Nov 13, 2023

Bitcoin (BTC)'s price has rallied over 100% so far in 2023. What's next for the crypto markets?

Video transcript

If you bought Bitcoin at the beginning of the year, you would have doubled your money by now. So what's next for the price of Bitcoin another crypto? Well, let's look at the charts joining us now to discuss this fair lead strategies, founder and managing partner, Katie Stockton, my personal hero. Welcome back, Katie. Thanks so much Lawrence. Good to see you. Good to see you again. So let's take a look at your first chart of Bitcoin because I can't read it. Um because two reasons. Number one, I'm really bad at technical analysis, but number two, it's really small on my, on my screen. So uh support and resistance levels here. What are we looking at with Bitcoin? Well, I think the important takeaway from the chart is that you have a breakout and the breakout for us was above that shaded area, which is called the cloud model. It's a really relevant model for cryptocurrencies and FX broadly speaking and the fact that Bitcoin was able to get through that and it posted a couple of good solid closes, well, not really closes, but it held above that former resistance that essentially completed a basing phase and of course, it reflected improved momentum as well. So intermediate to momentum, as you can see is very much to the upside and sort of within this context. Now the cloud model becomes a gauge of forward looking support, but we have interim support around the 50 day moving average or a 10 week moving average on the chart there not far from 31,000. And then the next resistance assuming we can hold up right up in here. The next resistance on the chart is above 42,000. So we we do have of course, an overbought condition for Bitcoin to contend with. And uh that's more short term in nature. We have some counter trend indications just really on the daily and weekly chart that suggests that we'll see maybe a month or so of consolidation and, and you can see how the chart tends to be sort of like a stair step higher pattern. But I think that will be worked off and give way to more upside. So, so does that hold also for E is it, are we seeing a overbought situation there with a slightly high a breakout if you will on there's the E chat there? They look so similar because oh gee look at that 90.9 correlation coefficient with those guys. Yeah. Yeah, I mean there's definitely a positive correlation Bitcoin has been the relative winner and we expect it to remain so longer term. Of course, there will be times at which that breaks up, but usually you'll see e outperform in a stronger tape for equity. So sort of like a risk on market benefits e more than Bitcoin. Uh But we have seen Bitcoin generally outperform the charts though, as you mentioned. Really do look the same, I mean, we have the same base breakout about that cloud based resistance for ether and we have good follow through. That's what we want to see. We want to see follow through immediately after breakouts that enhances the possibility that it's a real breakout that it's meaningful. And of course, there is an overbought condition there too to contend with. But we think that's sort of a natural by product of what we've seen in terms of the recent upside move. It's a very sharp up move and some consolidation certainly could be welcome there. Now, you mentioned that Bitcoin has outperformed e uh if, if we look at a pri, if we look at the price of Bitcoin in terms of e it's shooting up. I mean, this thing is this thing kind of granted it's not as glorious as it was a couple a few years ago, but it looks like it's trying to crawl its way back to something. Explain this. Yeah. So it's really a base breakout there as well. So we're seeing a lot of base breakouts in the space. So Bitcoin has outperformed ether enough to suggest that it will continue. And in essence, the ratio has broken out above resistance of its own. And it tells us that we can expect that out performance, that Bitcoin is sort of the market leader and we should be respecting that going forward. But again, within that context, you can have certainly cycles short term where you see the alt coins including outperforming uh to take advantage of sort of a higher beta type of move. But generally speaking, we we favor or prefer Bitcoin in part because of that base breakout. And Katie lastly, you sent us your latest relative rotation graph, albeit not animated. A little bit disappointed this morning. This is not when it's animated. I know I feel like, yeah, it's like a 19 sixties acid trip. Whenever it's animated. When it's animated, you can really see the cyclicality to the Cryptocurrency market just like their cyclicality in other markets, right? And so that, that's the neat part about the animation, but you can at least see the trajectories. And generally speaking in that relative rotation graph, when cryptocurrencies are pointing up and to the right, that's when they're outperforming in general. And doing so with positive momentum against Bitcoin and you'll see that chain link and Solana, Solana, you just had a guest on uh those have been pretty stalwart market leaders versus Bitcoin, whereas it not so much, right? So we look for these kind of rotational moves to take advantage of from more of a bottom up perspective. All right, Katie, thanks so much for joining the show. Always a pleasure having you on. Of course, that was Fair lead strategy founder and managing partner, Katie Stockton. You can check out more of Katie's research at Fair leads strategies dot com.

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