Crypto Markets: Up or Down?

Where Do We Go From Here?

With BTC set to test the significant 50k resistance level once again this week, indicators unanimously seem to point to the bulls taking control of the market once again.

With funding fees reset on CFD exchanges, bulls are now able to maintain their Long positions with minimal fees, creating a lot of upwards pressure. Also, it appears that we have, for now at least, avoided entering the dreaded zone on NUPL indicating a stage of Euphoria, which has historically resulted in the triggering of a crash.

What is more, we hear fresh news of institutional investment daily. The ultimate question is - is this enough?

Personally, I feel not. With vaccine roll-outs gathering pace and nations such as those in the United Kingdom penning June/July as a time to reopen economies, I can only see cash becoming king once more and that means a massive liquidity crisis for Alts especially.

People often ask me whether I feel crypto is in a 'bubble'. To this, I must confirm that I believe this to be the case. With global events being as they are, there is no doubt in my mind that retail investment in crypto has been catalysed by the restrictions placed on everyday life by the global covid-19 situation.

The moment that people are able to freely enjoy dining out, nightclubs, music festivals, travel and tourism, health and leisure etc. I foresee a huge rebound for the DXY (for those that do not know the DXY is the USD's current performance charted against itself i.e. its historical performance).

Personally, whilst I welcome with open arms the institutional investment that is flooding to the market, I do not currently see this at a level capable of preventing us slipping into a bear market and potentially a full-blown 'Crypto Winter' come Summer 2021.

Analysis of institutional pools show a radical decline in the purchasing activity of Grayscale throughout February 2021 and Michael Saylor has already publicised Micro Strategy's latest investment. 

Whale Alert analysis has shown some very significant, previously dormant addresses moving BTC for the first time in a long time, suggesting that miners, OG HODLers and extremely long-term bullish individuals/groups are also recognising that we may currently be lurking somewhere around a market top.

This is something that can also be seen by the sheer volume of new addresses, suggesting that some of this OG HODLed BTC is trickling down through the ecosystem, with the numbers of new addresses increasing in correlation with the decrease in the numbers of addresses holding 1000, 100 and 10 BTC. It is possible this is simply large bag-holders splitting their investments over several addresses for safety, but in my opinion the data is far too coordinated for such a conclusion to be plausibly causative.

Therefore, in terms of my preparation for the next several months, my strategy is to slowly DCA out of almost all of my positions - especially Alts - by the end of May 2021 into a stable coin yield at 8-15% APY variable. I intend to sit on the sidelines during the transition period of re-opening economies, and wait for market confirmation before doing anything else.

If it is the case that I am correct and we do see a major correction or a bearish shift in the market, this may in turn prompt institutions to increase their investments on the downturn, which could in turn rescue the market from a full-blown 'Crypto Winter' and bring us back into a bullish market cycle.

However, at the moment there is so much uncertainty regarding what the short-to-medium future holds, I feel it is necessary to ensure my strategy is prudent, risk-averse and focused on capital protection over short-term profits.

It may be the case that I am incorrect, and if so, for sure I will stand to miss out on some crazy gains in what would inevitably be a rather insane 'Alt Season'.

Alas, as someone who has been on the wrong side of far too many markets in the past, at this juncture I am more concerned with ensuring I have my capital protected and investment capital ready to invest when the opportunity arises, rather than chasing those attractively juicy gains.

What are your thoughts?

Are you like me, fearful that 'Crypto Winter Is Coming?' or are you extremely bullish for the remainder of 2021? Please let me know in the comments!

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A nomadic crypto hobo who meanders the planet seeking new adventure opportunities and spreading blockchain education en route.

Tales From The Cryptosphere
Tales From The Cryptosphere

This blog follows my personal journey through the cryptosphere, providing a reflection on the recent events, ground-breaking news and my perspectives and perceptions on how I see things developing in the short-to-medium term. Expect a summary view of the latest news, crypto reviews, on-and-off chain analysis, technical analysis and an acute focus on global developments.

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