Over the last few weeks, we've been making the case that Bitcoin is likely to resolve to the upside and head toward our first target of 85,000.
In a note we published last Monday, we outlined a variety of developments taking place that's been supporting our macro bullish thesis. Since then, Bitcoin has continued to consolidate following its run-up after achieving all-time highs, and we haven't seen any dramatic price action in either direction.
So, in today's post, we'll be revisiting some of the data points we're heavily weighing towards our approach in the coming weeks.
Price Stability at a Local Maximum
In recent weeks, we've been discussing the compression of volatility in a lot of crypto assets, primarily Bitcoin.
In the morning, the uptick in the CPI pushed Bitcoin immediately higher.
Throughout this short period, open interest spiked higher as longs jumped into late positions. This combined with FTX going offline contributed to a perfect storm for a minor shakeout of over-leveraged longs.
The beneficiaries of such a move would be widespread - down the cap scale of altcoins, and even in the individual stocks that are making crypto an increasing part of their operations.
So let's revisit how we're approaching the stocks in the crypto space, and identify the levels we're watching to manage risk and to take profits along the way.
Last week, we outlined that a big move was on the horizon, and the bias for prices over the coming weeks was higher. We were documenting the tightening volatility and the accumulation taking place on-chain, suggesting that upward price discovery was the most probable outcome.
Over the weekend, we've seen this play out in some respects, with Bitcoin breaking out of its tight range, which seems like the beginning of the next leg higher.
Now that Bitcoin is back above 65,000, we want to position aggressively long in anticipation of further strength into the remainder of the year.
The buzzword over the last few days has been the "Metaverse", but what is it, and why should we care?
Breaking all the headlines last week was the big tech news that Facebook was changing its name to Meta, realigning it with its future goals and ambitions. The metaverse is seen as the next iteration of the internet through virtual reality, primarily as a new way of experiencing the world of social media.
Following all this talk, virtual reality and gaming cryptocurrency protocols have caught a nice bid, with Decentraland and Sandbox up over +320% and +250%, respectively, since the Facebook Connect event.
And just take a look at the explosion in google searches about the metaverse:
In yesterday's note, we outlined our tactical short if Bitcoin was below 59k.
We gave the bears the benefit of the doubt, but they couldn't keep prices under 60k for long at all.
We have no shame in being wrong and flipping our approach as new data comes in. In fact, we pride ourselves on always adapting to new evidence and never being dogmatic. The quicker we know we're wrong the better, because we can move on to bigger and better opportunities. In this case, we knew in just a few short hours!
This seems like a textbook failed head-and-shoulders pattern right now:
We were seeing this with record-high open interest across the board and excessive funding in the face of declining prices.
This morning, we've seen this downside risk play out in some respects, with $200M worth in Bitcoin positions getting liquidated over the last 24 hours, quickly sending prices below 60,000.
That's why crypto has caught our attention so much in recent months: It's stood out as a beacon of alpha.
Whether or not you've been invested in crypto, chances are you've probably heard all the chatter about Solana - and for good reason. It gained a whopping 700% from its July lows in just under two months, making it one of our best trades of the year.
But, when you dive down the cap scale, there are so many opportunities shaping out just like how Solana was a few months ago.