Crypto Market Update November 1st, 2021 Edition #41
“Strength in numbers”
In the last newsletter, we revisited some of our longer term models, and FA drivers behind the incredible crypto run we’ve had. To most of us, it’s very clear that there is nothing “transitory” about this asset price inflation, and despite a few rate shocks, no sign that CB’s will be turning off the printing press anytime soon. I usually try and leave you folks with an analogy that fits the market climate we are in. “Strength in Numbers” seemed like a good way to describe how I am feeling. Portfolios are sitting at all time highs, hope is abound, and users are flocking to the crypto space in droves. After all, crypto is a userbase asset. Without the users, we are nothing.
Is crypto an inflation hedge? Certainly looks like it.
I strongly believe we have some of the best technical analysis there is in crypto. That said, I’ve re-iterated dozens of times that this is only a small part of the equation. I am a profit maximalist, and as an investor, I am “in it for the money”. The process of investing money, and taking out more than you put in, has a number of moving parts. That’s why I try and opine on those other “parts”. At this stage in the market, we need to be incredibly focused, agile, and disciplined to make sure we squeeze as much juice out of the fruit as we can. I will be weaving some of those lessons throughout this month’s report.
In our last report, we emphasized our $3 Trillion dollar total cap target.
We can see below, we’ve pressed up over $700 Billion in the past 30 days, and are “only” $400B away from our final target. It doesn’t mean $3T will be “the top”, but it’s a MAJOR area we’ve been looking at for months, and I can tell you I’ll be selling a considerable amount when we hit it.
In the last report we also emphasized Bitcoin was going to outperform. It led through to the middle of October, putting an impressive rally from the low 40’s all the way to a new ATH at 67k. It blew away our 63k targets, and frankly looks ready to go higher. 70k/78k/84k would be up next. We have NO RESISTANCE up here.
On October 18th, we NAILED the bottom in ETH, and the subsequent transition into ETH dominance. This is typical in the latter stages of the cycle to see ETH begin to outperform. We have not even gotten started on ETH in my opinion. Our target has been 4800~ for a long time, but I believe we can press higher into 5300, and possibly 6k USD.
While these past several weeks were incredible, these next few demand more focus, more discipline, and more caution. There are very few obvious setups, and we are coming into a NASTY Gann reversal window in early/mid November. I am watching VERY carefully to see if a topping setup manifests within this time window. These date windows are a bit like the weather… often, nothing happens, but sometimes, you get a hurricane. For this to setup properly, we would need to see a euphoric rally resume over the next week to 10 days, and give us some more traditional topping signs on our indicators. We’ve yet to see that, so the BULL rages on.
Discipline and agility are your friend at this stage in the market cycle. You are CHASING if you are buying up here. You should be making a plan on how much you want to sell at xyz levels right now. If we do get that euphoric rally, we should see the “junk” rise to the top. ETH will lead, then money will flood into altcoins, and finish with the worst of the trash – think SHIB, NFTs etc.
If a topping setup appears, the “junk” is what you will want to get rid of. Have bidless NFTs? Have dino coins from 2017? Dump them into euphoria. Do you have a target for your portfolio? Do you have an exit strategy to move into cash? Get one. We may not need this for another month or two, but when you do need it, I guarantee it will be too late and the exchanges will be bogged down. For myself, I have considerable positions in crypto equities, particularly options. I need to be mindful of IV% and the sentiment of buyers as I look to exit those.
Look – I am not trying to get too bearish here, we could blast through 100k BTC, but I doubt it’s going to happen without a nasty correction first. For the next week, we ride with loaded clips, but don’t fall asleep on duty.
TLDR; Still full on BULL, ETH likely to continue to outperform, topping/correction window Nov 10th15th (subject to change).
