All Star Charts Crypto Articles

That's the smell of risk-off...

47,000 was the level, and Bitcoin did not hold it.

Here's what we laid out last week:

For those with a shorter timeframe, the bias is higher above 47,500 toward the former crash highs of 53,000:

Otherwise, if this breakout fails to hold, expect more messy action in the coming days.

And fail it did...

As the old saying suggests, from failed moves come fast moves in the opposite direction:

This 46,000-47,000 level wasn't just an important inflection point in the near-term, but it also coincided with Bitcoin's last level of defense before crashing in May.

If we're below this zone of overhead supply, the bias is sideways to lower.

And as we said in last week's conference call, that's no reason to be long an asset!

...

This is the video recording of our September 17, 2021, All Star Charts Crypto Weekly Strategy Session.

In Monday's post, we mentioned that this would be very much a "wait and see" week as we watched Bitcoin's near-term consolidation play out.

And here's what we outlined in yesterday's note:

We’re not really expecting much more than tumbleweeds and a few winners here and there while Bitcoin’s stuck below the upper-end of this range near 47,500.

But if we see a breakout above that level, we’ll be deploying some more cash into new long positions.

It looks like we could be getting a resolution this morning, with Bitcoin trading back into the 47,000's.

For those with a shorter timeframe, the bias is higher above 47,500 toward the former crash highs of 53,000:

Otherwise, if this breakout fails to hold, expect more messy action in the coming days.

Of course, these are near-term developments. But even when we zoom out, this is still a major level of interest....

In yesterday's note, we outlined that this looks very much like a "wait and see" week, with Bitcoin still in this messy sideways range.

44,000 is a big level of interest that the market respected, with prices trading back above our long-term macro risk level of 46,000 this morning.

But we're not really expecting much more than tumbleweeds and a few winners here and there while Bitcoin's stuck below the upper-end of this range near 47,500.

But if we see a breakout above that level, we'll be deploying some more cash into new long positions.

We're seeing this play out with the number of new monthly highs dwindling recently:

Breadth is more of a lagging metric in crypto because so much of the asset class is driven by the top-heavy names, so this merely shows the diminishing opportunities since Bitcoin's correction a few weeks ago....

In traditional markets, we've been making the case that they've been a big fat mess.

So with all things considered, the alpha taking place within crypto has been catching our attention. But even this asset class has succumbed to the choppy action experienced elsewhere.

The bottom line is that if Bitcoin's below 46,000, the probability of success in new long positions reduces.

Looking more tactically, 44,000 is another critical inflection point. Not only does this conjuncture represent the 38.2% retracement from the recent thrust higher, but also the AVWAPs from all-time highs and July lows, as well as the 50-day moving average.

If we hold above 44k, things are likely not completely falling apart, and though the near-term trend is still choppy, there will still continue to be winners under the surface.

Alternatively, if we're below 44,000, the risk is well defined for a tactical short back to 41,000, which represents Bitcoin's June highs. We'd anticipate a...

This is the video recording of our September 10, 2021, All Star Charts Crypto Weekly Strategy Session.

That was quite the day yesterday...

We experienced $3.5B worth of long liquidations in the last 24 hours, with over $1.8B taking place in under an hour at the height of the crash.

Source: ByBt

Bitcoin's total open interest across all exchanges has fallen by a mighty 23%, and Ethereum's OI fell by 25%:

Source: Glassnode

Combined with this, we've seen a 21% reduction in the amount of futures contracts margined with US Dollars, along with a 7% drop in crypto-margined contracts.

That's a sizeable amount of leverage that's been flushed from the system in what can be seen as a healthy reset.

Bitcoin's aggregate average funding rate of perpetual futures positions has fallen into negative territory for the first time since July.

One of the first lessons you learn in technical analysis kindergarten is the principle of polarity.

That is, former support turns into resistance, and vice versa.

The thinking here is that when buyers absorb all the overhead supply looming at resistance, the market has nowhere to go but up. When the market breaks out and retests that former resistance, it turns into support on the way down.

This language of supply and demand is true everywhere, but particularly so in cryptocurrencies, where there are no earnings, dividends, and discounted cash flow models to dilute the necessity of price.

So, with this all said, is this a textbook example of polarity taking place in Bitcoin?

Things are looking pretty damn good right now.

Bitcoin's got a 50 handle.

The alts are pushing to new highs.

And on-chain behavior continues to suggest accumulation on the part of long-term investors.

The bottom line is that if Bitcoin is in the 50,000's, we need to be aggressively long crypto.

And on the other side of things, alts have certainly had a good run in the last month: Solana, Cardano, Terra, Axie Infinity all come to mind...

This is the video recording of our September 3, 2021, All Star Charts Crypto Weekly Strategy Session.

The bottom line is that we're seeing more new highs underneath the surface.

After Ethereum's impressive +11% print following our bullish tone earlier this week, Bitcoin looks to be inching closer to a 50 handle.

As we've been outlining, if Bitcoin is in the 50k's, we need to obnoxiously long crypto, particularly the altcoins.

There's a permeating myth that cryptos are too volatile to invest and trade.

Naysayers will argue that because volatility's so high, they won't touch it.

The reality is that Bitcoin's less volatile than some members of the S&P 500.

Hell, Crude Oil literally traded in the negatives just over a year ago... talk about recency bias for people leaving that out from the equation.

The real debate isn't comparing cryptocurrencies to other asset classes, it's one of risk management.

So let's flip the question.