Methodical Trading - Volume 14 - "Bitcoin March & Alts, Alts, & Alts!"
Bitcoin, Ethereum, XRP Woes, Alt Setups, & Stimulus
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Bitcoin inches ever closer to $30,000 as every single dip has been quickly bought back up and continues to march higher.
XRP continues to face some severe downside after multiple exchanges across the globe continue to halt trading due to the recent lawsuit filed by the SEC for the illegal sale of Securities in the U.S.A.
Ethereum had a nice pop up, but has failed to recover and confirm a break of the downtrend against the BTC pairing. Although the ETH/USD pair has moved significantly higher over the past couple weeks, Bitcoin has continued to outperform it on every leg up. The real party will begin when ETH/BTC can begin a strong uptrend…
Alts look absolutely primed as coins such as DOGE, Sushi, etc. begin to make moves higher against the USD and BTC pairings. Is it finally time for “Alt Season?”
Stimulus has finally arrived to bank accounts as many Americans wake up to a nice $600 deposit to start the New Year. Although $600 is not a whole lot, it is still better than $0 I suppose. The recent stimulus package may result in a whole new leg up across the board for both the U.S Stock market and Crypto as well.
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Talking Points
Bitcoin March
Ethereum… Please?
XRP Woes
Alt Setups
Stimulus Arrives… Rally?
Bitcoin March
Bitcoin continues to march higher as Spot prices continue to lead the way. This is remarkably different and surprising given how easily Long positions have been rewarded on this ride up. It would appear that whales and relatively large outflows of BTC from exchanges continue to move into cold wallets. Essentially, this is bullish because the Supply simply cannot keep up with the Demand currently. The amount of Bitcoin being taken off the market and stored away is astounding. Many have referred to this as a “Supply Liquidity Crisis.”
In the Tweet above by Ki Young Ju, he comments on the outflow of large amounts of Bitcoin moving to cold wallets. I highly recommend following Ki Young Ju on Twitter as he is an expert in on-chain analytics and help show the big picture of what is going on behind the scenes with Bitcoin transactions. The above Tweet is one of many Tweets in his thread that are linked to BTC outflows, cold wallets/storage, OTC deals, etc.
Spot exchanges such as Coinbase appear to be leading in price, or at the very least, keeping up to pace with Derivatives. This is huge because the premium when price was attempting to break $20,000 was over $50+ more often than not. Margin traders were utilizing high leverage positions in order to push price further up on exchanges such as Bybit, Bitmex, etc. which would create the large premium. However, despite Bitcoin continuing make fresh all time highs every other day, this premium has been relatively nonexistent in addition to the relatively normal funding rates.
Take a look at the screenshot above for Bitcoin Funding Rates. You can see how their is not a large premium here and that funding rates are essentially set at their default rates as well. In the past, extreme funding rates have been indicative of macro reversal areas whether it is extremely negative or extremely positive. If that same consensus is applied here, then Bitcoin is no where near a top yet.
Taking a look at the Daily chart, this is quite literally a dream of every Investor. As stated before, every single dip continues to be rewarded. If price were to see continuation, look for EMA 8 (Light Blue) taps to continue along with the parabolic trend. Deeper pullbacks may look for the 26/26 EMA’s (Brown/Orange) to enter as well. NO SIGN of a reversal has taken place yet. Every bearish divergence on a majority of indicators results in a very short pullback or gets quickly wiped out in the candles that follow. Shorting makes absolutely zero sense at the moment simply because entering Long positions is just the easier trade to make.
One thing to take note of here is the 1.618 Fib. level that Bitcoin is rapidly approaching. Again, this is not a sign of a reversal, but rather something to take note of if price sees a small rejection, wick, consolidation, etc. right around this region. This is also a good point to take profits on Long positions as well, but absolutely does not mean to begin Shorting Bitcoin unless a macro reversal begins to take place. At the moment, there is no sign of this train stopping anytime soon.
Ethereum… Please?
Unfortunately, Ethereum tells a very different story. While the ETH/USD has benefitted nicely over the past month. The ETH/BTC pair continues to fall short of Bitcoin’s momentum. In recent days, Ethereum has pumped less than Bitcoin when it moves up and drops harder when Bitcoin moves down. Simply put, Bitcoin is still the better play for Short term traders.
Zooming into the 4 hour chart, ETH/USD appears to be consolidating here and holding the 21/26 EMA’s. A breakout above the trendline should provide a nice Long entry with a target of $800+. However, the BTC chart is far more important at the moment and tells a different story.
The Daily chart for ETH/BTC shows a clear flip of the previous Support region into Resistance. Additionally, the 21/26 EMA’s here also provided some confluence for this recent rejection. The current scenario we are looking for is slight dip and close below the local low coupled with a bullish divergence as well. This would be a good sign for price to bounce and possibly lead to a macro reversal. Note that this is simply a speculative scenario that we are watching out for and until price action has actually formed a divergence here, their is not much else to go off of.
Ethereum still has a lot of catching up to do when zooming out to the weekly ETH/BTC chart. The amount of retail FOMO that contributed to this is a large part of why ETH/BTC performed so well in the past. An opportunity should present itself for price to repeat this cycle as it has done so in the past. Until the downtrend is successfully broken with conviction, it would be better to sit out and wait. The upside potential is absolutely worth waiting for and simply requires patience! The opportunity should present itself sometime within the next couple weeks/months to start out 2021.
XRP Woes
XRP continues to face backlash from the SEC and price has clearly resembled that. Several exchanges including Bitstamp, Coinbase, Okcoin, and more continue to make announcements that the are delisting XRP trading from their exchanges for the time being. Some exchanges have even announced a full removal of XRP from their exchange as well. Simply put, this just isn’t bullish and this type of Fundamental news is going to overrule Technical Analysis IN THE LONG RUN. In the short term, T.A can be strong for temporary Support/Resistance levels in events like this, however, if this lawsuit against Ripple is won by the SEC, then XRP is going to suffer a tremendous amount over the next 1-2 years. XRP investors may be forced to let their bags go because they will not have a way to Buy/Sell the crypto itself. If Ripple loses this lawsuit against the SEC, then it will be difficult for any exchange to have good reason to support XRP trading on their platforms.
The Daily chart here shows how price wicked into the previous Support region on the initial announcement made by the SEC. After several days took place and the delisting announcements began to take seed, price has fallen below the Support region and appears to be retesting it as Resistance. Combining this type of fundamental news along with the current technical outlook… XRP looks quite grim here. However, hope still remains for price to move upwards IF it can back above this region. At the moment, we hold a bearish stance here.
Altcoin Setups
Alts are looking relatively primed as well as the DeFi narrative is pushed and a few pop ups across the board begin to take place. Here are a few Alt setups we are keeping an eye on and these are just a few of many that will be published in the next volumes!
RSR/USDT:
Here is a chart NekoZ shared on Twitter. Keeping this one simple as long as we keep bullish momentum moving into 2021. Price has broken above the EQ and in theory, should visit the Range High next. The above diagonal resistance has also been broken and the project itself is fundamentally bullish in our opinion. RSR is a great project worth keeping an eye out on and several great traders/investors we know are holding on to this project from far below.
RSR/BTC:
The BTC pair for RSR also looks clean as well. Price does appear to be approaching a Resistance region around 100 shortly, but price is still 10% below it currently. Building a conservative Long position here and adding upon a break of 100 sats would be the ideal trade plan here with the first Take Profit Target at 129 sats. A break above 129 and RSR will absolutely fly. It would be a dream if Bitcoin were to rise and RSR were to rise in both the USD & BTC pairings as well. Riding both trends would wind up in some serious profit for Long positions.
SUSHI/BTC:
SUSHI is also looking pretty primed as well. Although price is technically tapping the above Resistance region, I have not entered any Short positions. Waiting for a flip of the region into Support would be ideal and SUSHI should be strong performer in 2021 as long as the overall bullish momentum continues. This is a good setup to take if SUSHI breaks the above Resistance.
DOT/BTC:
DOT is looking a bit similar to SUSHI in regards to price action and may also be a strong performer in 2021 as well. Price looks to have broken the downtrend over the past week and is currently holding above Support. A favorable R:R trade setup can be found here on the BTC pairing and looks good for the upside over the coming days/weeks. A break above 41,000 sats and DOT will absolutely fly.
Stimulus Arrives
At long last, Americans are waking up to $600 deposits in their bank account! The arrival of the new stimulus package along with the amount of relief aid it will provide to start 2021 should be bullish if history repeats itself. Last year, the stimulus package passed by the U.S government and governments across the world helped markets recover and hold steady. Going into the Monday open, look for Stocks to rise quite significantly across the board as the package begins to be distributed across America. Although the $2,000 Stimulus checks were rejected… some is better than none!
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