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Crypto Strategy – Robert Sluymer of Fundstrat Global Advisors

Crypto Strategy - Robert Sluymer of Fundstrat Global Advisors
  • Q3 2016 consolidation analog failed this week – In our 6/26 note (here) we raised the question of whether BTC was at a pullback point to where it was on 6/24/2016. That analogy tracked very well through 2019 with BTC consolidating above its uptrend defined by its 20-week sma, but as of yesterday, our thesis was clearly incorrect. 

  • Lower highs, and as of this week, lower lows now defines a downtrend for BTC – In last week’s note (here) we raised the question of “what would turn our view to be more cautious” and stated “while there are spike lows near 9K, we view 9.3K to be THE important support level for BTC. Why? The summer 2019 consolidation is defined by a series of lower highs with marginally higher lows in place. A break below the August low at 9.3K would create the first lower low for BTC following the June peak, and by definition, confirm a downtrend is in place”. Now, with BTC below 9K at its next support band between 7500-8000 near its 200-dma the technical question is whether this week’s collapse was the last stages of the correction in what we refer to in equities as an 11th hour sell-off. Slide 4
  • For now, unfortunately, BTC is in the penalty box and needs to mark time to repair the recent technical damage. As long-term BTC optimists we’d like to build a case that BTC sell-off was merely an 11th hour breakdown but as technical realists the data simply doesn’t support that argument, at least not  yet. With daily RSI now deeply oversold, a trading bounce is likely to develop but a basing/trading range will need to develop over the coming weeks/months to signal a more durable rebound. At a minimum, to signal short-term trend improvement, BTC will need to rally back above its 20-week (9784) and 15-dma (10307). With such high hurdles (+20%) to overcome, BTC is likely range bound at best for the coming weeks. For reference, next important support below 7500 is near 5662 at BTC 76% retracement level. 


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