As market participants, we have to keep an open mind and remain nimble as new data comes in.
There's nothing wrong with flipping our approach as the weight of the evidence shifts. In fact, we pride ourselves on never being dogmatic and always keeping an objective lens on the market.
And that's precisely where we stand with Bitcoin right now.
With prices pushing up against support from February and April, we're anticipating some form corrective action from this impressive rally at this pretty logical level of overhead supply.
How long will this former support act as resistance?
Viewers are asked to count how many times basketball players wearing white shirts passed a ball while someone in a gorilla suit walks into the middle of the scene, thumps their chest, and walks off.
Despite looking straight at the gorilla, over half of the people who watch the video completely miss it.
It's a hilarious showcase of how we can often miss what's right in front of our very own eyes. Psychologists call it inattentional blindness, and it's a very real thing.
People are always trying to find a narrative about why the market's behaving as it is. This is arguably more prevalent in crypto, where people base their investment decisions on stories of a new "global currency", or god forbid the arguments of Bitcoin being a "better store of value."
But in occupying ourselves with all these stories, we can often miss what's right in front of us.
The strength coming out of crypto in recent weeks has been impressive, and for the first time in many months, we can say that the bulls are in the driving seat.
The median change for all coins above $1B in market-cap in just the last 20 days, since Bitcoin bottomed, is a whopping 53%! In this same period, nearly 100,000 Bitcoin have been withdrawn from exchanges, and many more hundreds of millions of dollars committed to short positions were liquidated as the accumulation for these digital assets has ramped up.
Long story short, the cryptocurrency landscape looks the best it has in a long while, and we're subsequently looking for more names to express this bullish thesis of ours.
With bulls taking control of crypto in the last few weeks, many of the crypto-related equities are showing early signs of life.
Many of these names simply hold Bitcoin on their balance sheet, while for others, the activity taking place in this asset class directly impacts their bottom line.
So it goes without saying that if Bitcoin can sustain a meaningful breakout, it'd serve as a significant tailwind for these names.
Microstrategy is perhaps one of the more direct examples of this thinking, with the CEO taking out hundreds of millions of dollars of debt to add to their growing arsenal of Bitcoin on the company's balance sheet...
These are questions almost everyone who's been involved in crypto has asked themselves and felt, at one point or another.
Some call it a lack of discipline or FOMO, but it's really all about managing future regret.
This dynamic is undoubtedly present in other asset classes too. Still, it's put on full display in this space, where people are made to believe that regularly achieving 10x baggers is a normal occurrence.
The returns people feel they can obtain by holding coins in this space are largely based on a perfectionist mindset which is both unhealthy and unrealistic.
Of course, in the crypto world these adages don't make too much sense. So, just like how we say that "Tether's a position too,"in crypto it can be said that "patience pays sats."
But all jokes aside, Bitcoin has fallen back below 41,000, placing prices right back into this range. With Bitcoin below this level, new longs are likely to stumble in the coming days/weeks.
At least in the near term, some level of patience is warranted.
So while we're anticipating we ultimately resolve higher, the only question that remains is "how long?"
Regardless of the market environment, we always want to be pushing our bets on secular leaders.
The most effective way of positioning ourselves with the strongest (or weakest) names is through relative strength analysis - by simply comparing names to their counterparts.
So before we dive into all some of the names we're buying, let's address where this space finds itself, and what we're anticipating in the coming weeks and months.
Inventories on exchanges fell by a whopping 60k Bitcoin yesterday following eight days of consecutive positive closes.
This is the second greatest negative net change in exchange balances of all time, just trailing behind the -70k change in May 2016, which preceded one of Bitcoin's greatest bull markets ever:
There's a permeating myth that altcoins need to outperform Bitcoin for there to be a healthy bull market.
You'll often hear claims like "the Ethereum/Bitcoin ratio is making new lows, so the market can't go up."
A similar notion gets thrown in the stock market, that if equal-weight S&P 500 is underperforming its cap-weight counterpart, breadth is said to be "unhealthy".
Though, we've found that to be far from the truth.
In the case of crypto, there have been countless times where the relative leadership has not been in the altcoins, but yet the asset class did just fine.
Just a few short quarters ago, before the alt season kicked off earlier this year, Bitcoin was outperforming nearly every other major coin as seen by the continued progress in its market-cap dominance:
