X marks the spot
4 min read

X marks the spot

B21 Crypto. We help you stomach cryptoassets.

Cryptic ball: volatility is fading.

We're currently in crypto's equivalent of the doldrums. These calm, yet somewhat volatile equatorial waters are dreaded by many due to the nearly absolute lack of air movement which results from the convergence of different winds - a little bit like what bulls and bears are doing. There was a time when being stuck there often led to death by starvation. Fortunately, these days it's just a matter of winning or losing regattas and of making hundreds of thousands instead of millions.

But one trader's garbage is another's treasure, right? The doldrums are also a make-or-break place for ocean races, as knowing what to do when there's not much to do is key to overcome such a limbo where fleets catch-up and funding rates reset. So, while the current trading period is great if you're actively enjoying the volatility, trying to buy low and sell high, note that it isn't yet clear where the wind will blow from. As TheBoot, an epic BitMEX trader who got verifiably got rekt in the previous bear market but then recovered shorting it, nicely explains, it's all about recognising what kind of market we're in. Be patient and keep planning.

Chart art: Grayscale discount is fading.

A premium in Grayscale's BTC fund indicates institutional interest and vice versa.

Market musings: FUD is fading.

Meanwhile, note that we're likely going to remain trading sideways for a while. As long as bitcoin continues hovering around this level, akin to a 40% drop from its ATH, we're in what's considered a normal discount zone for a bull market - considering an average dip of 37% with the current history. But if we fail to sustain this level, then miners and other players who are currently holding will likely feel enticed to short the market and make more money betting against reckless longs.

Your correspondent feels the fear levels felt yesterday were the lowest we'll see this year. Elon Musk is back shilling Bitcoin miners and their potential to drive renewable usage, Ray Dalio has finally confirmed he owns some bitcoin and prefers the original cryptoasset to traditional bonds, and it seems the FUD coming from China was already more than qualified as the typical routine it has been for years. Nevertheless, keep an eye on failed breakouts around $42k, the level we must climb above if bulls want to stand a chance. If the selling there is strong, it's likely that we'll see a new test of $30k - although not likely not in the next days.

Visual block: fear is fading.

Monday was this year's low.
Monday's value of 10 contrasts with a historical bottom of 8 achieved in the COVID-induced dip.

Three things: the dip is fading.

  • CoinMetric's latest State of the Network explains this May's crash and argues the worst is likely behind us (provided coordinated FUD stops). Check it out!
  • Deribit Insights' latest analysis tries to read "the 'Tea Leaves' hidden in Derivatives Data". Good catch-up on the state of cryptoasset options.
  • Glassnode Insights' Week On-Chain also studies how the recent bearishness affected various fundamental indicators. It was just a healthy dip!

Tweet tip: losses are fading.

Click on the image to check Glassnode's report, it's same mentioned above.

Meme moment: China FUD will never fade.

COVID Crypto Relief Fund: made with help from B21.

Click on the image to learn more about this transparent community initiative. Even Vitalik Buterin, Ethereum's founder has donated!

Email eagerness: add us as a contact.

On Gmail, click on More info to add us a contact and see our emails in your Primary Inbox. Alternatively, click on this image to add our contact card to your phone.

Get started: download the B21 Crypto app!

Subscribe to our newsletter
Follow us on Twitter @b21official
Follow us on Twitter
Join our Telegram group
Find us on Instagram
Watch us on Youtube
Legal Notice
Our newsletter offers opinions and insights from analysts in the cryptoasset space. It is not intended to be investment advice, and should not be treated as such. You must not rely on its information as an alternative to financial advice from a qualified professional. Without prejudice, we do not undertake or guarantee that its information is correct, complete or non-misleading; or that the use of guidance in the report will lead to any particular outcome or result.