This is the video recording of our November 18, 2022, All Star Charts Crypto Weekly Strategy Session.
Three Breadth Charts To Explain Crypto Markets
Market breadth has to be the handiest tool in our technical analysis kit.
Sure, we love ripping through thousands of charts to gauge broad market trends. But breadth indicators are a cheat code. Putting in the work, we can easily quantify and, more importantly, visualize how well a market is being supported by its constituents.
Because remember, it will always be a market of stocks, not a stock market. Or, in this case, a market of cryptocurrencies.
There are numerous ways to optimize this data output; we can use this breadth data as the basis of a systematic approach.
Your trading system is only as good as your understanding of how well your system operates in different market environments.
If you understand that particular systems and strategies work better in trending environments but are terrible in rangebound markets, you can optimize your trading performance by leaning on different approaches depending on the market environment.
This is where quantifying breadth can have a lot of edge for a trader because it helps them objectively recognize the current market environment and, subsequently, which strategies they should lean toward.
A more subjective view of breadth indicators is that they can help confirm any directional biases.
Little to no trading opportunities exist when Bitcoin is under pressure, so these indicators can be best used when Bitcoin enters into a positive regime.
In this sense, it’s not supposed to be predictive (like in traditional markets) but merely confirms the systems he’s built.
So, with the stage set, let’s walk through three simple breadth charts and our read on each one.
Don’t Lose Your Crypto
From the Desk of Louis Sykes
The collapse of the FTX exchange has been a significant catalyst for market participants to utilize one of Bitcoin’s greatest value propositions — self-custody.
Self-custody is when only you have possession of your digital funds because you control the private key. There’s no question; there’s no alternative to holding your crypto other than in private cold storage.
Owning your Bitcoin keys voids the necessity for a financial intermediary, completely removing any and all counterparty risk. This is especially important given that crypto exchanges hold a shaky history of being responsible stewards of clients’ funds.
When you hold your crypto in hot wallets managed by intermediaries like exchanges, they have all the control. They can freeze your transactions, block withdrawals, set limits on the amount you can transact — and, in the case of FTX, use your funds for their private self-interest.
We’re seeing a massive migration where market participants are waking to the value of self-custody.
Couple More Liquidations, Then Up Only?
We pride ourselves on never being dogmatic and always being open to any scenario.
What often marks a great technical analyst is the ability to choose to be objective and not letting emotion get in the way of analyzing money flow.
And we all have that choice.
We can be driven by an immediate emotional response and gather into an angry mob over the injustices of the FTX situation.
Or we can take responsibility for our own self-interest and continue to look for opportunities as they come.
It’s hard not to feel like an asshole as I write this. But your only objective here is to make money. If you’re a trader, you’re not here for some greater good.
Now, to be clear, I in no way celebrate these misfortunes. Financial markets are brutal, and there’s nothing worse than the guy getting off on people blowing up.
But it’d be a terrible shame to walk away from this institutional crypto contagion without taking some lessons.
We’re all human beings.
None of us is infallible.
Markets like these remind us of the importance of risk management, which is so easily forgotten in the good times.
There’s such strong conviction in crypto, and there’s little room in the middle.
Ask Ethereum believers and they’ll say Solana’s going to zero. Hardcore libertarian Bitcoin maxis think everything but Bitcoin is going to zero. Ripple believers think it’s going to a million.
You see it all the time.
But this kind of conviction is often the undoing of traders and investors, both in crypto and legacy. Conviction, when strong enough, can cloud the commitment to risk management.
That’s what we’re seeing in real time.
This game is brutal, and sometimes that means leaving compassion at the door. We’re here to make money. It’s a zero-sum game, and we need to benefit from the misfortune of others.
They say you shouldn’t kick someone when they’re down. But that’s usually the best time to act.
Waiting To Pounce
Our process is defined by the power of simplicity.
We don’t need a complicated macro thesis to position ourselves appropriately in crypto markets. We find our edge in stepping back and identifying inflection points where we want to define our risk.
Risk should be front and center, considering recent events.
One of the takeaways from this entire FTX/Alameda mess is the necessity of risk management. Sam Bankman-Fried lost an empire in the space of a week.
If this isn’t a great reminder to manage risk and position size accordingly, I don’t know what it is…
A hilarious video made the rounds on Twitter showing Caroline Ellison, the 28-year-old CEO of Alameda Research, arguing against the use of stop losses.
SHE IS THE CEO OF FTX / ALAMEDA
WHERE WHERE THE SIGNS LMAO pic.twitter.com/xrEhke9WuC
— GURGAVIN (@gurgavin) November 11, 2022
She also said that technical analysis is voodoo in the same interview…
[Crypto] Weekly Strategy Session – November 11, 2022
This is the video recording of our November 11, 2022, All Star Charts Crypto Weekly Strategy Session.
Respect the Levels
Guys, this is Technical Analysis 101.
You don’t buy an asset that’s just broken a level of support. If you do, you’re only asking for trouble.
As technicians, we keep things simple, and we tell it like it is. We’re not afraid to call something a piece of shit if that’s what the data tells us.
I find a level of beauty in this process.
It doesn’t matter how elegant your theory or big your I.Q. If the market is below a certain level, it’s all wrong.
The Black Swan
Wow.
What can I say?
This is the most chaotic turn of events I’ve experienced being involved with crypto. For those who somehow missed what’s happening, here are the brief details…
One of the largest crypto exchanges on the planet, FTX, has experienced a significant liquidity crunch. As a result, Binance has entered into a non-binding agreement to acquire FTX, helping to cover the liquidity crunch.
Any and all funds held on FTX are now gone.
It’s the biggest blow-up in the industry’s history.
- « Previous Page
- 1
- …
- 9
- 10
- 11
- 12
- 13
- …
- 63
- Next Page »