Koroush AK's Guide to Trading BTC, ETH and Altcoins #66
Market Meditations | January 4, 2021
Let’s recap this weekend’s price action: BTC, ETH and Altcoins. All the while, looking for trading opportunities.
Dear Meditators
What a way to kick start 2021.
Let’s recap this weekend’s price action as both BTC and ETH managed to perform extremely well. All the while, looking for trading opportunities.
After that, we look at the ETH/BTC reversal and focus on what it means for other altcoins as well.
I’ll even let you in on some altcoins I’ve got my eye on.
Bitwise Asset Management AUM Soars Above $500 Million ?
A provider of crypto index funds, Bitwise has seen Assets Under Management grow from $100 million in October to $500 million. Most of the new demand came from investment professionals such as financial advisers, hedge funds, corporations and other institutional investors. The fund holds Bitcoin, Ether and Litecoin. Read more.Hackers Stole $120 Million via 15 Defi Hacks in 2020 ?
Defi’s popularity exploded last year which malicious hackers also managed to profit from. In total, there were 15 hacks of DeFi platforms for a total amount of over $120 million in funds stolen. Protocol bZx was even exploited twice in February via a contract bug that let the hacker execute a flash loan attack that netted around 1200 ETH. Althould yield farming was incredibly lucrative for some, others were reminded that high returns generally come with a lot of risks as well. Read more.XRP Holders Ask Court to Stop SEC From Calling their Holdings Securities ?
Several investors in XRP have filed with a Rhode Island court, looking to change the course of the Securities and Exchange Commission’s case against Ripple. The filers are calling upon new Acting Chairman Elad Roisman to alter the course that his predecessor, Jay Clayton, set by beginning enforcement against Ripple just before his departure. Read more.Three Arrows Reports More Than $1.2 Billion Position in Grayscale’s GBTC ⇶
In a new filing submitted to the U.S Securities and Exchange Commission, Singapore investment firm Three Arrows Capital has disclosed a more than $1 billion position in Grayscale’s Bitcoin Trust. According to the most recent filing, the firm’s position now represents $1.24 billion. The trust’s holdings top 607,000 BTC, according to The Block. Read more.
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Trading Opportunities When BTC Stalls: Buying Dips, ETH and Altcoins
Just when everyone believes that ‘this time will be different’ and the market is too bullish to see any decent correction, the inevitable almost always happens.
Today, we saw the first big correction after bitcoin broke its all-time high and soared almost 75% in less than a month.
In a bull market like we’re in right now, corrections like this are generally an incredible buy opportunity before the market bounces back up violently.
This weekend’s price action baffled even bulls with the highest conviction as ETH/BTC bounced +40% off the lows, hinting at the altcoin price action that is likely yet to come.
For this edition, let’s recap this weekend’s price action as both BTC and ETH managed to perform extremely well. After that, I look at the ETH/BTC reversal and focus on what it means for other altcoins as well.
No Dips Allowed?
Just as we saw in 2017, the market tends to accelerate once its breaks above an all-time high (ATH) and investors who believe they can easily get an opportunity to ‘buy the dip’ are often disappointed.
Breaking above an ATH is the most bullish that that can happen to an asset and being bearish above makes little to no sense.
The market basically enters a new ‘phase’ and new interest drives up demand even more.
Barely a month after breaking $20k, bitcoin reaching these prices again in the short-term remains a dream for many.
Those that didn’t have a position, aggressively buy the dip once the inevitable correction eventually happens, which we saw today with bitcoin and ethereum bouncing 15% in just a few hours.
This is the first of likely a few 20-40% corrections before we reach this market cycle’s top, just like we saw during the 2017 bull run.
Because of the excessive leverage that builds up as traders become more confident that the market only goes up, corrections are extremely violent and quick due to positions getting liquidated but generally provide an excellent buy opportunity nonetheless.
Ethereum Finally Shows Signs Of Strength
Ethereum managed to steal the spotlights from bitcoin on Sunday as the ETH/BTC finally reversed and recovered from a 3-month long bleed in under 24 hours.
With a double bottom and now a higher high, eyes are on Ethereum for the next couple of weeks as it has the potential to outperform bitcoin and likely started off some incredible trade opportunities in altcoins as well.
Ethereum strength is good for altcoins in general so we could finally see that ‘alt season’ Twitter has been wishing for these past few months, especially if btc consolidates at these levels before continuing its trend upwards.
Will Altcoins Follow Ethereum?
Capital rotates as some investors and traders attempt to make even more money by using some of their profits from positions like bitcoin and ethereum to buy lower market cap ‘altcoins’.
As confidence in those coins grows and hunger for risk increases further down the cycle, the gains we see in some of these altcoins are sometimes unimaginable.
Because of their lower liquidity, it doesn’t take a lot of money to push altcoin markets up and as price increases, more people try to get a piece of the pie which further strengthens the effect.
Both DOT and LINK are altcoins I’ve increasingly been paying attention to.
DOT already broke its prior all time-high and has been performing incredibly well since it entered price discovery last week.
With the amount of DeFi activity that is happening on the Polkadot chain, it is likely that DOT will remain a solid performer throughout 2021.
LINK has yet to break out meaningfully, but has been showing signs of a reversal ever since the recent wick to $8.
Conclusion
The BTC price action we are seeing is the first of likely a few 20-40% corrections before we reach this market cycle’s top, just like we saw during the 2017 bull run.
Because of the excessive leverage that builds up as traders become more confident that the market only goes up, corrections are extremely violent and quick due to positions getting liquidated but generally provide an excellent buy opportunity nonetheless.
In terms of other opportunities, with a double bottom and now a higher high, eyes are on Ethereum for the next couple of weeks as it has the potential to outperform bitcoin and likely started off some incredible trade opportunities in altcoins as well.
Both DOT and LINK are altcoins I’ve increasingly been paying attention to.
Trading these conditions has potential to be high reward but don’t forget the other side of the coin: high risk. Good luck.
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, 4th January
Aavegotchi (GHST) Mainnet Launch ?
NFT + DeFi sounds like a good combo going into 2021. Funded by an ecosystem grant from decentralized finance (DeFi) protocol Aave, Aavegotchi aims to “make DeFi fun”.
Tuesday, 5th January
Georgia State Runoff Elections ??
Two crucial runoff elections in Georgia on Tuesday to decide who will control the Senate and therefore the ability of Joe Biden to pursue his agenda.LCX exchange launch ?
“The full operational launch will be on January 5th, 2021.”
Wednesday, 6th January
Congress Meet to Certify Electoral College Vote ?
Congress will meet to certify the Electoral College vote that declares Joe Biden the winner of the presidential election. The session takes added importance this year as congressional Republicans allied with Trump pledge to try to undo Biden victory.
Friday, 8th January
US Non-Farm Employment Change ?
The December jobs report will likely convey the damage to the labour market from Covid-19. We can expect to continue to see USD weakness while the employment recession persists. In % terms, this is the worst employment recession since WWII. For more on spotting USD weakness, check out our ? free article.
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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.
