TA on the BTC Chart as Offset to the Alts
Subscribers to my alts page may find themselves alarmed at times on the posting of what appears to be a very bearish chart on the main page of Twitter. This fortnight’s article will look to address that alarm by the revision of the over-all alt buying strategy, and how that strategy itself relates to the BTC chart, which we all understand as the ultimate driver of Crypto prices. I’ll review the following points in the following order:
1] The BTC chart as a template or gauge of risk [not just a buttress to bull sentiment]
2] Alt trades as primarily a counter trade to long BTC
3] Layering in, where one treats time/ the trend as their friend.
1] The BTC Chart
One glance of this chart, taken in isolation from other strategic considerations, and taken literally as ‘clairvoyance’, and a follower might be deeply disturbed that the BTC market is about to crash taking all Crypto down with it. But this would be a misunderstanding of the purpose that this chart serves. In my more critical TA, the chart does not function in pretending to tell the future [a naïve reading of TA], but rather illustrates risk. The chart functions to show that price is at risk of a severe correction, in the shorter term, while also allowing that there is no necessity for this to happen on the basis of the longer term LGC model [within which volatile price moves]. There is at play here an acknowledge of the limitations of TA [realism] - we can provide scenarios, but can not say definitively what will happen. And here is where this uncertainty can be turned to your advantage through the use of a strategy. For strategic reasons, I can choose to read the BTC chart more conservatively/ ‘bearishly’ while in turn read the alt charts more liberally/ ‘bullishly’, and to do so as a hedge. The logic of the hedge being to stay long BTC [where it hardly matters if BTC corrects as have built a long position at lower prices], and to trade the volatility of alts as a hedge to that BTC long.
Here is the BTC chart with the conservative TA reading above removed to leave just the LGC model that remains open to various outcomes. This is really the chart you should have in mind given the wider strategy that accommodates risk to both sides.
- Price currently midway in the channel
- Price becoming increasingly irregular as compared to previous ‘cycles’
- Technically, and within the LGC model, price could go either way
2] Alt Trades a Counter Trade
A main maxim of the over-all strategy is to use the alts as a hedging counter trade to my long/ investment in BTC. In a sense, you could see this position as one of maximalism light [though I prefer the term BTC centrist to avoid the ideological excess that can come with maximalism]. The main idea is the extra volatility of alts are to be traded against USD, with profits taken in USD [and then into real assets]. In a sense, this is to have your cake and eat it too, for one can remain long Crypto/ BTC while also taking profits right off the table altogether [as opposed to just trading alt/ BTC]. This strategy allows for the possibility of a complete meltdown in the whole market. It looks the abyss in the face, considers the worst case scenario, and provides something of a pecuniary insurance come what may. Notice here, as in the previous point above, the cognitive dissonance involved. In practical/ strategic concerns, all cognitive assonance is to be eschewed, for it is only achieved theoretically by eliminating/ banishing the reality of uncertainty from the theatre of one’s own cognition. Allowing the free play of cognitive dissonance [where various outcomes are entertained given that we do not know the future] preserves you from ideological closure. Of course, we desire this certainty and this closure, but it is not rational given the subject matter before us which always remains obscure. And lastly to the practicality of the alt trades as they relate to the BTC chart.
3] Layering in, Time Being your Friend, a Soliloquy
I’ve established a core in BTC, [hopefully] bought at lower prices. I’m not certain whether BTC will go to the moon or crash to the center of the earth… for whatever reason. And yet I’m confident that price will follow a reasonable trajectory up based on the long term trend/ model of the LGC. I’ve not bet the house, let alone all the liquid funds at my disposal, as I’ve to hedge against uncertainty [being the reality principle]. And yet how am I to take profits and realize wealth in the real world through the ownership of real assets [I reject the transvaluation of values involved with the ‘metaverse here]? The solution? I can use other funds at my disposal and trade the extra volatility of alt coins, the rationale being to increase the USD value of the trading account… or at least to keep it on an even keel if the market is to plummet. These alt trades in turn can be shorter-term more risky swing trades, and also longer-term less risky position trades…. all of course with the aim to increase the USD fund. The levels of risk undertaken can be layered both conceptually [as per the following visual]..
and temporally; remember, time is your friend and layering in can also apply to your alt trades themselves, where you layer in over time in order to spread risk. Of course, your first buys are going to be the riskiest to the downside, for in order to cover risk to the upside, you need to first gain some exposure. Accordingly, there is a fair chance they will go underwater, but given confidence in the long term trend of the LGC, considered the driver of the market, those underwater positions should recover, and given the policy of layering in, one can further buy at lower prices. The logic of all of this, insofar as the LGC continues to play out, is that your final buys should be bought later as the market is moving back up.
To sum this up and to bring it full circle, the BTC chart again, which naturally is going to give alarm, on TA risk to the downside, if taken too…. seriously, or should I say certainly. Keep in mind that I’m in two minds [dissonant] about the BTC chart with both a major and minor view on the shorter-term TA [as opposed to the LGC model]. Yes, my major view is for a further decent correction, but I’m also mindful that BTC never fails to surprise [hence the minor view]. How does this correlate to my alt trades?
- Alt account - currently, half cash, half alts
- Many alt trades further built from swing trading volatility
- Some trades bought recently underwater
- Position trades bought earlier still performing well even after a solid correction
- Profits taken on some trades into real assets/ property
- Continuing to layer in with bids set at various lower levels
- Looking to sell a few on a spike and stay long most for a possible manic market
- Looking to average out of near all positions in a year or two on next bull market
There are many moving parts here that are a million miles removed from a simple black and white approach to the market. There is complexity, but it is not the stupefying mathematical formulaic complexity of a theory [usually with a claim to certainty]. Rather, the complexity involved here is a practical one, where multiple approaches are taken in order to cover the fundamental fact of uncertainty. In my opinion, a black and white approach [hyper bull or bear] is going to see you a nervous wreck, jumping in and out of the market, anxiety-ridden and bordering on vertigo. Better to stick to a strategy, cover your bases, have zero anxiety [always the litmus test] and have confidence in the longer term… hedges within hedges whilst remaining hedged against it altogether. As for the more conservative and shorter-term TA on the BTC chart [always fallible] consider it offsetting the more optimistic alt charts [always primarily a play on volatility], and not as the over-all driver of your outlook on the Crypto market in general. It’s this tension and balance between the two, bear and bull, optimism and pessimism, that functions as your ‘high-wire balancing act’ balancing as it does over the abyss of uncertainty.
Until next time,
Stay [relatively] safe out there,
Dave the Wave.