The DeFi Avalanche is Upon Us

IN THIS ISSUE

  • Avalanche Ecosystem explodes in the wake of 180m incentive
  • Bitcoin & Ethereum continue to move sideways at resistance
  • Michael Saylor buys more Bitcoins
  • L1’s follow Solana breakout with strong price action!
Analysis by @RandomTask555

This market doesn’t wait around! With the pent-up bullish energy that we’ve seen accumulate over the last few months, August has brought about an absolutely explosive wave of price action across the market. If you’ve been staring at the Bitcoin and Ethereum chart over the last week, you may think I’m crazy. Neither of them has moved much since last issue, but if you did a little digging into the ecosystem lists I shared, you may have been fortunate enough to spot the AVAX breakout and catch a multi-x ride!

AVAX and the tokens built on it have shown zero chill. There is a race to be early to what could be the playground for a “Defi Summer” repeat that could make 2020’s equivalent, look like an ant hill. Cheaper, faster, and now with a 180m incentive that kicked off this week’s orgy of buying.

If you’re human, then regardless of how much of the recent move you captured, like me, you’re probably feeling a pang of FOMO. Stop. Take a deep breath. Relax. You’re not going to improve your edge by rushing into seed a new wallet, aping into the bridge or market buying a coin that just went up 1200%+. Doing that, you’re more likely to lose keys, get rugged or eat shit for a week after buying a local high!

Trust me though, I get it…

After loading a bag of AVAX and PNG on Wednesday night, I got a tip from Messi on Thursday morning about AVAX DeFi as I was flying down to Chicago for the weekend to meet the Hxro founders’ Rob & Gunny. I was at the airport. I didn’t have the access I needed to ape into those positions. Looking back, I would have front-run the biggest 5-day rally of the year by mere hours. So despite enjoying nice gains on AVAX and PNG this week, I feel it.

But this is all part of trading! We will miss the best entries, hold too long, look left when we should have looked right etc. That’s all part of the game. There is no perfect score. This week, I’m bridging some funds to position myself for the next opportunity I can find. Whether that’s taking up a position in the Pump Chaser Zone of one of these names or buying the first hour on a new project that launches on AVAX (there will be hundreds).

The Fear & Greed Index reflects the growing state of FOMO in the market and is back at 79 (Extreme Greed) today.

Fear&Greed Index

 

I’m wasting zero energy thinking about what might have been. I caught a piece of it, and expect the best is yet to come. I think the heatwave that has hit Avalanche this week is just getting started so while I’m not in a rush to look elsewhere, I’m also not ignoring other L1’s that could catch echo rallies here in the near term. Just like last week’s issue where I highlighted the potential for AVAX or ATOM to echo the Solana summer breakout narrative, this week, I’ve got a few charts that I’m keeping a close eye on for more of the same.

AVAX is the clear leader and based on the volume flowing into the AVAX pair and the growth in on-chain liquidity, I think it’s the best place to be looking right now. Price has quickly made its way back to previous all-time highs and looks poised to continue. If it visits the PCZ (perhaps in the event that ETH and BTC break down from their current consolidation), it will be a big buy level for me. Confluent with daily support.

AVAXUSD Daily chart

Check out today’s episode of $hitcoin Church with @CryptoMessiah for a deeper look at the hottest AVAX tokens from this week: https://youtu.be/EJluM4qED0s

SOL is taking a breather after an explosive breakout into price discovery last week. I’d expect to see a continuation in the near future and will be hunting the PCZ on this one as well. There is enough liquidity to go around, and more coming into crypto each day. So, while AVAX is the headliner this week, I’m not about to ignore my favorite L1 play to chase candles. Solana & Avalanche make a great 1-2 punch for DeFi growth and I’m positioning myself for both to have an exciting end of the year!

SOLUSD Daily Chart

There are a few runner up L1’s that are worth keeping tabs on. All of them have shown strong buy volume off of the lows, but none quite as impressive as SOL or AVAX. We know the echo pumps & rotation games will come, so it’s good to watch carefully for entries and signals of continuation.

Cosmos (ATOM) broke out on volume last week and is coming into PCZ levels, confluent with daily support.

ATOMUSD Daily chart

Same with Fantom (FTM)

FTMUSD Daily Chart

 

 

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Polkadot (DOT) is the weakest of the group where the chart is concerned. Less volume and it didn’t break the resistance that the other names did. This one likely needs more time. But it kicked off what appears to be a bullish uptrend on the daily so is on my shortlist as well.

DOTUSD Daily Chart

Here are the ecosystem shortlists, curated by Coingecko (nothing for FTM yet, unfortunately). These make a great place to start hunting the above ecosystems if & when they breakout. There is much to be said for positioning in advance of those breakouts, but potentially an opportunity cost associated with holding if they end up taking a month, while AVAX & SOL continue to boom.

Solana (SOL): https://www.coingecko.com/en/categories/solana-ecosystem

Avalanche (AVAX) – https://www.coingecko.com/en/categories/avalanche-ecosystem

Cosmos (ATOM) – https://www.coingecko.com/en/categories/cosmos-ecosystem

Polkadot (DOT) – https://www.coingecko.com/en/categories/dot-ecosystem

Where the majors are concerned, BTC caught another bid this month from Michael Saylor’s Microstrategy with their announcement today that they purchased another 3,907 Bitcoin for ~177m with an avg. price of $45,294.

This news shouldn’t be expected to do much to price obviously since it’s a “known known” at this point. But it’s always nice to see an old friend doing what they do best. I don’t find BTC very exciting to trade when Altcoins are running like they have been, however, I’m sure we’ll see another rally sooner or later that will push BTC dominance up, and eventually make everyone wish they rotated back to BTC sooner. I’ll be sure to share insight on that if I see anything on the charts.

 

BTC/USD

Bitcoin is at an important level today after dropping a few thousand bucks to open the week. There is a low-high trendline intersecting with a key S/R level that the bulls will want to see hold. Another strong close this week could mark a flip of the key weekly level that we’ve been consolidating against and would likely take us up into the mid 50k’s soon after. A failure here, and the next area of interest for me is the 46k region that would mark a higher low, or potentially down to the PCZ in the low 40k’s if that doesn’t hold up. All of these areas where I’d be looking to add long exposure to the market (probably in altcoins vs. USD).

 

BTCUSD Daily Chart

 

ETH/USD

Ethereum looks much the same, struggling to break through a big daily resistance level this week. Again, this is to be expected on first, second & even third approach. This level is basically the last stand for the bears. IF we were headed into a longer-term bear market like so many would have had you think in June/July, then this is the level where price should be failing and failing fast. The most important battle of the cycle is taking place right now!

If we roll over, the party isn’t over though. In fact, as a technician and trader, I’d rather see a test of the weekly support at $2700 sometime in September. A strong showing there from the bulls would cement my thesis that we’re heading much higher in Q4 and give an optimal entry for me to ride that rally from a position of strength.

 

ETHUSD Daily Chart

 

ETH/BTC

ETH/BTC is quietly sliding into the local PCZ and RLZ this week, positioning itself for the next big move. For now, the trendline break following EIP-1559 has me leaning towards a bullish continuation through Q4.

Losing this trendline would likely only come in the wake of a new ATH for Bitcoin. If it were to break down prior to that, it would be a bad look for the leading L1 platform.

ETHBTC Daily Chart

 

 

Bitcoin Dominance

Bitcoin dominance has dropped heavily since coming up to tag the 20-week moving average. There are a whole lot of altcoins that are showing massive inflows of buy volume which makes me think we could be gearing up for another leg down, that would likely take us to all time lows on this chart! That would be the recipe for an insane altseason, the likes of which we haven’t witnessed since late 2017.

Bitcoin has a chance to take charge again in this local RLZ, but time is not on its side. The recent blast of buy volume on SOL & AVAX could be the market tipping its hand for what’s to come next. I’m obviously on the side of more up for alts vs. BTC

BTC Dominance Weekly Chart

 

DeFi Perp

The Defi Perp claimed a key resistance level and appears to have flipped it to support this week. It’s unclear how much of the noise on Solana and Avalanche will be captured on this chart, but my guess is that at some point, the DeFi names on those L1’s will factor in here, and we’ll see continued growth.

The chaos PRZ’s give an idea of what we could be headed towards in Q4. Incredible to think that just one month ago, there was such a rash of mid and long-term bearish analysis floating around. Sad really. Thankfully, we saw through the emotion and bought the fear. As we head back into “Extreme Greed” I’m being somewhat cautious with deploying new positions on the long side and will continue to be until we see BTC & ETH resolve the daily and weekly resistance levels they’re battling.

DeFi Perp Daily chart

 

DXY

The USD Index broke out above the key weekly resistance I’ve been tracking and closed a weekly candle. The swift rejection to open the week is a great start, but we’re not out of the woods yet. As I’ve discussed many times on stream, a confirmation of market structure like this can often be followed by a pullback to form, what in this case would be a higher low, before continuation.

DXY Daily Chart

President of Hxro, Rob Levy, is not convinced that this chart really matters in the big picture for Crypto. I’m inclined to listen to his wisdom, but for the sake of consistency and curiosity, I’ll keep sharing the chart here until we find out once and for all, just how much the DXY matters.

 

 

 

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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If you haven’t already, you can follow me on Twitter @randomtask555 & subscribe to our Youtube Channel here: youtube.com/c/Hxrolabs.

 

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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