Crypto bull markets are seriously no joke, and we wouldn't be surprised to see a lot of these names multi-bag over the coming months and quarters.
But despite how well things are looking, it's vital to remain humble and level-headed throughout it all.
The old saying that "don't confuse brains for a bull market" is particularly relevant here, and is the epitome of the laser eyes crowd. Any idiot can buy a coin that moons in a crypto supercycle, but not everyone can successfully manage risk and their emotions.
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.
If we're truly entering into a new crypto bull market, trend-following strategies are the only game in town.
Forget all the rotations taking place because we're entering into the "sit on your hands season."
Overtrading and getting cute is going to be punished, while just sitting on quality coins is likely to be rewarded.
Less trading.
More conviction.
Sit on your hands.
I think that's the play for crypto in the coming months, assuming the bull market is just getting started.
We're talking names like Solana, Avalanche, Luna, Algorand, Elrond, Fantom, Axie among a handful of others as well as the majors like Bitcoin and Ethereum.
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:
The market is still constructively absorbing overhead supply, which hasn't been surprising to see take place.
Periods of consolidation like this allow sentiment and positioning to cool down while the market prepares for its next leg higher. If Bitcoin is above 59,000, we're making the bet that the shakeout is in the process of completing, and prices will eventually move back to their former all-time highs above 65,000.
But as we'll walk through in today's note, we're waiting for prices to ultimately reclaim 65,000 before we hold much conviction on further upside.
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.
