We've taken shots at small long trades in a few altcoins during this time, only for us to ultimately get chopped up days after putting the positions on.
This is information.
Crypto as an asset class is range-bound at best, and unless you're incorporating a staking/yield/options strategy, the vast majority of crypto traders have been better off positioned in stables on the sidelines.
The macro environment continues to be heavily driven by geopolitical volatility and the situation in Eastern Europe.
Parabolic commodity prices are beginning to take their toll on the broad market indexes, which Bitcoin and crypto have been correlated with in recent months and quarters.
Moreover, whales and savvy traders are still in the process of selling.
Since November, the market has been grinding lower, and most cryptos find themselves in 50%-plus drawdowns.
There's no other way to put it: The altcoins have been bruised and battered.
It's at these stages of the market cycle that we analyze the names in the shallowest drawdowns.
When everything else is down the dumps, the few names that have bucked the selling pressure, and are even pressing against new highs are likely your next leaders when the broad selling subsides.
This is exactly what we've done.
We've filtered our universe of cryptos (all coins above $500M in market cap) by their drawdown from 52-week highs as well as their respective performance from Bitcoin's January lows and since war broke out between Ukraine and Russia.
Since last week's report, war has broken out between Ukraine and Russia.
This has been the dominant driver of recent price action in risk assets, Bitcoin and crypto included.
We're still positioned heavily in cash, with little crypto exposure.
Particularly with the geopolitical volatility we've seen over the last week and the resulting impact on global markets, this remains an aggressive tape to be actively trading.
Sitting out remains the most prudent option for the vast majority of traders.
At All Star Charts Crypto, we've emphasized the value of on-chain data that allows us to peer inside the blockchain to find reliable and actionable signals.
It seems almost every day in this blossoming asset class, there's a new dataset, indicator, or some other avenue to analyze price action with incredibly high resolution.
Alongside the on-chain data that's supplemented our traditional analysis, we're taking an increasing interest in incorporating order flow into our work.
We're beginning to find it provides considerable value in fine-tuning our approach, making for better executions, and helping skew the probabilities of success in our favor.
We'll walk through one of the many ways we use order flow in this post. Today we'll be discussing volume, or more specifically, volume delta.
Yesterday's report, which you can read here, laid the groundwork for today's note.
To summarize, we're of the strong view that there's little to no edge in pushing directional bets in this tape.
Because Bitcoin's lost all momentum, we anticipate more weeks of ranging and contracting price action that's likely to involve a high concentration of whipsaws.
This is not a market conducive to aggressive moves.
The vast majority of crypto investors are better served by not pressing trades.
However, in today's note, we'll discuss market-neutral trades that can quietly yield results in periods where absolute price trends hold little edge for directional bets.
In last Monday's report, we pointed out a handful of bearish developments but restated our neutral outlook on the crypto market.
We noted that there was demand coming from spot, while futures were still in the process of selling.
This continues to be the key theme to monitor; selling spot no longer appears to be the primary way savvy and large investors are going to cash.
Rather, they're doing it through shorting calendar futures driving down Bitcoin's term structure.
Since then, we've seen Bitcoin lose our risk level of 41,000 and are positioned heavily in cash.
We're anticipating a longer period of sideways price action, and this is a tape conducive neither to trading nor to establishing aggressive long positions.
The last time we discussed altcoins, we mentioned we were tactically shorting overbought names bouncing into supply while eyeing more intermediate-term long positions.
This approach paid off, with names like Gala $GALA and Sandbox $SAND succumbing to the selling pressure, booking a quick profit.
Moving forward, as we laid out in yesterday's note, the market's in a state of balance, and we have a neutral outlook.
This is the time when we're closely monitoring names showing leadership, waiting patiently for setups to solidify.
This will be a short and sweet note with three long trade ideas.