Failed Breakout City

That's the smell of risk-off...

47,000 was the level, and Bitcoin did not hold it.

Here's what we laid out last week:

For those with a shorter timeframe, the bias is higher above 47,500 toward the former crash highs of 53,000:

Otherwise, if this breakout fails to hold, expect more messy action in the coming days.

And fail it did...

As the old saying suggests, from failed moves come fast moves in the opposite direction:

This 46,000-47,000 level wasn't just an important inflection point in the near-term, but it also coincided with Bitcoin's last level of defense before crashing in May.

If we're below this zone of overhead supply, the bias is sideways to lower.

And as we said in last week's conference call, that's no reason to be long an asset!

Another point we made in Friday's call was the emerging relative strength coming out of Bitcoin.

Bitcoin's Dominance, a measure that divides Bitcoin's market-cap with the total market cap of the asset class, started progressing higher at the exact level it stopped going down in May before everything puked lower. This doesn't mean to say another May-type crash is on the way, but it is another data point that points to defensive rotation within the asset class.

If we see a rally higher in the coming days/weeks, we expect some capital rotation back into the higher-beta altcoins.

And this is all taking place as our Top 5 Crypto index is selling off at its former all-time highs.

Seems like a logical level to see a digestion of these gains, don't you say?

The most hilarious thing of all about this recent action is the impeccable timing of The Economist magazine - they've nailed it again!

When journalists, or even worse, economists, catch wind of a trend, they're probably the last to hear of it.

It's not just Bitcoin we're watching, though.