Traditional markets, crypto, correlations and tips!
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This ‘Market Snapshot’ is going to be an interesting one, as it is sharing some of my thoughts inspired by the markets and my trading rather than market action.
The first thing I’d like to talk about is the correlation between Bitcoin, Altcoins, Gold, Stocks and the USD, as it is definitely a topic many people are discussing and it’s a heated one.
Since the March crash we have seen most assets get much more correlated than they were before, and the main reason is that the USD has become more volatile and its importance to markets has become very clear. Due to the fact that the biggest markets in the world are the US ones, most debt is in USD and most assets are traded vs the USD, it is normal for assets to be correlated to an extent just because of that. At the same time, many retail traders are looking at the same things, along with institutions which aren’t focused on crypto only. Many of them actually bought the dip this time, and now have a bigger influence in the crypto markets than ever before.
Another thing is that the US stocks are going parabolic, especially the big tech names, while the VIX is near 30. There is a lot of uncertainty in the world right now and one market has gained most of the attention. At the same time, crypto is still flying under the radar and the crypto total marketcap is 50% below its ATHs nearly 3 years later. Eventually things are going to change as this market is maturing and the technology is progressing.
Bitcoin usually starts moving very quickly when something changes in the global picture. We saw that in Dec 2017, Nov 2018 and March 2020, as well as during this most recent correction where Crypto started dropping before stocks and even bottomed before them. Don’t forget that crypto is still the wild west and a 24/7 market, so it is normal for moves to start and end faster than huge, more stable and 24/5 markets.
In my first ‘Market Snapshot’ I got many of the targets for closing shorts and going long correct (SPX 3300, NDX 10900-11100 & Bitcoin 9500-9800), but then I became overly bearish. On my ‘Weekly Open’ analysis although, Bitcoin and altcoins had dropped substantially, I felt they had more to drop as traditional markets fell further. So why did I get it wrong, what were the signals that I was wrong and what to do next time?
A. Always focus on the chart you are analysing for entries and exits. If an entry is really good, don’t leave it on the table because you think the xyz asset could do something different. Crypto is a different beast and respects TA incredibly well, but also has its own intricacies. For example the diagonal support held nicely for BTC and the price never even closed below 10k or the 128 DMA. On top of that, the BTCUSD & ALTBTC correlation had started breaking since Sunday. Alts where also not dropping much despite BTC trying to go lower.
B. Always look at both BTC and USD charts for alts. Nowadays USD charts are more important as most trading is going on in USD/USDT pairs, so even though alts didn’t seem ‘oversold’ enough in BTC terms, they certainly were in USD terms.
C. When markets get volatile stick to your initial plan, because during crazy corrections like this one – fastest 10% drop in 3 days in Nasdaq’s history – you could be your own worst enemy by overthinking or, even worse, overtrading.
D. To me it was and still is very clear that we are in a bull market both in Crypto and stocks. NDX could drop to 10200-10600 which I think is possible, yet when such strong correction occur it is definitely worth betting with the trend if something is sitting at strong support. Even if ii will be just a dead cat bounce. What got to me was the fear of a March-like crash, which imho is simply not likely to happen anytime soon, although not impossible. For now I am focusing on playing the bounce of the log channel on NDX if the price gets there.
When things get volatile, try to play level by level and go small until you get a clearer picture of the market. Let the dust settle.
So this was from my article on Cryptocube.io, where you should all come and check it out. If you have good content and you would like to write for Cryptocube, don't hesistate to message the team (I am just a content creator). Otherwise you can read good stuff and find crypto coaches for most subjects related to crypto!
What I would like to add is how strong BTC is right now despite the volatility in traditional markets. Not only the volatility, but the strength of the USD along with markets going down. In my previous analysis I've said that I believe 7-8k is possible and it would be a gift. I still believe the DXY could get up to 96-97 which would give a strong correction to all markets, but after that as long as it doesn't close above... I expect a continuation of the bull market.
The momentum in crypto is really strong right now. Too many stablecoins, many new interesting coins, attention to the space is slowly growing as are the inflows of capital... all that while BTC's inflation was cut in half. The market is still down 50% from its Jan 2018 top, which I think is really cheap. Most of the alts I am looking at right now are extremely hot and if BTC/Traditional markets don't shit the bed, they could explode.
Look, based on most models I am looking at the fair price of BTC is at 8k and overall it is the best place to start buying based on my TA. 10k is a normal price and there are many reasons to be bullish here (I do think we will hit 20k by the end of the year), but first I'd expect a strong shake out. By the end of September crypto should start trending up again, if it isn't already ready to do so. I mean there are tons of good alts right now and many look incredible. Seriously confused as to what to do, as I should had played this a lot better than I did. I got out of ETH, TRX, BNB, FOR, MKR and some gems a several days ago... but many are now higher than I sold them (some at profit, others at a loss). I am also still long term bullish on stocks, but they look like they have more downside before they start going up again. (maybe another 5-10% from here)
The first thing I’d like to talk about is the correlation between Bitcoin, Altcoins, Gold, Stocks and the USD, as it is definitely a topic many people are discussing and it’s a heated one.
Since the March crash we have seen most assets get much more correlated than they were before, and the main reason is that the USD has become more volatile and its importance to markets has become very clear. Due to the fact that the biggest markets in the world are the US ones, most debt is in USD and most assets are traded vs the USD, it is normal for assets to be correlated to an extent just because of that. At the same time, many retail traders are looking at the same things, along with institutions which aren’t focused on crypto only. Many of them actually bought the dip this time, and now have a bigger influence in the crypto markets than ever before.
Another thing is that the US stocks are going parabolic, especially the big tech names, while the VIX is near 30. There is a lot of uncertainty in the world right now and one market has gained most of the attention. At the same time, crypto is still flying under the radar and the crypto total marketcap is 50% below its ATHs nearly 3 years later. Eventually things are going to change as this market is maturing and the technology is progressing.
Bitcoin usually starts moving very quickly when something changes in the global picture. We saw that in Dec 2017, Nov 2018 and March 2020, as well as during this most recent correction where Crypto started dropping before stocks and even bottomed before them. Don’t forget that crypto is still the wild west and a 24/7 market, so it is normal for moves to start and end faster than huge, more stable and 24/5 markets.
In my first ‘Market Snapshot’ I got many of the targets for closing shorts and going long correct (SPX 3300, NDX 10900-11100 & Bitcoin 9500-9800), but then I became overly bearish. On my ‘Weekly Open’ analysis although, Bitcoin and altcoins had dropped substantially, I felt they had more to drop as traditional markets fell further. So why did I get it wrong, what were the signals that I was wrong and what to do next time?
A. Always focus on the chart you are analysing for entries and exits. If an entry is really good, don’t leave it on the table because you think the xyz asset could do something different. Crypto is a different beast and respects TA incredibly well, but also has its own intricacies. For example the diagonal support held nicely for BTC and the price never even closed below 10k or the 128 DMA. On top of that, the BTCUSD & ALTBTC correlation had started breaking since Sunday. Alts where also not dropping much despite BTC trying to go lower.
B. Always look at both BTC and USD charts for alts. Nowadays USD charts are more important as most trading is going on in USD/USDT pairs, so even though alts didn’t seem ‘oversold’ enough in BTC terms, they certainly were in USD terms.
C. When markets get volatile stick to your initial plan, because during crazy corrections like this one – fastest 10% drop in 3 days in Nasdaq’s history – you could be your own worst enemy by overthinking or, even worse, overtrading.
D. To me it was and still is very clear that we are in a bull market both in Crypto and stocks. NDX could drop to 10200-10600 which I think is possible, yet when such strong correction occur it is definitely worth betting with the trend if something is sitting at strong support. Even if ii will be just a dead cat bounce. What got to me was the fear of a March-like crash, which imho is simply not likely to happen anytime soon, although not impossible. For now I am focusing on playing the bounce of the log channel on NDX if the price gets there.
When things get volatile, try to play level by level and go small until you get a clearer picture of the market. Let the dust settle.
So this was from my article on Cryptocube.io, where you should all come and check it out. If you have good content and you would like to write for Cryptocube, don't hesistate to message the team (I am just a content creator). Otherwise you can read good stuff and find crypto coaches for most subjects related to crypto!
What I would like to add is how strong BTC is right now despite the volatility in traditional markets. Not only the volatility, but the strength of the USD along with markets going down. In my previous analysis I've said that I believe 7-8k is possible and it would be a gift. I still believe the DXY could get up to 96-97 which would give a strong correction to all markets, but after that as long as it doesn't close above... I expect a continuation of the bull market.
The momentum in crypto is really strong right now. Too many stablecoins, many new interesting coins, attention to the space is slowly growing as are the inflows of capital... all that while BTC's inflation was cut in half. The market is still down 50% from its Jan 2018 top, which I think is really cheap. Most of the alts I am looking at right now are extremely hot and if BTC/Traditional markets don't shit the bed, they could explode.
Look, based on most models I am looking at the fair price of BTC is at 8k and overall it is the best place to start buying based on my TA. 10k is a normal price and there are many reasons to be bullish here (I do think we will hit 20k by the end of the year), but first I'd expect a strong shake out. By the end of September crypto should start trending up again, if it isn't already ready to do so. I mean there are tons of good alts right now and many look incredible. Seriously confused as to what to do, as I should had played this a lot better than I did. I got out of ETH, TRX, BNB, FOR, MKR and some gems a several days ago... but many are now higher than I sold them (some at profit, others at a loss). I am also still long term bullish on stocks, but they look like they have more downside before they start going up again. (maybe another 5-10% from here)
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BTC doing pretty well. basis still negative, OKex L/S going to sub 0.8, Binance funding finally dropped from 0.01% to 0.0009% after being the only one not going negative. For now I can see it rallying to 11.1-11.5k. I think that is a good potential area for short term shorts down to 10650 and then re evaluate.
In hindsight it was very stupid of me not to play the bounce at 9.8-10k like I had originally planned (same with stocks), but I prefered to play it safe and preserve my capital.
Alts however haven't followed BTC and most are still looking weak. The more I look at BAND (I was short on the perp which was bad choise), the more I am thinking alts will correct further and the next rally will be mostly Bitcoin like it did in Q4 2016. Of course in BTC bull from all these alts there will many that will trend or have their moments, but it will mostly about BTC.
I am heavily invested in BTC and 90% of the time I use BTC to buy alts, not USD... as the only thing that interests me is how to increase my BTC stash. So for now I'd only touch very few coins like BNB, NEO, ONT + some mid-small caps. ETH is also holding its 0.035 support, but the chart as a whole isn't that attractive yet.
Stocks very close to breaking out, but still haven't. On CFDs there is a double bottom on NDX but not on NQ & for SPX there is a double bottom on the ES contracts. So I can't rule out a choppy/ranging period until there is a dip. So far the only 2 positions I had were a long on GBPUSD and a short on USDMXN on which I got out earlier than I should have.
Imho USDMXN has more to drop but is close to support. It could easily go sub 20$ in the next few weeks/months. USDCNH which is also very important looks like it could drop another 0.9% before it stops its downtrend. Most fiat currencies and especially larger ones like EURUSD & AUDUSD are still in an uptrend despite the fact that there are signs of a reversal / correction coming. Other EM pairs like USDZAR & USDBRL look like they could drop a lot more, while USDTRY & USDRUB look like they could go much much higher. For now the key pair & levels to watch is EURUSD @ 1.175. If it breaks it could go to 1.14-1.15.
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