All Star Charts Crypto Articles

This is the video recording of our December 9, 2022, All Star Charts Crypto Weekly Strategy Session.

There's been no questioning how we've been positioned in crypto markets.

For the longest time, we've promoted high cash positions in this tape. Patience has been a significant virtue for traders to maintain.

Extending on this overarching theme, we yet again argued that caution is advised in the short term in yesterday's note.

While we've been putting forward the utility of patience in this cryptocurrency market for some time, we especially see a confluence of concerning data points.

Most importantly, the S&P 500 is once again testing its channel resistance and AVWAP off the highs, where it has found resistance over the last year.

Further, the dollar index is retesting its breakout level from the 2017 and 2020 highs following the collapse of the FTX and Alameda ecosystem.

It's been impossible to ignore.

Equities and cyclicals have seen some modest gains off the lows, while growth areas and crypto markets have waned. In fact, by our calculations, this year has seen one of the greatest disparities in performance between growth and value.

You can see it when you compare something like Bitcoin or Ethereum against the Dow Jones Industrial Average.

Sure, crypto markets have been dragged down by the FTX contagion. Still, perhaps the bigger driver of this price action has been the macro flow out of long-duration growth assets (crypto included) and into traditional value areas.

We're talking industrials, materials, and, of course, energy stocks.

But let's not forget the broad picture.

This is the video recording of our December 2, 2022, All Star Charts Crypto Weekly Strategy Session.

Markets are seriously complicated.

There's an endless number of participants, countless investment vehicles, and a million ways to analyze money flow.

Here at All Star Charts, we analyze thousands of individual markets and securities, all belonging to various asset classes. It goes without saying that we collectively look at thousands of charts every week.

There's no substitute for setting aside time to go through our chartbooks and putting in the work.

But, every now and again, certain environments and conditions dictate simplicity. Sometimes, we can step back and identify the major themes in just a handful of charts.

Indeed, for crypto markets, it has been rather simple.

The argument has been to be long if Bitcoin's above its prior-cycle highs and to be patient if the opposite is true.

But I'll pose that there's an equally significant data point that we'd be irresponsible to ignore.

From the desk of Steve Strazza @sstrazza

I’m pinch-hitting on the crypto note today.

It’s not so much because JC and Louis needed me to step in. It’s because I wanted to share something with you. 

I want to discuss a potential mean-reversion trade opportunity in Coinbase $COIN.

I think it’s one of the best ways to express a bullish tactical thesis on cryptocurrency markets right now.

I know that’s really not saying a lot these days. The asset class is a mess. “Disaster” might be a better descriptor, particularly as it relates to the FTX meltdown.

In the aftermath of its collapse, how can we trust any of the crypto exchanges right now? Why the hell would we want to buy Coinbase? Isn’t it just the next domino to fall?

Hear me out…

 While the FTX token $FTT has cratered toward zero in the past several weeks, Bitcoin $BTC and Ethereum $ETH have been relatively unscathed.

Both are trading about 20% off their highs from earlier in the month before news of the scandal broke.

As for other major exchanges, such as Binance $BNB and Coinbase, the charts are still stuck in the same ranges they’ve been in since...

We like to keep things simple and remove unnecessary complexity.

As far as we've been concerned, over the last few years -- and particularly since the November high -- Bitcoin has merely followed legacy markets.

For the longest time, it's been all about correlations. Has this made our job slightly boring? Sure, there's no doubt.

As technicians, we love having multiple uncorrelated asset classes at our fingertips. The more assets with their own idiosyncratic drivers away from systemic risk factors, the better.

But we need to see the market for what it is and profit from what ultimately pays, and that's price.

We remain patient in the face of this price action.

In fact, it's been many months since we've expressed any bullishness over long time frames.

At heart, we're trend followers. We're not here to stand in the way of the market. Rather, we want to keep our approach simple and ride the ebbs and flows of the tape to make our money.

Unless you're looking at your charts upside down, it's been difficult to ignore what's been happening in this space, be it in recent weeks or over the last year.

In the aftermath of the collapse of FTX, more parties will be exposed. Grayscale refuses to prove its reserves, and WETH has recently lost its trading peg to ETH.

In the parlance of Mr. Buffett, only when the tide goes out do you discover who's been swimming naked.

This is the video recording of our November 25, 2022, All Star Charts Crypto Weekly Strategy Session.

Following the collapse of Alameda and FTX, crypto's correlations to legacy markets have completely come off.

As an asset class, this is the most independent crypto has traded for over a year. For most asset allocators and traders, this is generally favorable because it increases the number of uncorrelated assets to profit from.

A big problem for crypto traders is they've been merely riding on a short volatility vehicle that's been tightly correlated to long-duration growth stocks.

All crypto has offered in this period is Beta rather than a unique directional market.

So it's certainly been nice to see some dislocation from equity markets -- even if crypto's been lagging hard following the FTX fiasco.

But my bet is this correlation between stocks and crypto will more than likely return in the coming weeks and prove a durable feature of the landscape.

You might not like it, but we must always deal with reality whenever money's on the table.

Tomorrow, I'm off for a roadie to Wellington to catch up with some buddies and to go to a lecture. It all should be a great time.

Last week, I spent some time at my Mum's lifestyle block, house-sitting and looking after their animals.

It's moments like these where you can unwind and clear your head. This is especially important when you're involved in these markets.

Random internet tokens?

Rug-pulls?

Mass liquidations?

It all seems false when you step outside and unwind.

In this market, I've spent less time looking at charts and more time thinking and contemplating. Don't force your hand in environments like these.

If you try to find setups instead of seeing them, you'll enter into trades you'll inevitably regret.

This is the video recording of our November 18, 2022, All Star Charts Crypto Weekly Strategy Session.