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).
Pursuing the bear
Prior to the whole LUNA-UST fiasco, people were still holding out some hope that what we’d been enduring these last six months was a normal, healthy correction in the inevitable emergence of the cryptocurrency supercycle.
US$1 trillion in lost market cap later and it’s safe to say optimism is in short supply.
So, what now? How do you approach the prospect of a multi-year bear market? (To be clear: I don’t have any strong opinions about whether this is going to take six months or six years to play out, but you need to react to the conditions in front of you).
While no-one should be in any rush to go all-in or to ‘buy the bottom’, these are the times when the next bull run’s fortunes are made.
SOL, AAVE, BNB, LINK, AVAX, MATIC: all of these monster projects started during the 2018/19 downturn. All of them had to grow without hype and create a community with tiny market caps. Yet for those willing to hold for 2-3 years, the returns were astronomical.
Not all projects are equal and not all projects will go 100x when conditions turn positive once more. But if you do the work now, find the projects with the right use case, realisable products and strong developer community, then you’ll be positioning yourself for success when the bull returns.
Add a pinch of alt
Two weeks ago I was talking about mean reversion plays and so far, well, not a lot has happened. But what we have seen is two more weeks where US$28.5k has proven an impassable barrier, slowly mopping up (we hope) the last of the sell pressure.
Now that we’ve seen a tiny glimmer of BTC strength, there’s growing hope we could be in for a near-term trend reversal.
It’s hard to overstate how brutalised alts have been over the last six months. Many are already 90% off their highs, a figure projects took more than a year to reach in 2018.
Look, a lot of alts will never recover. They had their run, do not pass go, see you at zero. But for those that were surging before the downturn – who had solid narratives and market strength behind them – any broader momentum could translate into quickfire multiples.
But if things do kick off, just remember: we’re still in a bear market until proven otherwise. And that means when you get 20%, you take 20% because, during times like these, unlocked profits have a habit of turning into locked-in losses.
Bitcoin looking hungry
By this point you’d be forgiven for not recognising that giant green thing on the right of the screen. It’s a good start, says Tom from FX Evolution, but we’re still in accumulation mode until we break through the US$32k resistance with some conviction.
Still, some heart can be taken from the precipitous drop-off in Bitcoin shorts. This suggests that not only have many shorts been blown out by the current move, new shorts aren’t in any rush to replace them. The optimistic take: this downward move is exhausted and it’s time for a relief/late-short-punishment rally.
The story is more mixed for Ethereum (and by extension the alt market in general). While also seeing an upswing alongside Bitcoin, ETH’s price remains hemmed in by the 20D EMA. Further upside is likely dependent upon BTC breaking through and stabilising above US$32k – at which point alt market gains should outstrip Bitcoin’s.
C’mon king. Haven’t we suffered enough?
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.