But, in yesterday's note, we entertained the possibility of near-term upside following the pricing in of the upcoming Federal Open Market Committee meeting and the US dollar hitting resistance.
Given the favorable risk-versus-reward at current levels, we like taking a tactical long, looking to play the trading range Bitcoin finds itself in.
For this trade, we're solely leaning on Bitcoin to execute, as most alts are messy and in the process of breaking down. Those are both characteristics we want to avoid when searching for new longs.
Further, Bitcoin has outpaced its counterparts recently, as seen through Bitcoin dominance.
Price action has been chopping in the high 30,000s, and there's little to update.
We're closely monitoring the tight trading correlations to traditional finance. Despite strong spot flows, this remains the most pressing driver of price action to date.
With few actionable opportunities, we're sitting back and weighing the probabilities of a number of scenarios.
Not everyone has the luxury of slinging cryptocurrencies in the world of DeFi protocols, exchanges, and wallets.
Others have to lean on traditional investment vehicles to gain crypto exposure.
There's a ton of potential candidates in the stock market to lean on to express a given crypto thesis, but it's all about choosing the right names.
We've been pointing out the dispersion of performance between crypto equities and the underlying cryptocurrencies themselves; the stocks have underperformed, while the coins have outperformed.
But it isn't that simple -- there's some level of nuance involved.
As we’ve said before, one of the big characteristics that often differentiates good traders from mediocre ones is the ability to sit out when necessary.
Correlations to weak equities remain highly elevated. We’d like for those to dislocate before getting overly optimistic in the near term.
When it comes time to put money back on the table again, it’ll be obvious. Otherwise, we’ll continue being patient.
If you've ever been deep in the trenches slinging cryptocurrencies, chances are you're well aware of the infamous liquidation cascade.
For some traders, the thought will send shivers down their backs.
To others, it represents one of the most profitable asymmetries in supply and demand.
What's a Liquidation Cascade?
The Chicago Mercantile Exchange (CME) is the largest and most sophisticated derivatives exchange for several traditional financial instruments and Bitcoin futures contracts. But there are stringent rules bounding these contracts:
Each contract is 5 BTC (currently just over $200,000).
The market is only open Monday through Friday.
Clients tend to have a good relationship with a broker that's allowed to trade on the CME.
These rules are essentially a risk-mitigation strategy.
In the case of liquidations, if the account reaches negative equity before the liquidation is finished, the trader is liable for the negative amount.
In a tape as messy is this, it pays to be patient and only focus on A+ setups.
The names emerging from bases on solid volume are the ones you want to lean on. By slinging names in messy ranges, you'd only be asking to get whipsawed.
We can't help but notice the relative strength coming out from ApeCoin $APE and STEPN $GMT, which we mentioned a few days back.
Both have real nice shapes emerging from their post-ICO bases:
Looking tactically, they both offer us some decent risk-versus-reward for a speculative bet.
There are times when you need to trade like a pig. With these macro conditions, now is not that time.
In those roaring crypto bull markets we've all come to know, bravery is more important than brains. But, in periods like these, traders who are patient get rewarded.
When the market inevitably improves, you can get back to making money instead of picking up pennies to recover from big drawdowns by avoiding the mental hurdle of overtrading.
As we've said before, one of the big characteristics that often differentiates good traders from mediocre ones is the ability to sit out when necessary.
There's that old adage that there are only three short periods each year to make money. Or consider the classic Paul Tudor Jones quote that “markets trend only about 15 percent of the time; the rest of the time they move sideways.”
We can't reiterate this enough; there's a huge difference between looking for a setup and seeing one.
If you go into the market with preconceived notions about how things should be instead of seeing them for how they really are, you might as well go take a punt on the dish lickers.
Just to be clear, I'm no expert when it comes to NFTs.
Later this week I'll publish the latest podcast with Justin Paterno, Portfolio Manager of the new NFT fund by OSPREY that I'm an investor in.
But today I wanted to share some of my recent experiences with the new STEPN App and NFT.
I'm earning GST Coin to go running. In fact I've made about $150 worth of this Utility Coin in the past 3 days alone. That's one hundred fifty United States Dollars!
You can see the price of the STEPN coin here since the new issue last month:
In conjunction with the All Star Charts quarterly playbook, this week's report is a copy of the crypto note we'll be attaching to the playbook.
It covers the themes we're monitoring, a few trades we like taking, and what we anticipate for the asset class moving into the second quarter.
Hope you had a great long weekend.
Cheers guys.
As we move into the second quarter, we leave behind a messy period in the world of cryptocurrencies. Bitcoin ended the first quarter slightly lower while the entire asset class, measured by the total market capitalization, experienced a 9% loss. In this period, the new highs list among the alts has been ominously quiet as participation waned.
There’s been little in the way of market action in this environment. Staying on the sidelines in elevated stablecoin positions has been rewarded, while those who overtraded and bought into breakouts were punished.
