Methodical Trading - Volume 12 - "Liftoff!"
Bitcoin ATH, Ethereum Lagging, Litecoin Brink, Alts, and News
Bulls are on a parade! Bitcoin successfully broke the December 2017 top at $20,000 has continued a rapid ascension into $23,800. As one bull market ended… another one “officially” begins!
Ethereum is still lagging in comparison against the USD pair along with failing to sustain a proper rally against the BTC pair as well. Litecoin looks to be on the cusp of breaking a brutal downtrend against BTC, but no confirmation has taken place yet.
Alts are also having a bit of a difficult time in regards to their BTC pairings as well. However, a couple Alts do stand out and can provide decent setups for the time being. Ethereum leading the market would help provide a splurge of opportunities for Alts as a whole.
First, a word from our Sponsor, Kava. Kava is a fantastic app and wallet built specifically for cross-chain DeFi. They help provide the ability to earn high-yield earnings on your crypto holdings by minting USDX stablecoin. They are backed by a series of major crypto exchanges along with support from community built apps. Binance, Huobi, Okex, etc. are all backers of Kava and certainly worth paying attention to in 2021. DeFi is the narrative that is being pushed across the market right now and Kava is certainly one of the projects that is helping build and push that narrative! You can check out Kava on their Twitter here as well as see their website in their biography.
Talking Points
Bitcoin All Time High
Ethereum Lagging
Litecoin On The Brink
Alts To Pay Attention To
Huge Crypto News
Bitcoin Fresh All Time Highs
Bitcoin quickly blew past previous resistances mentioned in last volume and has made fresh All Time Highs over the past few days. A break of the $20,000 level has led to a series of Short liquidations and higher funding rates across the board. Currently, Bitcoin has made a small pull back after hitting $23,800 and looking for more continuation.
In regards to Support/Resistance, this play is quite obvious. The outlined Gray region was the resistance to break from the December 2017 All Time High up until a few days ago. A pullback into this region would absolutely be a Long trigger. However, seeing as how many are focusing on this region once again and that Bitcoin is still over 13% away from this region, it is possible a pullback to this Gray region may not occur at all. As Bitcoin often does in a bull market, the pullbacks and retracements can be extremely shallow. Regardless, this is one scenario to prepare for in case Bitcoin does make a deeper pull back towards $20,000. The market appears to once again be in a “Long until proven wrong” type of mode.
Take note of the 21/26 EMA’s (Brown & Yellow) here on the 4 hour as well. In strong trending markets, these EMA’s can provide fantastic entries to continue entering Long positions. If Bitcoin can tap these 21/26 EMA’s with no more than a wick, then price should be looking primed for more upside.
Funding rates have increased exponentially once more. Margin traders are quite clearly leaning to the upside, but the premium between Spot and Derivatives is quite miniscule. This is a good sign so far that Bitcoin can look for more upside as long as funding does not get too extreme nor does a major price difference between Spot and Derivatives take place.
As mentioned in Volume 10, the $36,000 Bitcoin call Options have been in the back of my mind for quite some time now. The biggest takeaway here is that a majority of these contracts are placed on January 2021 Options. It is certainly within the realm of possibility to break into the $30,000+ region within the next month and a half. Big money is being put into these Options on Deribit and it is absolutely something to pay attention to moving into 2021.
The beautiful Hash Ribbons Indicator by Charles Edwards has given another fresh Buy signal on the Weekly chart. The Capitulation followed by Buy signals have always provided great entries before an ensuing uptrend. It would appear that this Buy signal will be no different from the last unless Bitcoin tops out and continues into another Bear market cycle. This scenario is extremely unlikely both technically and fundamentally. Buying the breakout of All Time Highs statistically have one of the highest win rates for further continuation. The amount of money pouring into Bitcoin since smart money, billionaires, and institutions have gotten involved is stupendous and will only continue to grow moving forward. The bottom line here is that Bitcoin seems poised to continue moving upwards in 2021 and onwards.
Ethereum Still Lagging… Why?
Ethereum still has over a 100% move to make in order to get back to the previous all time high. Why is this the case? How come Bitcoin has been able to break the previous cycle high without many other majors failing to follow suit?
Retail is the answer. The previous bull run was fueled by mass FOMO and resulted in a series of “dumb money” investors buying crypto currencies they did not fully understand. People were looking for the next “Bitcoin” when in reality, they were purchasing a project/crypto that had a completely different outlook than Bitcoin as a whole. The failure to understand basic concepts such as Total Market Cap is one of many things that helped fuel such a massive bull run in the past. The primary question is this, “Will Ethereum be able to break All Time Highs as well?”
Probably. It is only a matter of time. All the big money so far has been poured into Bitcoin. There will be a new wave of money that will flow into Ethereum and other Majors as well, although it will likely be much less than what has been thrown into Bitcoin so far. Retail FOMO may hit once again as the crypto markets continue to grow and another wave of “dumb money” investors will continue searching for the next “Bitcoin.” This cycle occurred once before back in 2017 and we firmly believe that it will occur at least once more. The seeds are being planted currently for a major Alt Season to occur in 2021, it is simply only a matter of time.
Grayscale also announced that a wave of Ethereum only investors have been approaching their doorstep. This is simply one part of the big picture that is coming into crypto.
Now, let’s move on to the charts. Ethereum was finally able to break the $620 resistance after a series of rejections. Bitcoin has dragged the USD pair upwards, but the ETH/BTC pair has not failed to find a proper footing to sustain a rally.
One could make a case that Ethereum has completed a Support/Resistance flip of the gray region and this is a trigger for Long entries. Anything between $620-$630 could provide another clear Long trigger with stops below the trending 21/26 EMA’s. The only issue here is that Bitcoin will likely outperform Ethereum if ETH/BTC does not pop upwards. A pop up on ETH/USD without ETH/BTC moving upwards simply means Bitcoin is leading the market once again. A short term trader would find it more beneficial to take a BTC/USD position in this case rather than an ETH/USD position.
This 4 hour chart for ETH/BTC shows how ETH is failing to keep pace with BTC. Price has dipped into the Gray region again and needs to hold as Support again if it wants to keep up with the Bitcoin rally. A break above the diagonal would be a good sign that price will likely visit the upper Gray region again.
If Bitcoin can consolidate within a tight range, then it will likely make way for Ethereum and Altcoins to make major moves in the market as a way to play catch up. Against their USD pairings, a majority of them will benefit either way. However, the best play to make would be when Alts are able to rally against both their respective pairings. Using BTC as collateral for the upcoming Alt moves will likely be the most profitable Long positions. This scenario is what will provide an extraordinary amount of high R:R positions. The only issue is ETH/BTC is just not keeping up at the moment. Eventually, this will change. It is only a matter of time and patience!
Litecoin On The Brink
Litecoin has also broken a key resistance against USD and looking for higher as well. However, one of the crucial differences to pay attention to is that LTC/BTC is attempting to break a long term downtrend.
This Daily chart shows how tough the 200 EMA (Green) has provided LTC/BTC as a brick wall for resistance. Price has been rejected four times and is currently testing again for the fifth attempt. A break and hold above the 200 EMA would be an extremely bullish reversal signal and could pave the way for Litecoin to outperform both Ethereum and Bitcoin.
Zooming out to the Weekly chart, price is simply unable to rally against BTC. The 21/26 EMA’s have rejected price from further rallies to keep pace with Bitcoin. At the moment, we are now getting our fifth attempted break at the 200 EMA on the Daily along with yet another test of breaking the downtrend here on the Weekly. If price can confirm this by holding above and begin to get some traction, then Litecoin could easily be a strong performer in 2021 when comparing it to other Majors.
The two resistance also outlined above rest at approximately 5500 and 7100 sats. These are two ideal take profit targets if price can turn the recent small bounce into a full fledged rally.
Alts To Pay Attention To
Some Alts still look great against their BTC pairs. These stand out against every other Alt due to the strength they are showing while Ethereum is struggling against Bitcoin. If Ethereum can lead the market again, then a majority of Alts will also rally against BTC as well and provide a vast amount of opportunities. However, for the time being, only a couple Alts on the radar. Patience is a virtue!
SUSHI/BTC:
$SUSHI is retesting and currently holding the Gray region as a Support/Resistance flip. The lower diagonal is also being tested for a third time as well and price looks good here to head higher over the next week. The logical targets remain here as the two outlined resistances around 1600 and 1850 sats. A Stop Loss below the diagonal and the Gray region would provide a clear invalidation point where the current uptrend has been lost.
AAVE/BTC:
$AAVE still looks relatively strong here as price has tested the Daily 200 MA (Black) again. A Daily close here followed by a few stronger candles to the upside would help make a case for price to revisit the August highs around 7300 sats. The R:R is quite favorable due to price sitting near the 200 MA already. As always, nothing is guaranteed in the markets. Buying the 200 MA whether it is on the Daily, Weekly, or Monthly will never work 100% of the time, but it is most certainly a high win rate percentage to take given the current bullish sentiment surrounding the crypto market.
Huge Crypto News
Coinbase recently made the announcement on Twitter that they have filed their draft registration for a public offering. This is absolutely huge news for Coinbase itself and for the sector as a whole. Generally speaking, this should help bring more attention to the crypto space as a firm like Coinbase hits the U.S Stock Market. You can read more about it in the Tweet below.
Additionally, Messari also made the announcement that they value the company at a whopping $28 billion! Is it all a coincidence that this occurred a couple days after Bitcoin broke the All Time High? Probably not. Coinbase is making a huge move to IPO during this time and are looking to build upon the momentum Bitcoin is currently getting around the world.
🔥 EXCLUSIVE Bybit Bonus
✅ Bybit Bonus $140 - $190
✅ Deposit 0.1BTC or 0.2BTC
✅ Sign up via https://partner.bybit.com/b/nekoz
1️⃣ Please DM @cryptonekoz of your UID and amount deposited.
2️⃣ Bonus will be credited once you notify me and use the link provided.
3️⃣ Find your UID at top right corner by clicking your email, click on Account & Security.
4️⃣ Claim more bonuses through “Reward Hub” on top left side “More”. Claim up to $90 bonuses!
Trade on Bybit, the preferred trading exchange where NekoZ does most of his crypto trading
Please note that this newsletter is NOT Financial Advise. Neither Methodical Trading and/or it’s associates should be considered Financial Advisors. Any and ALL related Market centric material should be considered educational content for entertainment only. Methodical Trading and/or it’s associates are not responsible for any financial endeavors an individual/group chooses to take.