Look For Risers In Crypto's Mess

Louis Sykes
May 31, 2021

It's messy out there.

Breakouts are failing all over the place.

In recent weeks, it's been a tough time for any type of trend following strategy. That's because most are not trending, but rather in ranges.

When this sort of action unfolds as it has done, we play an exercise.

That is, we zoom out.

In all this gut-wrenching volatility, let's not forget the extraordinary gains this asset class has achieved over the last few years are astonishing, even after a violent 50% crash.

Consolidation is painful, but it's necessary.

Let's jump into it with a quick look at how the top digital assets performed yesterday:

First, look at Cardano $ADA with that leadership!

While the vast majority of Altcoins had severe corrections recently, Cardano $ADA showed remarkable resiliency. After yesterday's performance, ADA is now back above its 2018 highs.

It's only natural in a risk-seeking environment that investors lean on these Altcoins to express their bullish thesis in this space.

But the silver lining is that we cannot expect the same level of success diving into these riskier digital assets, as we have done, if half of the asset class, namely Bitcoin, fails to gain any real traction here.

We're closely monitoring this critical 41,000 level on the upside, and alternatively a break from this consolidation in the red box on the downside:

Click on Charts to Zoom in

If Bitcoin shows further deterioration from this near-term consolidation, it would be irresponsible not sit on the sidelines. However, until a decisive move is made in either direction, we're making small bets where the risk is exponentially in our favor.

We want to know when we're wrong ASAP, especially in this environment more than ever.

Here's a great example.

We want to be long Cardano if we're above the 2018 highs. But the best part of the whole thing is that we simply DO NOT want to be long Cardano if we're below those former highs:

You see, you can only make the case that $ADAUSD is breaking out of this 3 year base if we actually are. If prices are below the former peak, then we simply are NOT breaking out, or at least not yet.

That's what this is all about: favorable risk vs reward propositions. This is one of those.

Cardano has a $53 Billion market cap, or the equivalent size of the Craft Heinz Company. We only want to be long if $ADAUSD is above 1.40 with a target of 3.65.

Meanwhile, a lot of you are asking us about Polygon $MANICUSD, currently the 15th largest cryptocurrency sitting around $11 Billion market cap.

You can see here how it's really just rangebound between 1.50 - 2.26 or so:

 On tomorrow's note, you'll be able to download our Exclusive Chartbook with all the Crytpos, including our annotations, support and resistance levels, and of course, targets and risk levels where appropriate.

Thanks for reading, and please let us know if you have any questions at all.

Allstarcharts Team

 

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