Reminders From Crypto's Crash

Louis Sykes
September 9, 2021

Watching some of these cryptos, you wouldn't even know Bitcoin just got a 15% haircut after $4B worth of positions were steamrolled.

Take a look at Solana...

We thought that this extension target, particularly in the face of the recent action, would act as a logical level to consolidate these gains. But, buyers have continued their charge.

When the market completely ignores these extensions, that's information...

Continuing to remain long if it's above 182 is the strategy here.

And you can see just how nuts this relative strength has been over the last month and particularly since crypto's flash crash:

The same is true when we look further into the remainder of the Solana ecosystem.

Here are two Solana-built DEX's pressing up against new all-time highs.

We're long Raydium $RAY on strength above 16.50 with a target of 25.

And it's not just Solana and its component ecosystem, a lot of the names we've been buying in recent weeks off relative strength have continued showing leadership.

So in the face of this notable divergence between the winners and losers, let's have a little thought experiment.

At what point are there too many smart contract platforms and defi protocols?

If you're a developer nowadays, it's almost becoming ridiculous with how many options you have at your fingertips right now. And even for the humble investor wanting to earn yield on their crypto, there are now literally hundreds of varying protocols at their disposal.

At some point, there has to be a frontier to how many new original projects can be launched.

We've talked in length about how the Pareto distribution is present in crypto markets; in the long run, 99.9% of crypto projects are zeroes, while there'll only be a small number of winners that rise to the top.

Despite this liquidity crunch, things are still pretty good. Though damaged, uptrends are still intact and investors continue to accumulate.

But when things do change for the worst, it's hard to imagine there'll be much of a necessity for all these sprouting protocols that really all have equivalent offerings.

So if the last few days have reinforced anything, it's to both manage your risk and to never stop looking for relative strength.

These are all just trades.

Numbers and pixels on a screen.

Nothing more, nothing less.

Keep it that way and always stay objective.

Focus on the winners, and forget the rest, because chances are, they're zeroes!

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Thanks for reading and please let us know if you have any questions!

Allstarcharts Team

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