This is the video recording of our November 19, 2021, All Star Charts Crypto Weekly Strategy Session.
Riding the Momentum Trade Higher
Over the last few days, we’ve made our thoughts pretty clear regarding the broader crypto market over long and short time horizons.
So let’s have a quick summary:
Where’s the Relative Strength?
There’s been some downside volatility over the last few days.
When the market is indiscriminately selling off, we’re looking for the small patches of green — the names that are bucking the trend and resisting the selling pressure or even moving higher.
When the red of the market turns green, the green has a tendency to turn even greener.
It’s relative strength at its best.
So given the current backdrop of this recent near-term volatility, let’s pose the same question.
Where’s the leadership?
Bull Market Shakeouts
There’s been some notable volatility over the last 24 hours, with Bitcoin and Ethereum losing 8% and 10% respectively over this period.
Throughout this recent selling, over $840 million worth of positions have been liquidated.
We want to emphasize that Bitcoin is still in its sideways range, and we haven’t seen a decisive breakdown. As we outlined in yesterday’s note, looking out longer timeframes, this merely seems like a springboard to further upside.
If Bitcoin is above 58,000, we need to continue giving the bulls the benefit of the doubt.
If on the other hand Bitcoin loses these lows, then a more defensive approach is likely better.
For those with longer timeframes, a potential retest of 53,000 would provide an excellent level to add to long-term spot positions, if we even get there (not the bet we’re making).
The Bull Market Springboard
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.
There are a number of ways we can go about quantifying volatility, but we opt for a simple 20-day width of the Bollinger bands. For those unfamiliar, these are calculated by taking two standard deviations from the 20-day moving average. As the width between the bands gets increasingly compressed, it points to tightening volatility, which tends to proceed with aggressive moves.
This is still in play with Bitcoin deep in the volatility compression zone.
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Lost Password?[Crypto] Weekly Strategy Session – November 12, 2021
This is the video recording of our November 12, 2021, All Star Charts Crypto Weekly Strategy Session.
The Weak Hands Shakeout
Yesterday, there was plenty of action.
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.
Despite this choppy action yesterday, this doesn’t sway our bullish thesis.
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Lost Password?Revisiting Crypto Stocks
We’ve made our thoughts clear that if Bitcoin is above 65,000, and the signs of on-chain buying pressure remain intact, upward volatility expansion through price discovery toward 85,000 remains the most probable outcome.
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.
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