The Crypto Comms #12

Crypto tends to follow a strict regime whereby Bitcoin weakness is exacerbated in altcoins, save a few short-lived outliers. However, the so-called ‘everything bubble’ might have some gas in the tank, and this one chart could signal yet another hype cycle.

In this issue:

The proxy reality
Ethereum analysis
Latest happenings
Listening material

Technically speaking

The proxy reality

There is a world where Bitcoin/Dollar is no longer a barometer for the rest of the crypto market. For better of worse, I believe this is where crypto is heading next. Not only is market dilution of first principles taking place over time, but Bitcoin’s nature is inherently conservative and slow-moving by design. And as I’ve said before, money will accommodate the entire spectrum of human behaviour.

This is world where Bitcoin’s influence diminishes, and ebbs and flows over boom and bust cycles. We’d learn more with hindsight as the crypto market grows, but that’s my hunch.

In this world, stablecoins are the top players (essentially central banks), and exchanges, ALT/USD futures, bridges and AMMs are major (yet secondary) players. This landscape is characterised by fast, cerebral betting on ‘the next big thing’- i.e. names with the biggest marketing department, trendy and sexy ideas win, while others win less.

Given the dire macro context, this is probably an end-game scenario for many Fiat currencies too, after which consolidation occurs along with global economic shifts and a changing world order. Macro expert Lyn Alden explains the major shift in what will be a new regime characterised by multiple ‘spheres of influence’ rather total US-hegemony, and I tend to agree.

In short, I do not believe we’ve seen the end of crypto euphoria. Incoming highly accommodative fiat on-ramps would create this ‘end-game’ boom-bust scenario, assuming calamitous events like energy supply issues in Europe are contained. Admittedly, this may be a big assumption given Europe’s disastrous, decrepit and utterly incompetent leadership.

But until Ethereum/Dollar begins to materially outperform Bitcoin/Dollar, the proxy reality will continue to reign supreme. In other words, a temporary regime change depends on ETH/BTC. And if this does end up becoming another hype bubble, your job is to sell ETH into USD and BTC.

For the time being, Bitcoin weakness begets more crypto weakness. This is the regime until proven otherwise.

Ethereum analysis

Ethereum/Dollar lost all gains it made last week, and dropped -11.6% to sweep the weekly low before buyers stepped in. The high-time-frame reversal was denied as ETH/USD continued to chop alongside BTC/USD, albeit with more relative volatility.

ETH/USD H4 chart levels of interest; Sweep of last week’s low

The technical setup for ETH is comparable to BTC, with the difference that Ether has already swept last week’s low.

The range point of control has so far marked a noteworthy pivot point during this range-bound trading environment. As such, $1,090 remains a relevant S/R level to watch out for on the H4 time-frame. If reclaimed, a move to last-week’s high ($1,280) is on the cards. Otherwise, further weakness from BTC/USD would be exacerbated in ETH/USD, so another shot at 3-figures ETH is on the table.

In my view, players should not panic if ETH hits 3-figures again, but instead look for entries and a deviation plus reclaim above the psychological $1,000 level. The rationale is simple: assuming the June initial dump was exacerbated by forced selling, another overextension to the downside is unreasonable unless a major event precipitates it (e.g. something in Macro triggers a sell-off).

As such, now that LWL was taken out, it’s time to look for a swing to the other side.

Latest happenings

Listening material

Lyn Alden, expert macro strategist discusses long-term debt cycles and crypto.

Dear readers,

The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Monday and Wednesday. I am not perfect and this is not a science — nor is this newsletter a signals service or financial advice. While I cannot promise perfection I do my best to be honest and transparent.

Thank you for reading.

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