Crypto markets appear to be stabilizing in the aftermath of the Terra $LUNA crash, with Bitcoin $BTC slowly progressing to the low 30,000s. Many altcoins are pressing down on critical support levels.
As we'll cover in tomorrow's note, many are well-defined for long-taking opportunities if the conditions arise.
But looks can often be deceiving.
We're still placing a high weighting that near-term price action will involve a high concentration of whipsaws. This appears to be a "fade the breakouts" type of environment.
This is all taking place within the context of Bitcoin resting on macro support of around 30,000.
All in all, we have a neutral bias for the weeks ahead. But, zooming out, this would be a logical area to see Bitcoin and the others bounce over longer time frames.
The beauty of trading and analyzing crypto is the level of transparency of the data.
This is put on full display when it comes to the sprouting industry of on-chain analytics, but the same principles apply when evaluating money flow as a collective.
Not only does crypto host its own exclusive metrics that aren't available in traditional markets, but traditional indicators like the topic of today's post often have additional nuances involved.
This enables us to gain even more insight than what is possible in other asset classes.
Today, we wanted to explore how we use open interest in our crypto process to supplement our traditional technical analysis research.
Longtime readers know how much we love new monthly candlesticks. They force us to zoom out from the day-to-day noise and focus on what's really taking place.
In the case of Bitcoin $BTC, it can't get any more defined than 30,000.
Remember this time last summer when we were obnoxious about this level every week?
Some tools and some strategies work great in certain market environments but terribly in others.
The range can include the following: looking for bearish breadth divergences at the start of bull markets; using a long-term moving average as an entry in a sideways market environment; or even something as fundamental as deciding how to approach tactical trading opportunities.
In the case of today's crypto market, a big mistake would be to directionally trade Bitcoin when no real direction has been ascertained.
As it stands, Bitcoin $BTC continues to hold above 30,000 following its brief false move. There are a number of levels we're monitoring over short time frames.
Correlations with legacy markets remain intact. But we're likely at an inflection point with respect to the co-movement between crypto and legacy.
Following the collapse of Luna's stablecoin, TerraUSD $UST, it's called into question the validity of its counterparts.
Tether $USDT and USD Coin $USDC have experienced notable volatility since this event.
We recommend you read Glassnode's latest report 'Unstable Coins' -- it's a great primer on what's happening.
But when it comes to down to the question "is Tether safe?", the consensus can get awfully confusing. Tether FUD has always been present, but it particularly ramped up in response to an anonymous post published on Medium, "The Bit Short: Inside Crypto’s Doomsday Machine".In fact, this piece was so significant that Bitcoin sold off over 10% in day following its release.