Smells Like Hopium
Mis à jour
I don't post much; mostly I just watch and observe. But at this point in time, I cannot help my self. I'm seeing way too much joy and optimism in markets over the last few weeks. The smell of strong hopium in the air is pungent, especially in crypto. Lots of traders I follow are posting 10-12x posts a day talking about bullish action...lots of screams of "333% PUSH!", "555% EASY!", etc. etc. You know who you are.
Time for some real talk--crypto autumn is over and winter is just about to begin. Let's do the math...using "King Crypto" BTC as a guide.
Here we see the 2W chart and the story is clear. I like the 2W time frame as a starting point because if levels out all the BS and allows for clear headedness in lieu of what is obvious hysteria.
What are we seeing?
1. Heikin Ashi still points almostly perfectly bearish since the Nov 21 double top. This is a negative.
2. Current price action and all candles are below every channel there is, including KC and Bollinger Band Std Dev 1 and 2. This is super very negative.
3. 2W 50 per EMA is about to death cross 100 per EMA. That's EMA, folks...not simple MA. It will be very hard to see how the next 3 months won't have this cross, but we will wait and see. This is negative.
4. Stochastic has tried 4 times since Nov 21 to break favorable and has failed every time. Short term momentum still under longer term momentum, at the very bottom of the range. This is negative.
5. MACD, while approaching zero on the bars, is persistently below long-term trendlines. This is a negative.
6. On Balance Volume (the ultimate tell) is not even close to breaking favorable. This is negative.
Technical analysis, sorting out for all the short-term noise, is all pointing in one direction...downward.
From a macro-market analysis, we are just beginning to see the shakeout of the crypto hysteria. Some points:
A. Regulation, the "all clear sign" for big money, seems stuck in the muck across numerous geos, because...
B. Crypto firms continue to go bust at a rapid pace. Hard to know where to regulate when firms are dying every month. FTX is now "old news", but as yet nobody knows how far the contagion goes. BlockFi this week, likely another before the end of the month. And the "Binance Rescue Fund" (outside of a tweet) is a pipe dream.
C. The idea of BTC (or any crypto) as an inflation hedge or safe haven is fully disproven.
D. Crypto is now, minus higher variance, inexplicably tied to Tech. Yet even the media hyped, MOMO pushed, fake-out rally in QQQ didn't get to BTC over the last month.
E. Recession looms, corporate multiples are still insane, leverage is still too high (in markets, and especially crypto), and fundamental economic dynamics globally are not favorable.
All risk assets are still very far away from bottoms, crypto especially.
Smoke the hopium all you want, but don't hit that "Buy" button. Long way to go before we are out of the woods.
"Roll it up, light it up, smoke it up...Inhale, exhale" - Cyprus Hill.
Time for some real talk--crypto autumn is over and winter is just about to begin. Let's do the math...using "King Crypto" BTC as a guide.
Here we see the 2W chart and the story is clear. I like the 2W time frame as a starting point because if levels out all the BS and allows for clear headedness in lieu of what is obvious hysteria.
What are we seeing?
1. Heikin Ashi still points almostly perfectly bearish since the Nov 21 double top. This is a negative.
2. Current price action and all candles are below every channel there is, including KC and Bollinger Band Std Dev 1 and 2. This is super very negative.
3. 2W 50 per EMA is about to death cross 100 per EMA. That's EMA, folks...not simple MA. It will be very hard to see how the next 3 months won't have this cross, but we will wait and see. This is negative.
4. Stochastic has tried 4 times since Nov 21 to break favorable and has failed every time. Short term momentum still under longer term momentum, at the very bottom of the range. This is negative.
5. MACD, while approaching zero on the bars, is persistently below long-term trendlines. This is a negative.
6. On Balance Volume (the ultimate tell) is not even close to breaking favorable. This is negative.
Technical analysis, sorting out for all the short-term noise, is all pointing in one direction...downward.
From a macro-market analysis, we are just beginning to see the shakeout of the crypto hysteria. Some points:
A. Regulation, the "all clear sign" for big money, seems stuck in the muck across numerous geos, because...
B. Crypto firms continue to go bust at a rapid pace. Hard to know where to regulate when firms are dying every month. FTX is now "old news", but as yet nobody knows how far the contagion goes. BlockFi this week, likely another before the end of the month. And the "Binance Rescue Fund" (outside of a tweet) is a pipe dream.
C. The idea of BTC (or any crypto) as an inflation hedge or safe haven is fully disproven.
D. Crypto is now, minus higher variance, inexplicably tied to Tech. Yet even the media hyped, MOMO pushed, fake-out rally in QQQ didn't get to BTC over the last month.
E. Recession looms, corporate multiples are still insane, leverage is still too high (in markets, and especially crypto), and fundamental economic dynamics globally are not favorable.
All risk assets are still very far away from bottoms, crypto especially.
Smoke the hopium all you want, but don't hit that "Buy" button. Long way to go before we are out of the woods.
"Roll it up, light it up, smoke it up...Inhale, exhale" - Cyprus Hill.
Note
I'm still seeing a lot of smoke and mirrors in this market and some outright panicked posting by several perma-bulls, who have been proven wrong thousands of times over the last year. You know who you are, and you all know the type...they were calling the "bottom" every month for 12 months while the market collapsed. Some, but very few, had the good sense to go dark while the market "bottomed". So let's revisit. The two week timeframe still eliminates the noise, and not much technically has changed. Nothing has changed fundamentally either, and last week the SEC sued Gemini and Greyscale, while Gemini is about to sue DCG for misplacing about a billion dollars. Nothing is clear.
That little green candle...that's it. That's all these bulls are putting their faith in. Clearly they are stoned on hopium.
Wise players will wait for a double bar confirmation and the OBV to shift. Then we consider getting back in. No point in losing 25% for the extra few basis points. What until the trend reversal is confirmed. Will update when the time comes.
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