The crypto Gods have awoken.
Since the April 8th new moon we've been in a relatively volatile and potentially painful downtrend. With yesterday's pump to $72k that trend is now broken. We are either moving back up or just continuing on with more crab. Personally I believe that this is the sign I've been looking for as to whether summer is going to be good for the market. Volatility is still fully intact and we haven't lost much if anything after hitting a record-breaking all time high. It's all looking very promising.
Nothing more bullish than a fake death-cross.
I must admit I was a little worried about this cross. I fully expected to be trading below it when it occurred, which usually makes it even worse. I was personally bracing for impact and getting ready for something like $52k, but instead the opposite happened. This is the primary death-cross between and 25 and 100 daily moving averages. These are the default lines that get drawn across many exchanges (including Binance) so a lot of traders are making moves based off them.
Now the death-cross has turned into a glancing blow that will almost certainly flip back into a golden-cross within a couple of days. This happens when the two lines start to parallel each other more and don't make a hard perpendicular cross. It honestly doesn't happen very often and it's a bit surprising it would happen now when there was still so much more room to move downward (32% dip to $50k would have been standard). Now we're in the position of $72k acting as resistance again and it's a bit unclear when we'll break above that level. All I know is that when we do we should see some real fireworks and FOMO.
ETF news?
I'm told there was some positive news about an ETH ETF, which would explain why ETH is leading the charge here with a 23% pump within a couple of hours. Still I need to remind everyone that news is only the catalyst. The market didn't go up because of the ETF news: the market wanted to go up and just needed an excuse. This ETF news was that excuse to pump.
Had the market not wanted to go up nothing would have happened on this news and no one would be talking about it. This is something that happens all the time in terms of confirmation bias. When number goes in a certain direction we look at the news and say, "The news did that!" But then when the exact same type of news does nothing we just ignore it. This is also a form of survivorship bias; we tend to ignore the big picture and the entire dataset while focusing on the more exciting events.
The funny thing about ETH is that it was an obviously good buy. I don't know if anyone else noticed this but all the Bitcoiners were shouting on crypto Twitter when ETH went below 0.05 ETH/BTC. There was a very weird "Ethereum is dead" moment coming from the maximalists. It was the most obvious signal to buy ever, and I publicly said as much as it was happening in real time. I was even considering buying some ETH even though I haven't owned any since $1000 was the all time high. As we approach the last year of the 4-year cycle alts will continue to outperform. Count on it.
Supply shock?
The supply of crypto on exchanges is still at record breaking lows with absolutely no expectations of being refilled anytime soon. This continues to be the theme of the current market. Every dip gets bought up to the point that all dips are around 20% maximum. These dips also aren't caused by actual spot selling either. They are flash crashes caused by degenerates going x50 long and getting liquidated. Without these liquidations the lows would be level less than 20% dips... which is a bit crazy to consider. All anyone has to do is buy spot and they're a winner in this environment. Clearly this is too much to ask when it comes to compulsive gambling.
High volatility is good
It's a bit counterintuitive but the volatile decline to the $56k low was very much a good thing. Trading downward in a volatile manner is bullish. The most bearish patterns are ping-pong-ball dead-bounces, each one less volatile than the next: into a flatline. This is what blow-off tops look like. It's quite clear that what we just went through was not a blow-off top, which is very good news. Volatility hasn't decreased since we hit all time highs. Here's the play by play:
- All time highs
- 17.5% dip
- 18% pump
- 7% dip
- 12% pump
- 17.5% dump
- 12% pump
- 15% dump to local low
- 16% pump
- 7.5% dip
- 18% pump
Market still very much alive.
Again the worst possible thing is not the price crashing violently. The worst thing is for the market to completely run out of steam and just float there looking like it might be stable when it's really just waiting for a reason to flash-crash into the dirt. That hasn't happened here even though it arguably should have. The bull market is still very much intact, and the spot price trading above all the important moving averages is evidence of this along with everything else.
Conclusion
We are about to have a very good summer if the 100-day moving average continues to act as the last line of defense like it has been. The 200-day is ascending quickly as well and finds itself above $52k at the moment, so even the worst case scenario at this point is likely less than a 30% dip from the peak.
As for myself I'll be looking to take some gains off the table across the months of June and July, as these months often mark a local top in situations like this. August is a complete volatile crapshoot and September is almost always a good month to buy. It seems like we're still in for a wild ride as the current run we are in very much feels like 2017 vibes. Be ready for constant pumping with 20% dips along the way. A volatile market is an alive market and we show no signs of slowing down even after a record-breaking ATH.
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