In last week's report, we outlined a handful of bullish developments appearing as we waited for price action to respond.

We discussed the fact that the institutional money that left in October is flowing back, exchanges are seeing modest outflows, and traditional markets are looking prime for a tactical bounce.

Since then, we've seen Bitcoin rally to our inflection point between 41,000 and 42,000.

With momentum turning back in the favor of the bulls, the highest-likelihood scenario looks to be a few weeks of sideways price action ahead of further upside follow-through.

This is the video recording of our February 4, 2022, All Star Charts Crypto Weekly Strategy Session.

Picture this.

One of your close friends asks you about technical analysis. What do technicians do? "What even is technical analysis?" they ask.

Your first instinct is to dive down the rabbit hole of charts, indicators, and intermarket analysis. After your rambling, your friend is even more confused than before they asked.

That's the common mistake, one of the primary reasons why technical analysis often gets such a bad rap.

In the same way you wouldn't describe geography as the study of seismometers or biology as the field of microscopes, you'd be selling technical analysis short by arguing it's the study of indicators.

A few weeks ago, we outlined our patient approach in the altcoins.

Our argument was as follows:

We’re approaching this market with a high degree of patience until a higher conviction setup has been formed.

This remains a messy, low-conviction tape to be positioned aggressively long.

Since then, most alts have trended considerably lower, and there's been little reason to be heroic in buying dips.

But, as we discussed in yesterday's note, there are a few bullish data points creeping in that could turn the tide for the alts.

Many names now sit at support, while others are in the process of putting in failed breakdowns sporting bullish momentum divergences.

In simple English, this is a good first stepping stone to carving out tradable bottoms.

For some time, we've had a neutral outlook and have been in heavy cash positions.

There's been little change in our approach since the publication of our previous Monday report, but we have seen a handful of data points in favor of the bulls.

As we'll cover in today's report, the institutional capital that left in October is starting to come back in, and exchanges have seen a moderate outflow over the last week.

Moreover, traditional markets seem set up for a tactical bounce. What has been a headwind could be turning into a tailwind.

These are great first stepping stones toward a more constructive picture for the crypto market, but one of our two criteria for more aggressive long positions has not been met as of yet. That is:

• Bitcoin dips to 29,000;
• strength above 42,000.

This is a tape that still commands patience.

Let's dive in.

This is the video recording of our January 28, 2022, All Star Charts Crypto Weekly Strategy Session.

In yesterday's note, we outlined how we're approaching the market in the aftermath of this volatility.

Bitcoin remains stuck between strong support in the low 30,000s and resistance around 42,000.

Unless we're buying dips to the lower end of the range or a break above this resistance zone, there's not a whole lot to do in terms of trading either Bitcoin itself or most of the individual alts.

This message most certainly remains relevant despite yesterday's recovery.

But in evaluating the names leading this recent bounce, relative strength has been concentrated in names we've been pointing to in recent weeks.

Names like Cosmos $ATOM, Terra $LUNA, and Fantom $FTM all held up reasonably well in relative terms and have also been leading this recent recovery bounce.

These are three of the best-looking names in the entire asset class from a relative strength perspective.

We anticipate that if the market continues this bounce, these three names will lead the recovery higher.

Over the last two weeks, we've outlined how we've been patient in buying dips.

Given the lack of demand observed on-chain combined with the growing macro uncertainty, the dip back to the low 40,000s appeared to be a low-conviction buy.

Since publication of those two notes, Bitcoin's subsequently lost a critical level of support and now hangs in a no man's land.

The same themes we've discussed over the last two weeks remain intact, so this report will serve as an interim update.

This is the video recording of our January 21, 2022, All Star Charts Crypto Weekly Strategy Session.

If you're a trader, you don't need to pretend to understand the underlying.

Money flow is the only thing that moves markets. Everything else is just noise.

We pride ourselves on always adjusting our thesis to new data and never being dogmatic in our approach.

In the case of cryptocurrencies, it's been made out that gold and Bitcoin are sworn enemies.

Bitcoin is the "better store of value," they argue.

This black-and-white mentality does considerably more harm than good to investors.

If you're a trader, your only job is to follow money flow, not to assert your views on the market.

We bring this up because, when it comes to gold, there are early but constructive signs developing, with the shiny metal beginning to work its way out of an 18-month downtrend.

In recent weeks, we've been making a point about the importance of the derivative markets. When leverage and open interest is as elevated as it currently is, futures markets tend to govern short-term price action.

One of the most effective metrics to gauge this data is through funding rates.

Not only do we use this data to get a read of the positioning of speculators to help shape our macro crypto thesis. We can also use it on a case-by-case scenario to find high-conviction short and long setups within the alts.

Let's start by addressing the question of what is a funding rate.

In yesterday's note, we outlined our patient approach in the face of this messy tape.

For the most part, we're sitting on the sidelines waiting for an uptick in investor demand to drag the market out of this correction.

Current price action is being heavily driven by the futures market, which will only serve to increase the probabilities of whipsaws and fake-outs that can wear on traders' emotional as well as their financial capital.

Additionally, when evaluating the altcoins, there isn't any edge in being positioned aggressively long.

As we'll explore in today's post, many names look vulnerable for further near-term downside, and even most of the leading alts have lost much of their bullish momentum over the last few days.

Let's dive in.