Sep 6, 2023

Bitcoin (BTC) has remained almost entirely locked below the $26,000 mark since Sept. 1, showing little to no signs of life.

Video transcript

Taking a look at the crypto markets. Let's let's discuss more about the charts with none other than fair lead strategies, founder and managing partner, Katie Stockton. Hello, Katie Happy September. Oh, yeah, thanks. You too. That was the exciting month in trading. And I know you're, you're all excited about the charts here that you have, we have several. Um I I kind of want to look at uh the first chart we have here is Bitcoin because uh yeah, you, you kind of see Bitcoin in a very, in a cloudy situation. Uh explain how cloudy it really is for Bitcoin. Well, it's a really good way to put it, Lawrence, the, the cloud model that you see on the chart, it's the shaded area and it's a trend following model based on price solely and it is really widely used by FX traders. Now we see that it has held a lot of relevance for Bitcoin and many other AL coins as well in that the last relief rally or the sort of intermediate term up move met resistance right at the upper boundary of that cloud and there and it kind of preserved the downtrend that started in 2022. So now, unfortunately, we have a corrective phase that left that resistance intact and that does reflect weak intermediate term momentum. So we, we have some setbacks here on the chart. There's very strong support that's uh just, just below current levels. And you'll see that it's roughly 25,200. It defines former resistance, which was the upper boundary of a trading range. It'd be a natural place for Bitcoin to stabilize at least temporarily. However, we have seen some others including Ether take out equivalent support. So that doesn't give us much peace of mind. Yeah, I, I kind of want to take a look at that Ether chart because again, Ether and Bitcoin are so highly correlated uh that you, you, you wonder if Ether is sort of, uh, how am I say leading the situation or at least, um, serving as a for, for Bitcoin. But it certainly has, uh, some scary warnings for people who are trading Bitcoin, correct. Uh We have to have the same. Mhm. Yeah. So with, with the Ether trade, I mean, they have been very positively correlated and, and actually somewhat neutral, relative strength between the two of late. But it, it is within the context of a broader relative up trend favoring Bitcoin. We tend to usually see Ether underperform when both are moving lower because it's seen as a bit riskier perhaps than Bitcoin or Bitcoin just being the stalwart in the Cryptocurrency markets. So right now, you know, we have a, a relatively fresh breakdown and ether below some support. It puts next support or around 15 30 which is based on the bottom boundary that cloud that you see. So there is of course room to that level, you see that there's downside momentum for the weekly MAC D indicator that's pictured on our chart. And that means that oversold conditions might not be something to get excited about. At least not yet. What we have up actually is, is the relative price of, of Bitcoin it priced as E um And so when it goes up, that's Bitcoin strength. And I don't want to say Bitcoin strengthening against E because they're both going down. But it's more like eth is weakening more steadily or, or, or more severely that if you will than Bitcoin in that chart. So, so that's a relative strength comparison, right. So in this situation, you, you see that as an uptrend, in other words that they might both be falling, but eth is gonna fall for some time in the future more than Bitcoin, correct? Is that, is that right? Right. Yeah, the, the relative strength of course, will be a read on just how they relate to one another. It won't give you a sense of what's happening in absolute terms in a market where both are going down in absolute terms. We would expect either to underperform in that environment given again, it's sort of position as your perception perhaps as being a bit riskier uh but also potentially higher reward than, than Bitcoin. So it does depend on whether they're going up or down in absolute terms, usually the way we see that ratio play out, but the long term trend is gradual and it does support Bitcoin still, even with what we've seen of late, you know, everyone's been talking about ETF S we of course, have the Ether futures ETF that folks are thinking may be approved by the end of the year if that does get approved. Do you see Ether overtaking Bitcoin and maybe um something a little bit different happening? Well, I think anything that fosters institutional demand for cryptocurrencies is probably a positive for the whole space longer term. It doesn't mean that it has a real short term impact or anything that's meaningful. And next year, for example, we did see a favorable reaction on the G BT C news recently from Bitcoin, but it was really just a blip on the chart. I think it's folks sort of anticipating that as ultimately being a positive, but I don't think it's really necessarily a near term positive. Uh but anything that does foster that institutional adoption, especially if it is lopsided towards one and not the other. Well, then that, that would probably favor that Cryptocurrency in terms of its um you know, sort of uptake, right, Katie. And finally, we need to take a look of look at this very cool animated chart that you sent to us. And I have to say you are the first guests since I've been on this show, which has been like a few months now who sent an animated chart. And I love it. It shows the 12 week Lawrence I it, it, it seems like the, the graphic was designed by someone who spent a lot of time at fish concerts. I think it's yes, perhaps a little trippy, right? But it is a great way to visualize uh sort of normalized relative performance in the Cryptocurrency market. So what we've done there is taken in the top 10 sort of market cap um oriented cryptocurrencies and and taking their ratios versus Bitcoin. So using Bitcoin as the anchor, the anchor being represented by the crosshairs in that graph and anything that's pointing up into the right is outperforming Bitcoin with stronger momentum as a kind of hook over while they're still, you know, outperforming. But doing so with less momentum as the idea. And I know you were just discussing Solana quite a bit. You see that Solana is one that still has a very favorable relative trajectory versus Bitcoin. And this is a 12 week view. So that provides an intermediate term takeaway. We can look at this kind of comparison which is called a relative rotation graph and we can look at it on a daily time frame, weekly, monthly. So you can really um sort of be fractal in how you're analyzing the time frames. And what I think is sometimes interesting from our perspective is when you can see, you know, a shift perhaps from risk on to risk off or some kind of emerging leadership on the coin front. And lastly, light coin is seeing a drop off. Why do you think that is? Oh, I, I don't know why the chart won't tell us that answer, unfortunately. Uh but, but we know that it is and, and my hope is that folks will see that and can infer what's happening there and, and listen, if it's happening before there is any uh you know, sort of obvious negative um news or influence around Bitcoin. Well, perhaps it's a heads up that these rotations are, you know, suggesting that investors are less interested in it for some reason. So it basically deserves more. Research is the way I'd see that Katie, thank you very much for joining us this morning. Of course, have a good day. That was fair strategies founder and managing partner, Katie Stockton.

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