Koroush AK’s Guide to Ethereum Highs and Alt Season #61
Market Meditations | December 28, 2020
In today’s letter, we are delighted to talk you through these developments. Providing insights, lessons and guidance for traders and those with skin in the game.
Dear Meditators
What a weekend it has been.
Bitcoin tops at $28.3k, ETH/BTC showing signs of strength and talks of Alt season.
In today’s letter, we are delighted to talk you through these developments. Providing insights, lessons and guidance for traders and those with skin in the game.
Delighted to say this free edition is brought to you by Phemex?, you can use my link to get free Bitcoin and a discount on fees. This is where I trade crypto with leverage, here’s a ? tutorial to help you get started.
Crypto Market Maker B2C2 Halts XRP Trading With US Counterparties ⛔️
Following the SEC’s lawsuit against Ripple, crypto market-making firm B2C2 has stopped the trading of XRP with U.S.-based counterparties. B2C2 is one of the largest market-making firms in the crypto market, and operates in the U.S. through B2C2 USA. Non-U.S. clients can still trade XRP with the firm but are required to pre-fund all short trades. After Galaxy Digital and Jump Trading, B2C2 is now a third large market making firm halting XRP trading. Read more.Ether Trades Above $700 for the First Time Since 2018 ?
Price of Ethereum soared on Sunday, trading above $700 for the first time since May 2018 with an 11% gain in just 24 hours. With the CME group announcement stating that it will list an ETH futures product next year, institutional interest is likely to start picking up like we saw with bitcoin earlier this year. Ethereum’s market cap is now firmly above $80 billion, making it the second largest cryptocurrency below bitcoin. Read more.Corporations Now Own $30 Billion in Bitcoin as Bull Run Pays Off ?
The total amount of bitcoin owned by companies around the world is now worth $30 billion, or over 1.15 million Bitcoins according to the website Bitcoin Treasuries. Of all the public companies that are listed, Micheal Saylor’s company MicroStrategy owns the most with over 70,000 in their possession. Bitcoin Treasuries also lists “ETF-like” companies such as the Grayscale Bitcoin Trust ($15.6 billion) and CoinShares ($1.9 billion). Read more.Cover Protocol Suffers Infinite Minting Attack, Price Tanks 97% ?
Decentralized finance (DeFi) protocol Cover, which recently merged with Yearn.Finance, has just been exploited.A suspected hacker has exploited the Cover staking protocol, inflating the token supply by printing over 40 quintillion “coins”. However, in a surprising move, the suspected attacker returned the funds with a note saying: “Next time, take care of your own sh*t.” Read more.Gold Heads for Best Close in 6 Weeks as Trump Signs Stimulus Package ?Gold headed for the highest close in 6 weeks after President Trump signed a $900 billion coronavirus stimulus package, pumping more state funds into the world’s top economy. The haven built on a run of 4 weekly gains following the breakthrough on the package, which Trump had initially declined to endorse amid a dispute on the size of checks to support households amid the pandemic. Read more.
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Koroush AK’s Guide to Ethereum Highs and Alt Season
Crypto’s Christmas Weekend: Bitcoin Tops at $28.3k
The 24/7 nature of the crypto market can be a feature or a bug, depending on how you look at it. Those that were looking forward to a weekend without looking at the charts were in for a huge surprise, as bitcoin continued its parabolic run over the weekend and ultimately topped at $28.3k before showing signs of a local correction.
BTC/USD
Even better news for some traders was the ETH/BTC bounce that followed after bitcoin started correcting, sending many altcoins 10-30% higher in the span of a few hours.
Ethereum managed to finally break $700 for the first time since May 2018 and it looks like confidence in altcoins is slowly picking up steam.
With such an exciting end of the year, let’s take a look at some price action first. After that, we discuss the implications of the ETH/BTC bounce and also take a look at how the majority of the market remains overexposed to altcoins.
Crypto’s Christmas Weekend: Biggest CME Gap Ever
After consolidating below $24k for about a week, bitcoin broke to the upside once again and saw another 10% jump during the weekend while legacy markets were closed over the holidays.
Institutional players that were short going into the weekend learned a valuable lesson. Trying to call a top or simply being short with bitcoin in price discovery is a dangerous thing to do.
CME’s bitcoin futures, being closed during the weekend, opened $3000 higher, making it the largest CME gap to date.
Shorting a trending market, especially a market like crypto known for its momentum, is rarely a high probability trade.
Those that traded the 2017 bull market have already learned their lesson and those new to the market will likely have to pay their tuition as well.
An iron rule of this market is that it overextends on both sides, making shorting the top or longing bottoms a very hard thing to do.
The vast majority of participants are better off averaging down in a comfortable spot position and sitting on their hands until the trend reverses on higher time frame charts.
Fakeouts happen on both sides, and those trying to trade the chop often end up regretting trading in the first place. Leverage your strengths and don’t get shaken out, all signs point to 2021 being another incredible year for the crypto market in general.
ETH/BTC Showing Signs of Strength. Time To Buy Altcoins?
ETH/BTC is one of the best indicators to watch in order to have an idea when the altcoin market could potentially start outperforming bitcoin.
Over the weekend, it seemed to have lost weekly support but managed to bounce back strongly in order to defend the weekly close.
As long as this level holds, we will like to see some incredible trading opportunities on both Ethereum and altcoins in general while bitcoin seems to consolidate for a bit.
High Risk, High Reward?
One of the things that became obvious over these last few weeks is how people tend to be severely underexposed to the industry’s largest asset while being overexposed to altcoins.
On Twitter, people new to the market are promised riches and bags going 10-100x ‘once bitcoin has done its thing’.
Bitcoin made new highs consistently over the last few weeks and euphoria was nowhere to be found. ETH/BTC bounces strongly for the first time in weeks and Twitter starts shouting how everybody is going to get rich.
Altcoins, just like early-stage startup investing, can indeed provide life changing opportunities at the right moment in time.
That doesn’t mean it’s a wise decision to put your entire net worth in such high-risk and often illiquid investments.
Twitter and other platforms skew the perception of risk involved in holding altcoins and time and time again it becomes clear that many put in their life savings hoping to get rich.
Personally, I even think that holding 20% of my crypto portfolio in altcoins is on the aggressive side, which I’ve allowed myself given the current momentum in the market.
Don’t forget that risk management and avoiding risk of ruin is a trader’s top priority. I’ve done a full course of risk management that you can view ? here.
Once you’ve got those aspects covered, you can start thinking about optimizing potential profits.
Conclusion
Bitcoin has been absurdly bullish. Newer traders will have learnt the hard way that trying to call a top or simply being short with bitcoin in price discovery is a dangerous thing to do.
Over the weekend, ETH/BTC seemed to have lost weekly support but managed to bounce back strongly in order to defend the weekly close. ETH/BTC is a leading indicator of when the altcoin market could potentially start outperforming bitcoin.
Whilst this brings plenty of opportunities, it should not be an indication to put your entire net worth in such high-risk and often illiquid investments.
If you are new to the crypto market, do not be too led astray by all the bullish promises on twitter. If you are a more mature trader, remember to continue best practises of risk management.
On Mondays, our ‘Scan The Week’ section is designed to show our community what events and headlines we will be keeping an eye on.
Monday, 28th December
Swingby (SWINGBY) Chaos-MainNet:
“This launch will be pivotal to Swingby. After December 28th, Swingby will have a fully operational Chaos-Mainnet network which will be generating a tremendous amount of value to the world of DeFi and bringing in a large number of new users” — Yusaku Senga, Founder.
Tuesday, 29th December
KardiaChain (KAI) Mainnet 1.0:
“The launch of the mainnet promises the completion of another significant milestone in Kardiachain’s roadmap. The mainnet will be run after rounds of testing on the testnet 3.0 in November 2020”.S&P/Case-Shiller Home Price:
Change in the selling price of single family homes in 20 U.S. metropolitan areas. Why do traders care? This is the leading indicator of the housing industry’s health because rising house prices attract investors and spur industry activity ?
Wednesday, 30th December
U.S. Crude Oil Inventories:
Primary gauge of supply and demand imbalances, which can lead to changes in production levels and price volatility.
Friday, 1st January
New Years Day:
Happy New Year Market Meditators ? We wish you every good fortune for the year ahead. In the words of Miyamoto Musashi:“There is nothing outside of yourself that can ever enable you to get better, stronger or richer. Everything is within. Seek nothing outside of yourself.”
Remember this when you set your goals and dreams for 2021. More on this topic in Thursday’s free education letter.
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Disclaimer: The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. I am not a financial advisor. Every investment and trading move involves risk. Do your own research when making a decision.
