My Strategic Approach To The Current Crypto Market

Welcome To The Wild West

There is not a single person in Crypto who has not been affected by the LUNA fiasco. This is a typical example of how quickly and “easily” things can turn in this market. I have quite strong opinions in regard to LUNA and Do Kwon but won’t elaborate any further. I will however mention that Luna was a project that I avoided throughout the hype of 2021 and 2022. For whatever reason, I just had a “check” not to invest in it. I respected it and chose to go with my “gut”. Hindsight has obviously exposed the flaws, to some extent, responsible for this disaster. As I am writing, Bitcoin is trading above $30K, which is a comfort. However, this might be temporal, as you don’t simply “bounce back” overnight from a situation like this, especially in this current economic climate. The charts also seem to be echoing that there is a tremendous struggle ahead. Bitcoin once again is faced with a fresh challenge.

Let’s Pull Up The Charts

So, if we zoom out and take a look at the weekly chart, we can begin to see how this could potentially play out. Bitcoin traded predominantly sideways, which I predicted when it first began trading the range. Those reading my posts will be familiar with my personalized term, “Bitcoin’s Box”. This can be seen in the purple channel below. Losing the support and breaking down is where things began to get shaky. However, the real blow came when we broke the 29K support level. As you can see, Bitcoin had respected this level extremely well over an extended time frame.

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The falling wedge plotted out in blue, reveals a very scary scenario for Bitcoin. I will say that in these particular pattern formations the breakout often occurs earlier and does not necessarily imply that BTC has to hit the $12K level. Bouncing off of the support of this wedge is at least a good sign but I would not get excited just yet. Bitcoin could go as high as $38K before being rejected at the top of the wedge, which could bring us down a lot lower than $25K. However, a breakout from this wedge could also happen but is the less likely scenario due to obvious reasons.

That breakout would also need to be confirmed because if it’s a “fakeout” then we fall back into the wedge and are subject to the “rules” within, which forces bearish price action until such a time as the resistance is broken and definitively confirmed.

Isn’t This Good For Traders?

Exactly, which makes me extremely happy about a recent decision to convert all my XTM to USD in order to fund trading accounts. Obviously, my trades are underwater at the moment, which brings me to my next point of how I am choosing to play this. A few days ago, just prior to the Luna carnage, I sold some ETH at a relatively decent price and am holding it in fiat. This is an emergency allocation that I am hanging onto as Dry Powder. In the event that the market really crashes, I want to swoop in. I still hold my stablecoins, which have been of great assistance during this chaos. As mentioned, these simply do not get sold.

Minor Adjustments

So, I have chosen to utilize smaller passive income models to further fund my trading accounts. I am aiming to get these into the green by slowly adding capital and pulling my average down. I trade leverage very cautiously with a rather unique strategy that gives me an advantage against the “liquidation dynamic”. Ultimately, I want to begin increasing my trading activity and am fine with waiting out my long-term portfolio appreciation.

Due to recent adjustments and holding a very large percentage in stablecoins, my portfolio continues to only be down 3% in BTC terms. The dollar value is more but ultimately, I am most concerned that I maintain my “peg” to BTC, as dollar fluctuations are temporal. As always, this is simply my approach and interpretation and not financial advice. All the Best as you consider your own options and path forward.

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