Rejoice cryptocurrency bulls and traders! Many of my charts are indicating a new uptrend in the works. Things look positively bullish! So much so that I myself have gone long certain cryptos for a trade! For you hodlers, keep on adding as these prices provide a good dip opportunity. Whether you are a hodler or just a crypto trader, this Market Moment will have something for you!
I understand there is a lot of talk about central bank digital currencies (CBDC), government regulations, and even the Russians using Bitcoin to bypass sanctions. Many analysts poo poo the last topic because of the lack of privacy. It would be easy for the government to track Bitcoin movements. The first two topics are serious fundamental issues for me. In the long term, I don’t know how private cryptos will react to a CBDC. Central banks do want to own the monopoly of printing and creating money, so I expect the battle to be tough. You can read my many other crypto articles on Equity Guru for more information.
BUT we have big news. Major institutions are coming in to trade cryptos. BULLISH. Yesterday, the world’s largest hedge fund, Bridgewater Associates, is set to invest in Bitcoin. More funds will add Bitcoin to their investment portfolios.
Readers know that I trade the charts that I see, not the charts that I wish/want to see. What is apparent is this: cryptocurrencies are acting like RISK ON assets. Meaning money flows to cryptos when things are all hunky dory (do people still say this? I hope so). When there is no fear, when there is no money running into the fear trade ie: safety of bonds, sometimes gold, and the US dollar, money will run into more riskier things such as stocks…and cryptocurrencies.
Now I know this is a crazy thing to say given the geopolitical uncertainties, inflation, and the Fed being very hawkish. The stock markets remain unfazed. Market loves it. This is just my opinion, but I think markets are beginning to price in LESS rate hikes than how many the Fed says they will implement. Yesterday, I wrote a piece on the flattening to inverting yield curve. We are seeing bumps on the yield curve, but the 2 year yield and the 10 still is key for forecasting a recession. The big question is how many rate hikes the Fed can pull off before cutting due to a recession. I’m thinking markets are pricing in more cheap money.
This is good news for stocks and cryptos. Money will continue to chase yield which means money will flow to riskier assets. That yield is important when it comes to beating rising inflation. Some of you may hate everything to do with cryptos. That’s fine. I am not trying to convince you to hodl (but I suggest having some rather than none). But if you want to make some $$$ for a trade, the cryptos are looking bullish. Let’s break down some of the charts, and you traders can pick what suits your style.
Let’s start with the big daddy Bitcoin. Oh boy, we have something to work with here. I like the downtrend with multiple swings, and now prices are beginning to base between $34,000 and $45,000. A nice setup especially with Bridgewater getting involved.
There are two ways to play this. First, one can play the downtrend line breakout. I have drawn it, and we would wait for a daily candle close above it. As of now, we do not have it.
The second way is the safer way. Wait for the breakout above the resistance at $45,000. That is the trigger to begin a new uptrend. If we do not break above these two zones, Bitcoin could just continue to range. My preferred strategy is to enter a small position on the trendline break, and then add my full allocation on the resistance breakout. Then I ride the uptrend for multiple higher low swings.
Ethereum is a good case study. Unlike Bitcoin, Ethereum actually got the trendline breakout. Really nothing has happened ever since the breakout. Although, we can say the pullback and retest has been confirmed. $3000 is a pretty significant price zone that we are about to take out. That likely leads to more upside to the $3250 zone.
Same strategy: take an initial entry here, with stop losses nestled below $2810, and then ride. Add more on the resistance breakout.
How about a few crypto charts that have broken out?
Bitcoin Cash is the first which comes to mind. What a breakout confirmation. We have taken out the resistance, and a range pattern has been broken. We had a downtrend, and a range…the uptrend comes next. Can we retrace? Yes. I would enter on a breakout but have my stop loss nestled below $325. If the next daily candle is a fat red candle engulfing the breakout candle, it would be a sign to get out as this would likely be a false breakout/fake out.
Maybe one of my favorite setups is Litecoin. I have been scoping this crypto like a hawk. I loved the support bounce at $100. A major psychological zone. Buyers kept jumping in to buy any dips below. Bulls did not allow for a close below $100.
We created a nice basing pattern with a breakout over the weekend above $112. We did pullback slightly to retest the breakout on March 20th 2022. Buyers jumped in. I like what I am seeing. I remain bullish above $112, which is now new support.
I can see a move up to $130, and then a major resistance zone comes in around $140.
I haven’t forgotten about you Doge fans/bulls! Yes, we have something to work with here! Very similar to Ethereum where we have broken above a trendline. But a major resistance zone at $0.13500 still exists. I would love to see a move up to there, and then a pullback before breaking out.
If this happens, we would have our quintessential reversal pattern in the form of an inverse head and shoulder pattern. Maybe Elon Musk can help us out with a tweet to cause the breakout? It is more likely that the sector strength will get us over the resistance. I can then see a nice pop up to $0.1650. Longer term target? $0.42069. If you know, you know.
To summarize, we have some very bullish setups on cryptos. Some, like Litecoin and Bitcoin Cash, have already triggered. Bridgewater Associates jumping into Bitcoin is a big deal and could be the catalyst to trigger a new uptrend in the crypto space. For the haters, approach this as an asset class. Digital assets. If the largest hedge fund is acquiring some, it is probably prudent to hold some. More funds will follow, and this would be bullish for the crypto space.
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