Downside Participation Accelerates
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There are plenty of charts to go through in today's note, so let's dive into it:
Here's our Weekly Movers scan.
We scan for both the largest single-day moves (up or down, depending on market environment) and the largest weekly returns, or in this case, losses:
Kusama $KSM was the big loser of the week, violating our risk level in the process.
But it wasn't just KSM getting dragged down last week - Altcoins have finally broken down from this multi-week consolidation to the downside, which places the index back into this range.
Below 3,750 and the bias is lower toward the high 2000's.
The Micro-Caps of the space - the smallest, most high beta coins - have lost this waltz to the bears.
Price is currently below this 5,500 level, and looks incredibly vulnerable in the coming weeks.
If we're below 5.5k, we can be aggressively short with a target of 3,500.
Exchanges were once the leaders. Not anymore...
If we're below 7,000 in FTX's Exchanges Index, we can be short down to 5,700.
DeFi is also breaking down hard.
Our shorts have worked excellently in the last few weeks, and if we're below this level, we're only anticipating them to continue working in our direction.
Ethereum $ETH is below our risk level of 2,250, so it's absolute a no-touch from the long side right now:
Ripple is breaking down from last year's highs of 0.85.
Under no circumstances can we own XRP if it's below this level.
Aave $AAVE again lost this battle to sellers, placing it below our critical 290 support level.
If Aave is below this level, we want to be aggressively short.
We've already been short Avalanche $AVAX with a target of 10.50.
This has been one of the weakest coins in our Top Crypto Universe since this entire volatility began to unwind.
Here's another breakdown...
Below 0.92, we're short IOTA with a target near the crash lows of 0.68.
Same story here, XLM has been breaking down for some time now.
The risk is a tad stretched using an entry point of 0.35, so if you want to short XLM, 0.2850 seems to be the more defined level to trade against right now.
Below that and we're short with a target of 23 cents.
Here's Filecoin $FIL getting rejected from this 97 level, and right back to the crash-lows of 54 bucks.
While it would be a logical place to see a bounce in the coming days, if buyers can't defend this 54, we're short with a target of 32.
Internet Computer $ICP has been a great short for us. We were shorting it at 90, and then again at 52. This has been one of the worst major Cryptocurrencies throughout this entire selloff.
If this volatility continues, we're only expecting it to lead the remainder of the asset class lower.
The risk vs reward is a bit stretched here, so we only want to be fading strength to 52 bucks right now.
And what does it say about an asset class if the leaders look like this?
Kusama $KSM was one of the coins to recover the fastest, and now it's caved in to this broad-based distribution going on.
If these are what the leaders look like, it's irresponsible to be buying coins right now.
Wait for money to eventually rotate into the leaders before trying to be a hero.
For those who want exposure to these trends via an equity vehicle, Microstrategy is probably the best option.
Just as all of this is going on, the CEO just sold an additional $500M in corporate bonds to finance yet another purchase of Bitcoin, adding to their arsenal of nearly 100,000 Bitcoin.
If the space is gonna get slammed, it goes without saying it'll likely drag down MSTR in the process.
We want to be short MSTR if and only if it's below 670, with a target of 450.
RIOT Blockchain $RIOT is another good option, right now.
The principle of polarity is really kicking in here.
If we're below 37, we can be short with a target of 21.
As always, we'll leave you with a Performance Recap of yesterday's trading:
We expect a lot more red on tomorrow's table...
We'll be publishing Tuesday's report with these charts and many more, highlighting our risk levels - so you can see for yourself just how vulnerable many of these assets look right now.
While we're still waiting for Bitcoin to make a decisive move from its respective range to confirm these breakdowns, it's quite clear that investors are aggressively positioning themselves out of these higher beta plays in this asset class and flocking for cash.
We've preached that while this messy action has persisted, we're simply buying leaders and selling the laggards. That tune has started to shift.
Even buying leaders in this environment has become infinitely more challenging, while shorts just keep on working.
Be sure to let us know if you have any questions.
Allstarcharts Team
*This post has been opened up for everyone to read. But if you'd like to access our daily Crypto note, weekly live Crypto Conference Calls and full access to our Crypto trade ideas page, you can sign up for that here.