Cryptic ball: take that, bears!
What an Oscars night! Yesterday bitcoin rose 5% in ten minutes and, as usual, the rest of the market followed. As often explained last week, it seems spring is here and the animal spirits of the bulls have been reignited, at least for a while. Yes, there's still a lot of risk in the air, but it's time to blossom. Let's analyse.
- Like last Monday, the bias for this week is bullish, and this setup still favours longs. However, I believe it's more likely we range a little bit, even if with a little upside, following the 18% rise in the last seven days. Why is this?
- Bitcoin overcame all relevant resistances it had on its near-term horizon and is now up on the year. The next boss is $52k. But right now $48k is also a minor resistance and it's unlikely we jump another 10% straight away.
- Still, such a move isn't uncommon in crypto and bitcoin is known to slap faces. If we see some alts doing +20% daily moves it's likely traders rotate back to the original orange coin, as it's perceived as a safer investment in times like these.
- Talking about the times, I must keep on hitting on the uncertainty note. Many are calling this a scam pump, another designation for a dead cat bounce. While I'm optimistic we're seeing a true spring, I also vividly remember a similar recovery in 2018, only to see the market continue crashing later on - so keep that in mind in case you're drinking the Kool-Aid that the bull market is back.
In the meantime, enjoy these profits and remember this is the right environment to set up stop losses. Just manage them well enough to ensure your positions are not cut left and right by those targetting high liquidity zones, i.e. the areas where most traders will place such stops. If you have questions about this matter, then hit reply and I'll try to answer them in the next newsletters!
Chart art: king richard effect?
Visual block: tick, tick...BOOM!
Three things: readfast or belfast?
- Joel John explains why "collapsing the cost of trust and verification is profitable". A must-read, especially for Ben Thompson's fans.
- The DeFi Edge shares the "17 common DeFi mistakes he wishes he knew before he started". Really a must-read, one of the best threads on the topic!
- Ming Zhao helps you understand the Kelly criterion, which is "a simple strategy to maximise returns via trade size".