Bitcoin and Crypto Market Updates (January 23rd)

Things are getting SPICY!

TLDR: After such a massive run things are starting to get frothy - Prudent to take some profits here – Keep an open mind about a move to 25k BTC and 1.8k/2k ETH. Will derisk further at these levels and short.

BTC – Hitting the first untapped liquidity zone here. Top-of-range move to 25k is still entirely possible. I’ve elected to sell some spots here and I will sell off my 2nd clip at 25k if we see it. AROUND 19.5K / 21.5K is the level I’d look for a hold on a pullback. This is also the level I’d expect to see again if we get a final push to the 25k zone.

ETH – Very much a similar look with 1.8k/1.9k ish levels looking entirely possible still. Looking for 1425ish levels to hold on a pullback.

Bitcoin and Ethereum Heatmaps

BTC – USDT – See here above the price we still have some heavy short liquidation levels we could still squeeze. But also note the untapped late longs around 20k… The MM will want to hunt this at some point so a return to this zone is likely.

BTC – BUSD – Here we have a cluster of late long liquidity under this consolidation zone – down to around 21.5k. Not much above price…

ETH – Again similar to BTC we still have clear liquidation levels above the MM could easily target… But again we have late longs building up below so I view a move to 1.8k – 2k as a clear opportunity to TP or SHORT.

I also thought It was worth reviewing some of the highest-volume traded Alt coins over the last 24 hours…

Starting with APT – You can quite clearly see here we have a cluster of late long liquidity around 10.5… Yeah, we have some shorts we can still liquidate above but this looks like it runs it back to 10.5 levels soon… one last final thrust with BTC and ETH before we run it back?

AXS – similar script, large clusters of late longs building below… could still see some shorts taken out before we fall but it's heating up.

XRP – Looking at the lower TF here – same script but a little more extreme. A heavy number of late long liquidity below… minimal short side liquidations left. Maybe we see 0.44 but even if we do I expect to see us run it back to 0.36ish levels soon.

In summary, looking at the heatmaps we either stall here and pull back to capture that late long liquidity OR we have a nice final thrust on BTC to 25k ETH to 1.8k/2k – THEN get the pullback. I took some spot of the table here – will derisk further and look to SHORT with decent size IF we get that final thrust to the desired targets on BTC and ETH.

Crypto Sentiment

Smart Vs Dumb money hitting extremes – Usually signals a top or at the very least at the business end of the move.

Put call ratios – Show some excitement around risk…

Influencer sentiment

Reviewed 5 top Twitter / YT accounts this morning – All bullish.

All my models show poor RR (Risk reward) here. HOWEVER, reviewing many stock charts + crypto you can build a strong base case that we have put in a possible market bottom/accumulation range for risk assets. The plan remains simple – Short the extremes of the range… Long the bottom. So I’ll be posting stock/crypto charts in the discord that fit this bill. 

Disgraced 3AC Founders seek funding for new crypto exchange GTX

The disgraced founders of bankrupt cryptocurrency hedge fund Three Arrows Capital (3AC) are seeking $25 million in funding for a new cryptocurrency exchange called GTX. The exchange has come under a lot of security already, namely because two of the founders Su Zhu and Kyle Davies blew up a multi-billion dollar hedge fund only earlier this year before now launching GTX. The other two founders Mark Lamb and Sudhu Arumugam, the founders of the crypto exchange CoinFLEX also saw their last project file for restructuring in August. On top of that, GTX is viewed as somewhat predatory by trading crypto claims on their platform - namely looking at FTX creditors. Will anyone give them $25 million after all they have done?

FTX revamping

FTX CEO, John Ray came out last week saying that the bankrupt crypto exchange could restart its operations. In an interview published last Thursday, Ray said that “Everything is on the table,” when it comes to options around FTX and that “If there is a path forward on that, then we will not only explore that, we’ll do it.” about the exchange restarting operations. The FTT token jumped nearly 35% up to $2.46 following the news last week. How this would work with all of the outstanding creditors remains to be seen.

Polygon Hard Fork

Polygon underwent a hard fork on January 17th - in an upgrade which will help address gas spikes and chain reorganization issues which have affected the chain previously. The proposal was passed by a DAO vote, by just 15 validators, which is a low turnout in the scheme of decentralised governance. With all of the corporate partnerships, Polygon has made in recent months which include the likes of Nike, Starbucks and Meta - the network upgrades are in line with the need for optimal performance as these companies interact with the chain.

DOJ busts Bitzlato… the crypto exchange no one had heard of

The US Department of Justice (DOJ) last week announced a mysterious live stream around an ‘International Cryptocurrency Enforcement Action’ announcement. The whole of the crypto world held their breath in fear of what was to come… but it wasn’t as bad as initially thought. The DOJ charged the founder of a Hong Kong-based crypto exchange for processing more than $700 million in illicit funds. Bitzlato, the crypto exchange in question is alleged to have “sold itself to criminals as a no-questions-asked cryptocurrency exchange, and reaped hundreds of millions of dollars’ worth of deposits as a result” US Attorney Breon Peace said in a statement. At least they didn’t ban altcoins or stablecoins!

Yuga Labs new drop

Last week, Yuga Labs launched ‘Dookey Dash’, a skill-based NFT game. Holders of Bored Apes and Mutant Apes could claim free ‘Sewer Passes’. The game itself is a skill-based endless runner type game, similar to cult classics like Temple Run or Subway Surfers. Dookey Dash went live on Jan.18 and holders have three weeks to try and achieve the highest score possible in that time frame. On Feb. 15, the winner with the highest score will win a ‘mysterious and very important box”... how mysterious. The passes are tiered 1-4 and the higher the pass, the greater the multiplier in the game to achieve higher scores. Players simply need to get over a score of zero to ‘validate’ the pass, and all validated passes by Feb.15 will turn into an “eligible new power source” which in other words means to transform into the new Yuga Labs NFT collection. The collection has already done over 16,700 ETH in volume so far.

Facing aggressive conditions

The crypto markets have seen a significant uptick since the beginning of the 2023 year, with aggressive conditions pushing prices high very fast. This sudden shift has caught many traders and investors off guard, leaving them unsure of how to navigate such a rapidly changing market.

The fear of participating in such an aggressive market can be overwhelming, but it is crucial to remember that the potential returns are significant and well worth the effort. Overcoming this fear and adapting to the market's volatility are key to success in the crypto space.

Instead of remaining on the sidelines, it is essential to actively seek out opportunities and make informed decisions to capitalise on this market's potential. It takes a strong mindset and a well-thought-out strategy, but with the right approach, it’s possible to navigate the volatile crypto market and reap the rewards.

Let’s have a look at some concepts that can help you to jump on a moving train.

In today's fast-paced and ever-changing market, it is crucial to stay active and not be left behind. Sitting on the sidelines and waiting for the perfect conditions to develop can be detrimental to your financial success. Instead, it is essential to take calculated risks and actively seek out investment opportunities.

Why is risk management important?

One of the most important things to keep in mind is risk management. It is crucial to have a clear understanding of the potential downsides of any position and to not overexpose yourself to risk. By managing your risk, you can ensure that any losses you may incur will be manageable and that you will be able to capitalise on the winners when they come around.

PRO TIP: When you are about to jump into aggressive conditions, visualise what amount of money you could lose and not feel too badly about missing it. Then use that amount as your aggro portfolio for the “break the ice” and “jump into the moving train” moment. That will give you some peace of mind and your emotions will be less intense, you already made peace on losing it.

Why are adaptability and flexibility important?

Another important aspect of investing in today's market is to be adaptable and flexible. The market is constantly changing, and it is essential to stay informed and be able to adjust your strategy accordingly. This means being open to new ideas and being willing to take on new opportunities as they arise.

Humans by design are to be in a comfort zone, and changing quickly from something that was working well in the previous conditions to something different when those conditions changed is not easy, but in the financial market, you are playing against yourself most of the time. Overcome the fear to change, and just do it!

Are you afraid of taking losses?

It is important to remember that it is not about avoiding losses entirely but about making sure that the potential gains outweigh the potential losses. A successful trader or investor can take calculated risks and capitalise on the winners, even if it means taking some losses along the way.

A trader or investor afraid of taking a loss is like a boxer afraid of taking a hit! Train yourself to be able to take more of them and toughen up to be less harmful when they come.

PRO TIP: Don’t be afraid of losing. Embrace losing and perfect it to your advantage. Use proper risk management, and use stop-loss orders when your thesis is invalidated. When you are a professional loser you will be able to cut your losers fast and let your winners run hard. Learn from every loss you take to be able to do less of what has led to it.

The mindset in Aggressive Conditions

When it comes to participating in aggressive market conditions, it is important to have the right mindset. This includes overcoming the fear of failure and not allowing aggressive conditions to freeze you out of the market. One way to overcome failure fears is to have a plan in place and stick to it. This means having a clear understanding of the potential risks and rewards of any investment and having a plan for how to manage those risks.

How important is execution?

Another key aspect of investing in aggressive market conditions is execution. This means having a plan in place and sticking to it, even when the market conditions are volatile. It also means having the discipline to control your emotions, such as fear and greed, and not allowing them to cloud your judgement. This can be achieved through consistent practice and staying informed about market conditions. Journaling your performance makes a difference!

Conclusion

In conclusion, the worst thing we can do at this point is to be frozen out of the market. It is far more beneficial to be taking shots and looking for entries than it is to be sitting on the sidelines waiting for the perfect conditions to develop. By managing our risk, being adaptable and flexible, and being willing to take on calculated risks, we can increase our chances of success in the ever-changing market. Additionally, having the right mindset, including overcoming the fear of failure, having a plan in place, and controlling emotions, can help us navigate the aggressive market conditions and increase our chances of success.

What are some of the key takeaways from this article?

• Stay active and don't be left behind in the market

• Take calculated risks and actively seek out opportunities

• Manage your risk to ensure any losses are manageable

• Be adaptable and flexible to stay informed and adjust your strategy accordingly

• Remember that the potential gains should outweigh the potential losses.

• Overcome the fear of failure and don't allow aggressive market conditions to freeze you out of the market

• Have a plan in place and stick to it

• Control emotions such as fear and greed, to avoid clouding judgement.