Short The Crypto Stocks?

Louis Sykes
June 9, 2021

The thesis has been that if Bitcoin loses 30,000, we need to be aggressively shorting these digital assets.

In that environment, not only are Cryptocurrencies themselves likely getting slammed across the board, but crypto-related stocks are also going to come under pressure.

Unlike some other crypto and blockchain funds, the Amplify Data Sharing ETF $BLOK does a great job of finding stocks with direct or indirect ties to this still-niche industry. 

We think it makes for a pretty good benchmark for this group of equities. Here's a daily chart:

If BLOK is below 43, we're short with a target down near 32 over the next 1-3 months.

Here's Microstrategy $MSTR, one of the most prominent corporate backers of Bitcoin. With the company recently selling $500M worth in Bonds to finance additional Bitcoin purchases and the CEO recommending that people mortgage their homes to buy Bitcoin - volatility within crypto markets can definitely drag this thing down.

We're short MSTR if it loses this 450 level, with a target of 310.

The same applies to Marathon Digital Holdings $MARA. However, instead of simply holding Bitcoin on the balance sheet like MSTR, Marathon is directly involved with Bitcoin Mining.

Either way, the risk is incredibly elevated to the downside if it's below 30.

We're fading strength back up to that level, with a target of 16.

Last up is the Canadian Galaxy Digital Holdings $GLXY.

After violating this 12-month trendline, the chart has endured some structural damage and appears to be shifting from a sideways to a downward trend in the intermediate term.

We're short GLXY below 19, with a short-term target of 13.

To wrap things up, here's our Performance Recap table:

Again, look at Cardano with that leadership!

But that strength doesn't compare to Theta Fuel $TFUEL, which we featured in yesterday's note. It's the only Top 50 coin at an all-time high - talk about leadership! So if we're going to express any bullish thesis in this environment, TFUEL should be front and center of the discussion as long as this relative strength continues.

Keep in mind that in its current state, TFUEL is only available through Binance.

You can view our levels for that trade and the others we've discussed on our Crypto Trade Ideas page.

And in case you missed it, you can download our Chart Book for the week here, or view it online here.

Be sure to let us know if you have any questions.

Allstarcharts Team

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