An ancient management consulting legend states that 危機 is the Chinese word for crisis, represented by the characters for both danger and opportunity
Morning Traders,
With digital assets still a little soft the last 24-48 hours, it is worth considering our positions and designating them as trades or investment and figuring out what we would really like to do with the risk of each asset. We have to always consider trend-reversals honestly, and do not actually advocate one way or the other.
To do this, we consider that trades are for taking profit and investments will ebb and flow.
Without jumping the gun, the short-term risk is of a theme reversal setting in, where equities are sold, USD rallies, gold and silver fall and digital assets stop their relentless bid. It would also not be crazy if markets settled until the big picture develops further.
Our best measure, in this opinion, is in the USD Index (DXY). If it can get itself above 94 we have a theme reversal – at the moment it has had a false-break of its low. Given our views on the USD denominated equity market, it is at risk of taking out all long positions in a USD rally – what’s the black-swan event? potentially USD through the high, S&P500 through the low.
Despite the dramatics of events like this, the net change in real value -designated by gold – will likely only be a gradual sell-off in S&P500/gold to match economic expectations.
As long as this fails to materialise we are just adjusting/watching. Traders who are at their screens could see some great risk/reward spots to bid the dips and as long as they are ultra-strict on risk-management might enjoy another leg higher. If buying the dip fails and traders cover their risk, they should be very happy to have avoided the reversal if it sets in.
Bitcoin
Bitcoin is still a little weak, having never really taken off like other assets in the space. Despite this, we saw Dave Chapman of OSL give some impressive figures on interest in Bitcoin with the majority coming from institutional clients.
We are seeing the handover of the asset into institutional hands, where it gains another layer of value-add as an uncorrelated asset to the set of assets and asset-classes.
But it’s not really translating into the type of price increases that we expected so far. It does feel like we are either on the cusp of that, or a serious leg down, and perhaps this is a reason why it continues to do neither – these participants are not interested in chasing the market.
Given that, the upward trend-channel makes sense.
Bitcoin last traded at $11,740
24 hr high: $12,100
24 hr low: $ 11,575
Bitcoin USD Chart
Ethereum
Eth last traded at $408.30 and has been weaker than Bitcoin on the second-leg down. The blue level it looks like it bounced off is from 2018 where resistance is now support (or, support for now).
24 hr high: $ 429
24 hr low: $ 392
Ethereum USD Chart
Digital Assets
If digital assets are anything to go by – especially the usual suspects in DeFi, then this has been a buy the dip opportunity.
- Aave: $ 0.54
- Algorand: $ 0.596
- Cardano: $ 0.13
- Chainlink: $ 16.60
- Compound: $ 184
- Maker: $ 647
- Ren: $ 0.503
- Reserve Rights: $ 0.248
- Stellar: $ 0.103
- Synthetix: $ 6.19
- Tezos: $ 3.70
- yearn.finance: $ 11,175
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