A Bull In Winter
Hal explains his Q1 bull thesis
Cheat Sheet -
Support and resistance levels and our daily, weekly and monthly bias on BTC, GC, CL, ES, and NQ as well as our favorite altcoins
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What We Are Watching
We further breakdown our case for these cryptos here : What We Are Watching
Crypto News
Silvergate posts $1 billion loss (The Block)
EU's final vote on MiCA regulation postponed until April (The Block)
DOJ Objects to FTX’s Choice of Lawyers, Citing Conflict of Interest (CoinDesk)
Bitcoin Surge Causes Over $500M in Liquidations, Highest in 3 Months (CoinDesk)
Bitcoin hits new post-FTX high as analysis warns move ‘choreographed’ (CoinTelegraph)
Polygon Upgrade Goes Live Following Low Governance Vote Turnout (Blockworks)
Grayscale Blasts SEC’s ‘Illogical’ Denial of GBTC Conversion (Blockworks)
MetaMask Partners With Lido, Rocket Pool To Enable ETH Staking (Blockworks)
Ethereum Hits 500k Validators Ahead of Scheduled Shanghai Upgrade (Decrypt)
EU Finance Ministers Say Digital Euro Must Offer Privacy (Decrypt)
BTC Outlook
What a wild start to the year. The last time we wrote Bitcoin was below $18k and we spoke about how it was in no man’s land and could as easily go to $16k as $22k. Well, the direction was picked rather quickly and as of the time of writing BTC is hovering just below $21500. This is around the highest price tick before the FTX sell off started.
I have been observing this week what many crypto influences are saying on Twitter some with over 250k followers, and they refuse to see the forest through the trees. Many are posting how this is the final leg up before the inevitable collapse to $12000.
I strongly disagree here.
I’ll lay out my case with technical evidence from the chart above, but also some fundamentals that could be fueling this return to $21k.
The most striking feature in the chart above is how BTC has behaved historically around its 200 day moving average. The gusto in which BTC has flown upwards through this moving average is important. First, the average hasn’t been close to being tested since April 2022. Every time BTC moved through this average in 2021 there was short term bullish price action, and one of the times saw a new all time high. A rest of this moving average is likely in the coming weeks and months. However, BTC is currently consolidated well above this moving average so it may be quite some time before a retest occurs.
There are a few other features in the chart you can see for yourself. I want to discuss the fundamentals of this rally surrounding the DCG/Genesis situation. Many are refusing to participate in this rally because they think there is a systemic risk to the market coming from DCG/Genesis possibly having to liquidate there asset. Its my personal belief that the market rallying from $18k to $20k in one week should be your sign that these fears don’t matter or not as much as people give them credence. I view it similar to the MTGOX situation. Yes, there are still people who may get Bitcoin back in the future from the MTGOX bankruptcy but that didn’t keep Bitcoin’s price depressed since 2014, and in the same way the market has alleviated its fears of DCG situation and started moving up again.
Remember, markets climb a wall of worry. We have our worry, “there must be more FTX contagion”. Also, note that in 2018 and 2020 the “next leg down” came with an associated black swan event, and the same could be argued for the FTX collapse in 2022. Everyone calling for the next leg down is betting on a black swan to occur within 6 months of the last one! That’s just not how the world works usually.
So, what would make me bearish? Bitcoin going back below its 200 day moving average.
Possible Course of Action
Get long while Bitcoin is above its 200 day moving average
Do nothing and wait for price to move above FTX sell off high
Short if price falls below 200 day moving average (daily candle closes)
The Bulls’ Defense:
Price above 200 day moving average
CME gap (huge!)
Daily RSI > 50
The Bears’ Prosecution:
Global uncertainty , recession fears
Uncertainty around fed minutes
DCG/Genesis Situation still unresolved
A Closer Look
This section will be focused on taking a closer look on what Hal thinks is important to watch in the coming week.
This morning Hal analysis the FRAX Shares, FXS, an altcoin that has been leading this rally. We added it to the cheat sheet around $4 and it’s now at $9.8. So, what next?
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