Welcome to this week’s analysis on which altcoins are performing well and which ones are not. You can view the list here:
Macro Update
Bitcoin and the crypto market had a fairly large sell-off late on October 10 sending Bitcoin down to low $100,000 and some altcoins fell 50% or more in minutes. Here’s the topics we’ll cover:
- Short Term Outlook
- What the F%!# Just Happened?!
- October Seasonality Edge Update
- Funding Rates Reset
- Long Term Outlook
- US PMI vs. US New Orders
What the F%!# Just Happened?!
This was a rather shocking moment in crypto because of how fast the dump occurred. Crypto is no stranger to flash crashes like this and it’s all part of the market maker game that I’ve covered in a previous newsletter. This time, it wasn’t a normal flush of leverage but what seemed like a rather unusual series of events that seem too coordinated for it to be a coincidence. James from InvestAnswers covers this really well and highly suggest everyone check this out:
As a friendly reminder to everyone if you don’t know this already but this event from Friday should make it clear that although there is a lot of opportunity for growth in crypto, there is still risk. We can mitigate that risk by doing the following:
- Use spot only and don’t set a stop loss in the exchange. If you set a stop loss, you become a target for market makers. If anything, set a mental stop loss or a separate notification from the exchange or through CoinGecko so when your price target hits then you can go take appropriate actions to sell if desired.
- Having leverage makes you even an bigger target and even those who tried to “play it to safe” with low leverage like 2-3x still ended up getting liquidated. Easy thing to do is just avoid leverage and use spot. Crypto is volatile enough to make outsized returns so it’s not necessary to use leverage anyways.
- Keep your coins in cold storage via a hardware wallet or through a regulated exchange like Coinbase, Kraken or Gemini. This may also depend what is available in your country but do your own research and don’t just pick any exchange for convenience sake.
October Seasonality Edge Update
Looking at this again as a reminder that with October 12 behind us, there’s a 90% chance based on history that the bottom is in for October:
Funding Rates Reset
This historic flush resembled the 2022 bear market lows which suggests more upside could be coming.
US PMI vs. US New Orders
I forgot to cover this in last week’s newsletter but here we have the US New Orders with a 1-month lead. This slight pullback is not much of a concern for me as the trend is still suggesting we are higher in 6 to 9 months. I am still expecting Q4 to be bullish overall with possible short term turbulence along the way like the October 10 dump. This is the power of focusing more on the long term to cut through the short term noise.
Bitcoin Update
So I admit I was incorrect about a tight sideways movement near $120,000 to $125,000 because we got this flash crash on October 10. I think we could either go sideways a bit between $112,000 and $120,000 before make new all-time highs.
In the Pro Discord, I shared some charts for Bitcoin options expiry. It suggested a short term pullback was possible to $117,000 for October 10 expiry:
Or in the case of October 31 expiry, another possible pullback was to $116,000:
What I was not expecting this early in the quarter that the end of quarter December 26 expiry max pain level of $110,000 would hit and here we are:
Given the high influence leverage has on the short term, I will continue to monitor these.
Ethereum Update
Despite this major dump from October 10, Ethereum is still within this bull flag pattern and I’m expecting higher:
I also shared these in the Pro Discord that the October 10 ETH options expiry was showing max pain level of $4,400:
October 31 ETH option expiry was showing a max pain level of $4,200:
With how much the market was dropping, I thought perhaps ETH might go all the way to $3,200 since that was max pain level for December 26 expiry. Maybe this comes at a later time…
Solana Update
Despite the recent drop, Solana is still holding above $200 and still expecting higher from here:
Again despite the dump, Solana vs. Bitcoin is still holding up well above the weekly 20 EMA and I’m still expecting this to go higher. I’m still sticking with my theory that we’re about to witness a surge higher similar to what we saw in the second half of 2024.
Dogecoin Update
I am a bit concerned with Dogecoin since it’s below the weekly 20 EMA at the moment. The good news is the last weekly close was above 0.20 so as long as it holds here, it should go higher. Remember with Dogecoin that most of the time it does nothing but it in very short periods of time, it has explosive moves to the upside. The key with this one and with most crypto is patience and it will come when you least expect it.
Sui Update
Similar to Dogecoin, I am a bit concerned that this is now below the long term trendline but given the rest of the evidence of a potential bottom, I think the chances are looking good for higher. We need to see this hold above $2.85 with the next weekly close.
Large Caps
For large caps, here’s the ones that stand out on a long term timeframe:
- XRP
- Stellar
- BNB
- Hyperliquid
Pepe looks concerning but since it already has touched the March and April lows, I think more than likely the bottom is already in
Model Portfolio Update
Now is a good time to buy the dip again while you can. The portfolio is now showing 15% return for open positions:
The overall portfolio performance considering closed positions is roughly a 5% positive return:
To see the detailed analysis on Mid Caps and Small Cap sector outperformers as well as the complete portfolio, sign up and become a pro today and gain an edge in the crypto market.