We couldn't help but notice the relentless bid in Bitcoin $BTC yesterday morning while equities had a flat start. Leading up to the FOMC announcement, Bitcoin front-ran the rally in US equities.
The two have been heavily correlated in recent months; evaluating the co-movement between the two is proving to be an insightful data point for stock and crypto investors alike.
But, in yesterday's note, we entertained the possibility of near-term upside following the pricing in of the upcoming Federal Open Market Committee meeting and the US dollar hitting resistance.
Given the favorable risk-versus-reward at current levels, we like taking a tactical long, looking to play the trading range Bitcoin finds itself in.
For this trade, we're solely leaning on Bitcoin to execute, as most alts are messy and in the process of breaking down. Those are both characteristics we want to avoid when searching for new longs.
Further, Bitcoin has outpaced its counterparts recently, as seen through Bitcoin dominance.
Price action has been chopping in the high 30,000s, and there's little to update.
We're closely monitoring the tight trading correlations to traditional finance. Despite strong spot flows, this remains the most pressing driver of price action to date.
With few actionable opportunities, we're sitting back and weighing the probabilities of a number of scenarios.
Not everyone has the luxury of slinging cryptocurrencies in the world of DeFi protocols, exchanges, and wallets.
Others have to lean on traditional investment vehicles to gain crypto exposure.
There's a ton of potential candidates in the stock market to lean on to express a given crypto thesis, but it's all about choosing the right names.
We've been pointing out the dispersion of performance between crypto equities and the underlying cryptocurrencies themselves; the stocks have underperformed, while the coins have outperformed.
But it isn't that simple -- there's some level of nuance involved.
As we’ve said before, one of the big characteristics that often differentiates good traders from mediocre ones is the ability to sit out when necessary.
Correlations to weak equities remain highly elevated. We’d like for those to dislocate before getting overly optimistic in the near term.
When it comes time to put money back on the table again, it’ll be obvious. Otherwise, we’ll continue being patient.
In a tape as messy is this, it pays to be patient and only focus on A+ setups.
The names emerging from bases on solid volume are the ones you want to lean on. By slinging names in messy ranges, you'd only be asking to get whipsawed.
We can't help but notice the relative strength coming out from ApeCoin $APE and STEPN $GMT, which we mentioned a few days back.
Both have real nice shapes emerging from their post-ICO bases:
Looking tactically, they both offer us some decent risk-versus-reward for a speculative bet.