HargaRumah: Don’t Feed the Macro Tourists

Sabtu, 10 Agustus 2024

Don’t Feed the Macro Tourists

*|MC:SUBJECT|*

Good morning tastycrypto,

By now everyone is an expert in the Yen carry trade, so we're not going to waste your time. There are more interesting discussions to be had.

In this edition of the tastycrypto email we show you how to setup a crypto pairs trade with the ETH/BTC ratio now at three-year lows, we dig into the data and put context around bitcoin's big move on Monday, and amid a week filled with macro distractions, we shine a light on some positive crypto headlines to keep the vibes high.

First, our updated performance dashboard…

Sometimes it happens fast

There are numerous culprits we can point to for this week's volatility, but regardless of the catalyst, these moves are fairly ordinary. At one point BTC was down -20% on the week, with ETH down over 30%, though the worst of it hit Monday morning, and prices recovered modestly from there.

Considering things can get out of hand rather quickly, how often do moves like this actually happen?

Going back to 2014, bitcoin has experienced a weekly move of 20% or more, 220 times. This volatility is quite common, and here's the thing, most of the time it's to the upside, which we highlight on the tastycrpyto show.

These are the sorts of moves we should expect from bitcoin, it just hasn't traded like this recently.

Focusing on the 69 times it's been smashed lower like this, there's often some follow through to watch out for too. For example, the 2020/COVID period saw multiple weekly downside moves of 40%. - Sometimes it happens fast.

If the worst is over, what happens next?

Looking at times when BTC is in 20% weekly smackdown territory, 1-month later it has often bounced. Not always, but on average it's up 7.75% with a median return of almost 4%. It's higher more often than not, though there's a lot of pain when it's not. The max move has been BTC -64% lower, one month later.

Buy Crypto

Let's be positive

Are Japanese interest rate policy and a slowing US economy going to crash BTC into down -50% territory? I don't think so.

While everyone has been distracted with macro, there's not much attention on the positive developments this week.

Jump done dumping?

Going into the week, there was heavy sell pressure from Jump Trading wallets, according to wallet movements and analysis by Arkham Intel.

That selling appears to be over now, but August has also seen sizable distributions to creditors from the Genesis and Mt. Gox bankruptcies, which could be an overhang near-term if these creditors dump their coins.

On the other hand, while Bitcoin ETFs experienced outflows, both Glen (our latest guest on tastycrypto) and institutional investors were in BTFD mode, as ETH ETFs took in over $200 million during the carnage.

Finally, DeFi activity continues to show signs of increased usage and fundamental growth, especially with the recent explosion in trading volumes, benefiting decentralized exchanges like Uniswap.

Decentralized Exchange Monthly Active Users

Decentralized Exchange Fees (Revenue)

Download tastycrypto

Crypto Pairs Trading - Trade Idea

As we end the week, bitcoin's market cap dominance is at a multi-year high of 57% and bitcoin is outperforming just about any alt coin you line it up against.

But what if we told you at the start of the year... In 2024 we'll see an ETH ETF approval and a serious shift away from prior US anti-crypto policy. Would you have bet the ETH/BTC ratio would be trading near a three year low?

Well, here we are.

ETH/BTC is down about 30% on the year, trading at a level not seen since April, 2021. If like us, you believe ETH is due to play catchup, a long ETH, short BTC trade can be structured using futures and will benefit if ETH gets off the mat and closes the performance gap.

To learn more about this trade setup, position sizing, and how to adjust for volatility. Watch this week's episode of the tastycrypto show where we provide step-by-step instructions and explain crypto pairs trading.

Watch below.

tastycrypto on Youtube

Stay Locked In

This week saw a test of the bottom of the 50k-70k range we highlighted last week, which is holding for now. Macro is still driving price action short-term and cross-asset correlations are strengthening. It's unlikely crypto markets are immune to geo-political headline risk and fears of economic slowdown, but often times this short-term volatility presents opportunity. Don't get too distracted.