Author's note

In conjunction with the All Star Charts quarterly playbook, this week's report is a copy of the crypto note we'll be attaching to the playbook.

It covers the themes we're monitoring, a few trades we like taking, and what we anticipate for the asset class moving into the second quarter.

Hope you had a great long weekend.

Cheers guys.

As we move into the second quarter, we leave behind a messy period in the world of cryptocurrencies. Bitcoin ended the first quarter slightly lower while the entire asset class, measured by the total market capitalization, experienced a 9% loss. In this period, the new highs list among the alts has been ominously quiet as participation waned.

There’s been little in the way of market action in this environment. Staying on the sidelines in elevated stablecoin positions has been rewarded, while those who overtraded and bought into breakouts were punished.

This is the video recording of our April 15, 2022, All Star Charts Crypto Weekly Strategy Session.

Objectively speaking, knowing when to sit out is something that often separates good investors from mediocre ones.

We've already laid out our approach, which you can read here.

In summary:

Yesterday we documented how we're shifting back to our defensive strategy. Tight trading correlations to weak equities dictate this approach.

At the same time, we've been stopped out of most altcoin long positions.

There's little to discuss in the way of tactical trading opportunities.

Even the strongest names can't get it done when we look at the alts. We're seeing many failed breakouts, and there's little to like in shorter time frames right now.

Here are a few examples.

Over the last few weeks, we've promoted our bullish crypto thesis, even going so far as to argue the Bitcoin bear market had concluded.

As of the writing of this note, we're currently watching Bitcoin lose our risk management level of 42,500. We entered into some small hedging positions on the loss of 46,000, but now we're looking to add to our hedging positions/raising cash this morning.

This is the video recording of our April 8, 2022, All Star Charts Crypto Weekly Strategy Session.

We keep saying it: There are just so many good setups out there.

You've noticed?

This is the first time in months that there's generally a good shape to the price action in these beaten-up altcoins.

Welcome to our weekly crypto open letter.

The last few weeks have seen a sizeable shift in our approach. Here's a summary of this period:

This is the video recording of our April 1, 2022, All Star Charts Crypto Weekly Strategy Session.

Wait for your perfect pitch.

We say it all the time.

There are no called strikes on Wall Street. In other words, we’re not penalized for not swinging, like you are in baseball.

We have the ability to be patient, to a certain extent at least, depending on your mandate. But most of us don’t have mandates! Even one of the best hitters of all time struggled when he swung at bad pitches.

In this video from our Charting School, we compare Ted Williams’ batting average when he swung at good pitches versus when he swung at bad ones.

Why do we bring this up?

Well, what's the last few months been for crypto traders?

Tumbleweeds...

In last week's letter, we outlined a handful of key bullish developments leading us to forecast a high probability of an upward resolution from this consolidation.

Alleviation of the selling in futures and renewed spot demand pointed to a high probability of Bitcoin resolving higher out of this multi-month trading range.

As of the writing of this note, we've seen this take place, with Bitcoin taking out resistance at 46,000.

More aggressive long positions are now warranted.

Summary of Today's Topics

This is the video recording of our March 25, 2022, All Star Charts Crypto Weekly Strategy Session.