Broadly speaking, risk assets have caught a well-received bid over the last few weeks. This recent period has proven to be an incredibly risk-on tape.

When it comes to crypto, the big narrative driving capital markets seems to be the upcoming Ethereum $ETH merge. This update will see the network move away from proof-of-work (PoW) to a proof-of-stake (PoS) framework.

Of course, as technicians, we naturally follow money flow as opposed to getting stuck in the weeds of narratives. It's quite clear to see traders are bidding Ethereum leading into the merge in what looks like a "buy the rumor, sells the news" event.

This is the video recording of our August 12, 2022, All Star Charts Crypto Weekly Strategy Session.

From the Desk of Louis Sykes @haumicharts

In recent weeks, we've found ourselves revisiting the following question: Is Ethereum outperforming Bitcoin a bullish characteristic for the asset class?

We addressed this question a year ago. The conclusion we reached back then was that, while ETH outperforming BTC is not a necessary condition for a bull market, it’s always an encouraging sign when we see it.

In light of the recent disparity in performance between ETH and BTC, we thought we'd re-examine this topic.

Let's get to it.

The cryptocurrency market has certainly seen a nice relief bounce over the last few weeks; the average coin is up a notable 60% off its lows.

With this short-term regime in bull territory, let's evaluate how we're approaching this tape from a tactical perspective.

From the Desk of Louis Sykes @haumicharts

Last week, we briefly touched upon bringing the market breadth to cryptocurrencies and the considerations we were taking into account.

You can click here to read that post in full.

After some work and many days of cleaning data, we're happy to introduce some great new metrics we're working up to supplement our cryptocurrency research.

Before we dive in, we want to set a brief framework.

It’s important we lay down a foundation before analyzing this data; there’s little point dedicating the man hours to the research if we don’t know why and how to apply it.

There's no denying that we've been erring on the cautious side, even in the face of this recent strength.

While we have seen an expansion in new highs, the majority of coins find themselves right below overhead supply. The same can be said for the major averages, which have bounced nicely into tactical levels of resistance.

The primary trend is still down, and repairs after bear markets like these often take months and quarters, not weeks.

Having said that, we can never be dogmatic in our approach. If we don't account for new data as it comes in, we're no longer doing our job as technical analysts.

We often like to make Monday's letter a little more lengthy and detailed, but this week we're taking the opposite approach.

That is, we're outlining four simple developments that'd make us flip more on the bullish side.

Let's dive in.

This is the video recording of our July 29, 2022, All Star Charts Crypto Weekly Strategy Session.

There's been no getting away from it.

These last few months have been rather lackluster if you're a crypto trader.

But that's perfectly fine.

The market should never be your dopamine fix. The ability to sit on the sidelines for long periods of time -- as difficult as it may be -- is often the differentiating factor separating mediocre traders from good ones.

Even in the face of this recent strength, there's still not a whole lot to discuss.

Cryptocurrencies have completed multi-year distribution patterns and are now retesting their breakdown levels from the underside.

There are most definitely mean-reversion trade opportunities out there. But they're low-conviction, counter-trend in nature, and messy.

Meanwhile, Ethereum and many other names have bounced nicely back into supply zones following their respective rallies.

If this tape has reflected anything, it's to be very aggressive in taking any profits. This is particularly true considering the countless whipsaws we've seen over the recent months.

Bitcoin price action has been a slow grind higher over the last month, while Ethereum and other altcoins have posted notable gains.

This very much remains an environment where crypto capital markets are moving in lockstep with legacy markets.

The relationship between long-duration assets (growth stocks) and the US dollar remains integral to our macro crypto thesis.

We continue to maintain the view that the US dollar is the single biggest driver of risk assets and, by extension, cryptocurrencies.

Further USD weakness would be a tailwind, while a stronger dollar would place pressure on crypto.

This is the video recording of our July 29, 2022, All Star Charts Crypto Weekly Strategy Session.

From the desk of Louis Sykes @haumicharts

And, just like that, any residual strength in crypto has once again dwindled.

Guys, we like to keep it honest and real with you.

At a certain point, we feel obnoxious about being so repetitive. But we're not going to tell you anything other than what's happening -- it's just our job as technicians to follow the money flow.

In yesterday's note, we outlined how we were taking a small, low-conviction long if Bitcoin $BTC was above 22,000. Just one day after we put the position on, Bitcoin's fallen back into its range:

From the desk of Louis Sykes @haumicharts

Last week, we advocated again for a patient approach.

We remain cautious about buying too heavily into short-term breakouts. This is a tape where whipsaws and fake-outs can be anticipated.

Many names find themselves firmly below overhead supply, and we expect any short-term strength to be aggressively sold into.

In the depths of this most recent drawdown, market participants were approaching their maximum pain thresholds. It makes sense that the market finds supply from holders looking to break even on their losses.

There are two ways to approach this tape from a trading perspective: