recent lows
- DXY threatens to ruin the party, or does it matter?
A lot can change in a week when it comes to the Crypto markets. Especially when that week marks a transition into a new quarter. The month of Rektember is finally over, and Uptober appears to be in full swing! Just one week later and the Crypto Fear & Greed Index jumped up from Extreme Fear all the way to Greed.
As if by some magic, the bullish reversal kicked off in the early hours of October 1st, just ahead of the NYKZ. Some analysts are crediting the reversal to a comment from Jerome Powell, Chairman of the Federal Reserve. When asked during questioning before the House Financial Services Committee on Thursday evening, whether he had any intention to ban or limit the use of cryptocurrencies, similar to China, he said there was “no intention to ban them”.
The timing seems incredibly convenient, and it makes me wonder why no one ever asked him that publicly before, but there you have it. A monthly pivot, perhaps helped along by confirmation that we’re not looking at a “USA bans Bitcoin” scenario any time soon. The Anti-ban announcement if you will. God bless America. He did go on to suggest that regulating stablecoins seems appropriate because they “are like money-market funds” but didn’t elaborate on any near-term plans to do so.
The Bitcoin bulls have woken up this month! Pushing price up hastily back to weekly resistance around $50,000. The volume on the daily last Friday provided the first hint of reversal things the bears took over in early September. It’s hard to flip bias overnight like that and I think there are still a lot of people likely waiting to make their next big move. It can be really tough to trade a HTF swing pivot like this because the “entry” often comes days or even weeks after the initial signal. Waiting for that dip can feel like forever, especially when you look around at altcoins like ICE, SPELL & SCRT that all made big moves this week!
There will always be another dip, but it’s really difficult to say when and at what price that will come in at. This is why DCA’ing into positions during Extreme Fear is perhaps the most effective way to operate when the overall outlook remains incredible bullish. I did some of that thankfully in altcoins, and a little Bitcoin but didn’t “go for it” until we got confirmation on the volume last week. For now, I’ll wait for any further add-ons until we get a little pullback, whenever that comes.
If Bitcoin breaks through this resistance, there is a good chance it will chop around above for at least a week, filling in the upper void on the VPVR that’s circled on this chart.
Ethereum is lagging Bitcoin a little, despite confirming bullish market structure on the daily and trading back above the daily S/R level on the chart. With the Bitcoin network “Taproot Upgrade” slated for November and Bitcoin ETF news buzzing this month, I’m leaning heavily towards Bitcoin exposure vs. Ethereum.
The ETH/BTC chart suggests there is more room to trade lower while still maintaining an overall uptrend on the weekly. We could see this pullback persist into the end of the year if Bitcoin breaks out in earnest on the heels of an ETF approval or the launch of its very own smart contracts.
If that happens, there is no doubt in my mind that ETH/USD will perform well too, but it would likely lag the BTC/USD pair in that case.
The Bitcoin dominance chart is hinting at a rally again this week, pushing up as 43.35% this morning. At this point, another tag of the 20-week MA on the chart looks all but pre-programmed. From there we’ll get important information as traders as to how much Altcoin exposure we should really have in our portfolio. If Bitcoin dominance goes on a tear, historically speaking, the play is to be positioned heavily in Bitcoin where portfolio % is concerned.
Catching a swing like that has two major benefits. Firstly, I’d be riding the fastest horse (Bitcoin) through whatever rally it has in store. Secondly, I’ll be in a great position to re-deploy that Bitcoin into Altcoins when they form bottom reversals on ALT/BTC pairs sometime in the future. I don’t find the prospect of a “2x” that exciting, so a move to 100k for Bitcoin at a glance, doesn’t seem that attractive. But if the alternative is watching my portfolio balance measured in BTC drawdown over 50% while that happens because I’m heavy in altcoins… Well, you can see where I’m going here.
Trading the trend on Bitcoin dominance with portfolio % allocation adjustments is one of the most important aspects of swing trading in Crypto. For now, there is no need to panic, but I am slowly building my BTC % and for Altcoins, am focusing as much as possible on names that don’t trade on a CEX vs. BTC. I think DeFi coins that live on-chain, will likely suffer less vs. BTC in the event of a big dominance rally. If BTC dominance trades back above the 20-week moving average. I’ll move even more of those altcoins back into BTC.
The DeFi perp also confirmed bullish market structure on this move up but is pinned at trendline resistance today. I’d be more comfortable waiting for a break of that trendline with structure on the other side (Confirmed W) or looking to add on another test of weekly support if we get a small pullback in the coming days. The slight underperformance vs. BTC here is yet another sign that we could be heading into Bitcoin season to open Q4.
Eventually that new liquidity will most likely rotate back into majors>midcaps>small caps as we’ve seen countless times before, but if I can, I’d like to time the rotation to optimize overall upside.
The total altcoin market cap bounced off the 20-week moving average on the dip in September and looks really good at current levels. A break to the upside looks probable in the mid-term, and price discovery on a chart like this is likely the most exciting thing one can witness. Patience should pay off yet again.
The USD index (DXY) broke out last week as the equities markets tumbled down from their recent highs. It pulled back over the weekend but is still showing a very bullish trend. Some suggest that Bitcoin CAN rally in the face of a DXY rally, it’s just something we haven’t really seen before on a HTF.
I look forward to the day that the inverse correlation between BTC and the DXY subsides. For now, I can’t help but wonder what a strong continuation would look like on this chart for Crypto. Generally speaking, it’s not something we want to see. Hopefully, the latest Bill gets past, the printer goes brrrrr, the dollar cools down and we see what I’m expecting to see in Q4, which is explosive upside in all things Bitcoin & Crypto.
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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