3-Min. Weekly Market Sentiment Wrap-Up — June 26th

Nice little bounce this week. Nothing to get excited about, I suspect, but still good to see. As mentioned in earlier posts, from a technical perspective, everything was VERY oversold -across crypto and traditional assets.

If you follow me on LinkedIn, you’ll see me post daily and typically remind that, with monetary environment is in the grip of changing, there’s less cash around and so I don’t expect a significant bounce. We’ve been used to V-shaped bottoms in the easy-money world, and we’re waking up from that party with a hangover that might only get worse with time.

That being said, from a price perspective, we might be at or close to a bottom. I just think it will take a long time to form, it will test patience, discipline, emotional strength, etc.

It’s also interesting to toy with the idea that some of the riskier assets, which have fallen dramatically -as they should, in a period of repricing based on different yields and central bank policies-; those assets might have bottomed out before the larger companies or indexes.

The theory is simple and maybe simplistic and very erroneous but: when things have fallen 70%, 80% or 90%… it’s tough to go lower — unless they’re to go totally bankrupt/to zero. And so while everything is still being sold and we’re still in a bear trend, there’s not much more to be sold.

An example might be AVAX (Avalanche) a presumably quality crypto project with a good leadership team, lots of activity, compellingly cheap and fast transactions. It dropped 87% from all-time high. The point is this: those that were to sell have sold already, the leveraged longs that got liquidated got ‘rekt’ already. Doesn’t mean the remaining holders can’t sell further but you’d assume that they would’ve given in sooner and would rather hold onto their meager bag now and see rather than sell what little USD-value is left there.

Crypto isn’t looking good, though. BTC is still below the 200-W moving average and it’s never stayed that long below it. The RSI was at the lowest reading and started retracing up. But we could see prices continue down and the indicator just resume downward, while we stay lower. That would be painful.

There’s some hope, though, with most quality altcoins showing a bullish weekly engulfing pattern, a strong week of rising price that retrace close to or over the previous candle.

You can see the BTC Dominance index go down as people are taking more risky bets, with altcoins, and seem to indicate a chunk of investors are willing to be long here.

Another way of looking at this is that the total market cap is holding up better, from a technical pattern, than BTC at this point in time. Not to say the majority of shitcoins aren’t done for. But still, there are other use cases, chains, projects, dApps, etc.

I’m embarrassed to say it I myself held quite a lot of altcoins. My core portfolio is and remains 55% BTC and 25% ETH then a good chunk of DOT and VET. But I also allowed myself to put small tickets on a flurry of altcoins, before this whole bear trend, thinking of myself a bit like a VC. That clearly wasn’t the best move although I still think a flurry of altcoins will pump at the next bull run.

What I’ve done, though, is cycle some altcoins for other altcoins. This is super relative but essentially I looked at the performance from all-time high to now and looked at batches of coins: which coins are down between 80% and 85%? What’s down from 75% to 80%? Etc. And then, within those batches, I looked at coins that I’d rather keep on holding and those I’d rather do away with. The latter where swapped for the formers.

Basically, if two coins are reduced to almost nothing but you still have some conviction in one and none in the other, you might as well re-concentrate into the one you like.

That’s about it, for this week, actually.

The consensus I get from all the whatsapp/telegram chats, slack channels, emails, calls with clients is this: we’re getting a relief rally in an otherwise unchanged bear trend that should keep on going and bring a lot more pain to investors.

When everyone is ultra-bearish, this is where I think there’s value in being tentatively contrarian.

As always, I never advocate for one-time investment decisions but always want to be averaging in (or out) of assets I’m looking to hold for 10–20 years. Everything I buy is seen in the same way I buy an apartment, not to be flipped but held -potentially forever.

Sharing some cool charts because I have them and think they’re relevant.