Welcome to the Three Ts with CoinJar. Each fortnight we explore a big Theme, an interesting Trade and some good, old-fashioned Technical Analysis (courtesy of Tom from trading gurus FX Evolution).

Attack of the jpegs

January was a month best forgotten for crypto. Spooked by inflation fears and the possibility of a high interest, risk-off environment, Bitcoin shed more than half its value while the total crypto market cap dropped more than US$1 trillion. Volume was minuscule and new users dried up.

Yet while the cryptopocalypse loomed, at least one segment of the market was making hay: NFTs.

By most metrics, January was the NFT market’s best month ever, seeing record numbers of transactions, active users and average prices – as well as soaring Google search volumes. On any given day, OpenSea accounts for almost one-in-five Ethereum transactions.

While NFTs currently find themselves in the middle of a scorched Earth culture war (in case you hadn’t noticed, some people really, really hate them), from a market standpoint it’s odd to see them decorrelate so strongly from crypto as a whole. When it comes to crypto crashes, outliers aren’t supposed to exist.

But perhaps that speaks to the innate differences in the NFT market, where community, status and speculation are combining in strange and unforeseen ways. Add in profound illiquidity and you have a recipe for a market that makes its own moves.

Sure it’s easy (and fun!) to dunk on the worst excesses of the NFT scene. But as an investor, momentum is everything – and right now, for better or worse, the NFTs have it.

Out on the range

While periods of extreme growth and decline can make it feel like frankly insane targets will soon be in reach – “We’re going to $100k! No, wait, we’re going to $10k!” – zooming out can give you a fresh perspective on where we might actually be in the market cycle.

According to many analysts, the answer is simple: we’re in a big, long MF-ing range. By this reading, everything that happened last year, all those dizzying highs and crushing lows, has basically been Bitcoin establishing itself between US$30k and US$60k, with a whole bunch of supports, resistances and deviations in between.

If that’s the case, then there’s no reason to be particularly bullish or bearish until Bitcoin decisively breaks out one way or the other. You simply try to buy near the bottom and sell near the top.

However, when a range is this big and forms for this long, it’s going to take a hell of a lot of force to break it free. So don’t be surprised if we’re still bouncing around and having the same conversations 3, 6 or 12 months from now. But when it does finally burst…

BTC breaks up

After almost three months of punishment, Bitcoin has finally pushed through the diagonal resistance that was keeping it hemmed in. The break happened in style with the king also surging through the 20D EMA and the powerful resistance at US$41.5k.

According to Tom from FX Evolution, the next key resistance is at the US$46k mark. Get past that and the bulls will really show they mean business.

The story is similar for Ethereum. The downtrend from November has been broken, along with the 20D EMA, leaving the 50D EMA sitting between it and a retest of the level at US$3400.

While it’s still too early to call this a definitive reversal, some confidence can be found in the relatively flat amount of BTC shorters on Bitfinex (AKA where the whales trade) – suggesting that the big players aren’t in any rush to short the market back to oblivion.

CoinJar is Australia’s longest-running crypto exchange. Since 2013, CoinJar has helped more than half-a-million Australians buy and sell billions of dollars in cryptocurrency.

FX Evolution is Australia’s premier forex, stock and crypto trading community.