Look guys, we try to be real with you.

We don't like to sugarcoat what's happening. We don't make up stories. We don't follow journalists and narratives.

What we do is follow the money flow.

From the desk of Louis Sykes @haumicharts

One of the greatest features of Bitcoin and cryptocurrencies more broadly are the mechanisms that allow for self-custody.

In traditional assets like commodities and fiat, the only way to maintain self-custody of your assets is to inefficiently store them, which comes with a slew of security risks. Given the challenges of burying gold or stashing cash in a mattress, the overwhelming majority of people simply leave this daunting task to a financial intermediary.

The trouble in crypto, however, is the instability among even the most established of firms and institutions. Hacks, breaches, and insolvencies are incredibly commonplace in the world of digital assets. Even a handful of the largest protocols and lenders have gone under, and billions of funds have been lost in recent months.

And when it comes to exchanges -- one of the safer ways to store funds -- hacks have been common over the past few years.

From the desk of Louis Sykes @haumicharts

One of the great features of technical analysis and classical charting is its universal nature.

Technical analysis is a proven value-add regardless of which asset class you're analyzing, be it equities, commodities, bonds, or even the emerging world of digital assets.

Markets are incredibly sophisticated, with many moving parts. A big misconception about technical analysis held by novice proponents is that fundamentals are of no use.

It's quite the opposite. Fundamentals drive markets.

Particularly when it comes down to long time frames, markets are driven by fundamentals and macroeconomic factors.

On the other hand, technicals help us profit in the direction of those fundamentals. 

Over shorter time frames, markets are driven by speculation and significant players. As a result, technicals and order flow are important to emphasize over these time frames.

Under these conditions, smart players with a lot of size push prices to maximum pain thresholds of the so-called "dumb money."

Last week's letter addressed the asymmetric opportunity being presented to long-term crypto investors.

By most measures, the crypto capital markets are in extreme oversold conditions. Using on-chain data, we demonstrated how Bitcoin market participants are closely approaching their maximum pain thresholds.

For long-term holders, periods such as these represent advantageous places to more aggressively average into spot positions.

Over this time frame, we strongly believe that we'll look upon this period as a great time to have accumulated Bitcoin and other major cryptocurrencies.

But this raises yet another question: What does the short-term outlook look like?

As any technical analyst would be quick to announce, long-duration assets and cryptocurrencies have been in an assertive downtrend as central banks have moved into a tightening regime following inflationary pressures.

But these bear markets often see swift and aggressive counter-trend rallies.

This is the video recording of our June 24, 2022, All Star Charts Crypto Weekly Strategy Session.

There's no denying the fact that crypto and macro have become intertwined in recent times.

We'd even go far as to say that Bitcoin is a macro asset. I think over time, as its market capitalization grows, the correlation to traditional assets will remain concentrated, as Bitcoin will eventually go on to exhibit gold-like returns.

Some will ask what it'll take for Bitcoin to decouple from equities. This is often a great and insightful discussion. But, like most elements relating to financial markets, we need to see them for how they really are, not how we want to see them.

When it comes to the macro landscape, it's clearly been difficult to ignore what's taking place in yields. The carnage in the bond market is, by historical measures, extreme.

The first lesson you learn in any university finance program is that higher yields negatively impact long-duration assets -- you're seeing this take place right here and now.

The Nasdaq is trading tick-for-tick with US Treasuries over recent weeks:

As technicians, we tell it as it is.

By focusing the vast majority of our research on price action, we're simply following money flow. We hate to sound like a broken clock, but if you're following something other than money flow, it's just noise.

Ignore it.

Money flow is by definition the only driver that impacts markets. That spans from price action, derivatives data, order flow, and, in the case of cryptocurrencies, on-chain.

Apart from that, all else is noise.

In this process, we typically have a rather binary view of markets.

"Above this level, we own it. Below there, we leave it alone."

We constantly say this for a reason.

We're not trying to be obnoxious in repeating itself. We are quite literally adjusting our thoughts based on money flow.

"Strong opinions, weakly held," as they say.

From the desk of Louis Sykes @haumicharts

Naturally, after a drawdown like the crypto markets have endured, this is the part of the cycle where everyone tries to call a bottom. Of course, we don't need to discuss the dangers of this treacherous journey of bottom-calling where many traders eventually meet their fate.

There is perhaps no worse setup for active traders than in environments like these.

Times like these are when volatility is rampant, emotions are elevated, and bad decisions are made.

But, there are two antidotes:

1. Don't trade, be patient, and buy when upward momentum returns.
2. Dollar cost-average in the value zones.

For the most part, we continue to hammer down the first point. Going back to December, we've been preaching patience and high cash positions.

But today, we want to address the potential credence in the notion of Bitcoin dollar-cost-averaging in the context of this recent selloff.

This is the video recording of our June 17, 2022, All Star Charts Crypto Weekly Strategy Session.

It can be hard for traditional investors to gain appropriate exposure to crypto. There are many hurdles to jump and hoops to clear.

The Bitcoin futures ETF, launched late last year, is a step in the right direction. But isn't a perfect solution. Over time, futures ETFs are incredibly expensive, as the fund provider has to constantly roll over the contracts.

In an ideal world, US investors would have a Bitcoin spot ETF, which, of course, does not yet exist.

Another possibility is to skip the Bitcoin/cryptocurrency exposure and invest in crypto-related companies. That's certainly a viable solution.

From our work, we've found MicroStrategy $MSTR is, by far, the most fitting vehicle for those looking to gain exposure to Bitcoin via a traditional stock.

Other stocks, like mining and banking names, have their own idiosyncratic risks and drivers beyond crypto trends, making them less-than-ideal solutions for those seeking exposure solely to cryptocurrencies.

But beyond this is yet another solution.

How about crypto equity ETFs?

There's no hiding the fact that we've had little to discuss in the way of tactical trading opportunities.

To avoid repeating ourselves, we're continuing our patient approach. You can read yesterday's note or last week's for more detail.

Speaking anecdotally, crypto traders specifically seem incredibly susceptible to a subconscious bias that they always have to be positioned. Everyone's trying to bottom-tick the market to fuel their ego.

It's a rookie's mistake, and the reality is far from the truth.

Maintaining the ability to sit out is not only a necessity in markets like these, but I'd argue should be the default option for traders.

The old saying is that there's only a handful of periods every year to make money. You're being patient for the rest of the year, waiting for the setup to form.

This perfectly encompasses our approach.

In last week's letter, Keeping Out of the Waters, we continued to argue the case for neutrality in the near term.

There's been so little to discuss in the way of actionable trade ideas in this messy, choppy environment. Assessing the price action over the weekend, it seems this patient approach has paid off.

We were stopped out of our starter Bitcoin $BTC long and a few positions in crypto-associated equities at a small loss. As Bitcoin hit our stop in the upper 20,000s, we sold any exposure we had and moved straight back into cash.

Following this volatility, we are not interested in calling a bottom.

Patience has been and continues to be the strategy in this tape.