Bitcoin and Crypto Market Updates (November 21s)

– A mixed Bag…

Following my last update, I said market conditions are tricky… I also said I expect to see 18/19k BTC and 1375 ETH…

Those statements remain unchanged this morning…

The sentiment is still bearish here and after reviewing pleb YT content the consensus is bearish. It sprinkled with a bit of confusion/uncertainty. IMO these aren’t the conditions for a nuke…

When I look at the TA picture on legacy – SPX/NQ and other indexes are still defending key levels. So strength remains with the bulls until these supports are broken (3900 SPX) (11480 NQ).

Market mechanics

When I look at the mechanics a few things stick out…

1. The market is underhedged here. So an offside bit of macro data/market event will nuke the market hard as people rush to hedge.

2. Smart VS dumb money index is showing signs of a top.

3. Put call ratio’s also signal a possible top.

4. Heatmaps on BTC and ETH show the MM is more incentivised to push the price up here before another nuke.

5. ETH Max pain for this week's opex is 1400 and BTC is 18,000 – End of the year it is 1,500 and 20k respectively.

One thing that’s making the mechanics super hard to read right now is the OTD options (On the Day) – these options moves are making it extremely hard to read the mechanics properly. One session was max short, one session was max long – all changing over a 24-hour period.

The macro picture remains grim – No light at the end of the tunnel here yet

SUMMARY – So on balance it really is a mixed bag and this type of action forces me to reduce the amount of money I’m willing to risk per trade. I’d advise taking the same approach.

Providing we don’t have any black swan type event from GBTC / Genesis I STILL maintain the MM needs to push the price higher here to entice more participants before nuking the price. So my ETH and BTC targets remain in play unless we break the key levels on SPX and NQ.

I’m also considering the end-of-year move here – Fund managers/traders want bonuses – To hit these targets they need markets to rise and retail liquidity to dump on.

Well… most of the news this last couple of weeks has been dominated by the FTX saga and its aftermath. Here is some news you may have missed:

FTX Hack

Following the public collapse of FTX, another twist to the tale came after the exchange was then hacked for over $600 million as various cryptocurrencies were drained from the platform. This happened just 24 hours after FTX & 134 affiliated companies filed for Chapter 11 Bankruptcy. FTX Telegram administrator characterised the situation as a ‘hack’ indicating it was an outside party but after all of the revelations was it FTX representatives themselves? We are yet to find out

Is Crypto.com still reliable?

Following the complete break of trust with the FTX situation, many other exchanges' liquidity was tested with mass withdrawals as panic spread throughout the crypto space. Crypto.com & Gate.io were at the centre of some controversy and bank run as rumours spread of their own insolvency. On November 12th, it emerged that Crypto.com had accidentally sent 320,000 ETH to Gate.io as rumours spread that this was used by Gate for their proof-of-reserves… suspicious. Many other exchanges have seen big outflows as fear took hold.

Is Genesis Going Bankrupt?

Genesis Global Capital serves as an institutional lender as well as retail for many crypto clients - there was $2.8 billion in total active loans on the platform in Q3 2022. The platform is now also reported to be on the brink of bankruptcy as well following the contagion effects of the FTX collapse. Genesis’ parent company DCG (which also has Grayscale as a subsidiary) is looking to raise $ 1 billion in emergency loans assumedly related to the Genesis platform. Given that Genesis helps many other crypto projects in providing yield for their consumers, a collapse could have even more severe knock-on effects than those felt from FTX.

Lost Pension in FTX collapse

Ontario Teachers’, one of Canada’s largest pension funds with over $250M in assets under management (AUM) has just lost $95M with their investment in FTX. Another shocking example of the side effects that the FTX collapse had any many different customers and stakeholders.

SBF cryptic Tweets

Infamous FTX & Alameda Research Founder, Samuel Bankman-Fried was seen writing a series of bizarre and cryptic tweets as he broke his silence following FTX's demise. Writing ‘What HAPPENED’ over the course of 9 separate tweets in 24 hours. Infuriating and seemingly sociopathic in nature for all those observing given the severity and damage caused by his actions. Is this setting up some sort of insanity plea to shift the blame and avoid any jail time? Or is this guy so self-absorbed and detached he genuinely thought this was appropriate?

Nike NFT Platform

Nike launches Swoosh which will be their new Web3 platform. Polygon will facilitate the project and the platform will be a destination for Nike virtual apparel and other NFT-based products. This seems to have been coming after Nike’s acquisition of Web3 studio RTFKT in 2021 and will see their first drop in January 2023. It is said that the platform will be a hub for virtual apparel like T-shirts, Trainers and Avatars which will be used within Web3 games. A unique integration with crypto and mainstream brands.

Binance recovery fund

Binance may have inadvertently caused the inevitable crash of FTX with their public scrutiny of the platform in recent weeks, but they have also announced their intention to implement a recovery fund for the best and most affected projects. Binance CEO, Changpeng Zhao said “We want the strong industry players today to protect the good industry players who might just be hurt short term” and “That’s not to say we can save everybody. If a project is mismanaged on multiple fronts we won’t be able to help them anyway”. A nice backstop for many of these potentially affected projects, but also another power play by CZ and Binance

Trading Patterns

In trading, there are two main pattern groups: candlesticks formations and chart patterns. For both, the principle is identical: the price movement of asset shapes in a recognizable configuration that allows its recognition by the trader and provides a signal.

When a pattern signals a change in trend direction, it is known as a reversal pattern; a continuation pattern occurs when the trend continues in its existing direction following a brief pause. There are many patterns used by traders but all of them put all buying and selling that’s happening in the market into a concise picture.

It provides a complete pictorial record of all trading that occurred in a period and also provides a framework for analysing the battle between bulls and bears. The goal of patterns is to help in determining who is winning that battle, and then what’s the most probable winner, this way traders can position themselves accordingly with better chances of success.

Pattern analysis can be used to make short-term as well as long-term forecasts. The data used can be intraday, daily, weekly, monthly or yearly.

One of the best things about trading using patterns as part of a strategy is that it can be systematic as patterns tend to repeat themselves over and over again which helps to appeal to human psychology and trader psychology in particular, and more importantly, can be used to journal properly and assess the effectiveness of the strategy.

If you can learn to recognize the patterns early they will help you to gain a real competitive advantage in the markets.

Just as with any other technical indicators, patterns help in identifying trend reversals and continuations. Can provide entry triggers, exit and take profit points.NOTE: Be aware that patterns are ultimately a mere descriptive manner of market structure and simplification of price action reading, as seen in a previous article.

As with any other technical analysis tool, the best is to combine it with other indicators and tools to find high-probability setups with multiple layers of confluence.

PRO TIP: Look for recognizable patterns around areas of interest such as horizontal supports and resistances, trendlines, supply and demand zones, and moving averages. And then look for the patterns that fit in the context of the price movement of expectation in that region. I.e. Look for bullish reversal patterns near support and bearish reversal patterns near resistance.

There are a lot of candlesticks and patterns to try and remember when trading, over time you will be familiar with all of them, but probably every trader out there started needing a cheat sheet. This is just an example of chart patterns cheat sheet, as you can see you can be as creative as you like! Cup and Handle in a mug maybe!?

As seen above, a patterns cheat sheet is a guide that compiles all your significant patterns to help, especially when you are at the beginning of your trading career, to be able to grab a piece of paper or look at something on your phone or computer when in doubt. Will give the confidence needed and the good reasons to take or discard a potential trade; emotions aside.

Trust me, if patterns are part of your strategy, having a good cheat sheet will help you enormously. The internet is full of awesome information but also filled with misleading information.

In the Crypto Rand group, we have an expanding academy accessible to our members with refined, easy-to-follow pattern lessons, accessible at all times in different formats, and analysts at your disposal to help with anything come to have a look and join us.