We can highlight as many charts and Altcoins as we like to demonstrate where things could be leaning, but with most things in markets, less is often more.
In this case, it's straightforward.
If 60% of the asset class, namely Bitcoin and Ethereum, can breakout from their current consolidations, the short-term trend is likely up, and it'd be wise to put some risk back onto the table.
Alternatively, if they cannot, and these patterns resolve lower - we should anticipate messier action for longer.
To gauge any market trend, we must look under the surface at the components themselves.
This is true for Stocks, Commodities, Bonds, and even Cryptocurrencies. It's Universal.
For instance, when discussing Smart Contract Platforms like Polkadot or Ethereum, we evaluate whether the bulls are diving deep into the projects of the other offerings in the ecosystem.
This is Technical Analysis 101, and it goes back to Charles Dow in the 1800s looking for confirmation of the major averages.
Over 130 years later, in entirely new assets, the same principles govern markets.
In this case, we're looking at Polkadot's first project release and Canary Network, Kusama $KSM.
Similar to how Litecoin is seen as the experimental little brother to Bitcoin, any new additions to be implemented on Polkadot go through Kusama first.
For this reason, the two trade very much in tandem.
Shifts are taking place for the first time in over a year.
Bitcoin just printed its second consecutive negative monthly candle, which hasn't happened since the Covid crash. Meanwhile, Ethereum was down on the month for the first time since September of last year.
Riding along in the Cryptocurrency space has been the ultimate momentum strategy. As a result, gains have far exceeded any risk asset by a country-mile.
But the same applies to the downside.
In the case where volatility's ramped up as it has, there's nothing wrong at all with sitting on heavy cash positions until a more definitive trend forms. If the history of these digital assets have taught us anything, it's that knowing when NOT to be in the trade puts us in an incredibly advantageous position.
In recent weeks, it's been a tough time for any type of trend following strategy. That's because most are not trending, but rather in ranges.
When this sort of action unfolds as it has done, we play an exercise.
That is, we zoom out.
In all this gut-wrenching volatility, let's not forget the extraordinary gains this asset class has achieved over the last few years are astonishing, even after a violent 50% crash.
Consolidation is painful, but it's necessary.
Let's jump into it with a quick look at how the top digital assets performed yesterday:
It's always nice to sit down and talk about what the future is going to look like.
Currently, the largest hotel chain in the world doesn't own any hotels (Airbnb). The largest taxi cab company in the world doesn't own any taxi cabs (Uber).
Will the largest bank in the world not own any banks? Howard Lindzon says yes, "Banks aren't dead, they're walking dead".
This was fun. I learned a lot.
It gives me more reason to keep an eye on opportunities in the Crypto Markets.
I'm a chart guy, as you're all well aware. Price drives all of my decision making. But if you're interested in what's happening behind the scenes (I am), then this one is for you!
From the desk of Louis Sykes @haumicharts and Steve Strazza @sstrazza
The Crypto space just experienced its worst day since the height of the Covid crash.
Bitcoin was down over 30% on an intraday basis, while Ethereum was almost cut in half.
We see this recent action aligning Crypto with what's taking place throughout the market. Bulls have had a more challenging time in recent months, and risk assets are coming under increasing pressure.
You notice how investors often like to overstay their welcome?
The people throwing the party give them plenty of opportunities to get out. The music stops playing. The food is already gone. The lights even get turned off.
But some people still choose to stay, almost as if they have no where else to go.
And then they sit around wondering what happened?
"Oh, the DJ going home meant the party was over?"
"What do you mean they're not ordering any more food?"
"Who turned out the lights?"
These are what we call "Bag Holders".
They're an important part of the market cycle, because these are the people who are buying all the shares that the rest of us need to sell, so we can head over down the block to the much better party. The one that's just getting going.
In life, you need these sorts of people.
We should not make fun. We should not troll. We need to be thankful.
It's people like this who provide the necessary liquidity for the rest of us to dump our shares on.
From the desk of Louis Sykes @haumicharts and Steve Strazza @Sstrazza
Alt Season is still very much alive and well.
In February, we did a deep dive into the wide world of crypto assets outside of Bitcoin. This turned out to be quite timely as many of these "alt-coins" have booked significant gains in the time since.
It's no longer just Bitcoin, Ethereum, Litecoin, and some others. There are thousands of cryptocurrencies out there now!
As this new asset class continues to grow and blossom, we continue to pay close attention to the leadership within the Crypto complex.
