Low risk crypto strategy is difficult, so... | 1 June


BTC Bitcoin Price, Bitcoin Price Risk Analysis

(Previous week in brackets)

BITCOIN BTC/USD Monthly Weekly Daily
37,673 (37.476)
↓ 19.9%
Trend ↓ (↓ ) ↓ (↓) ↑ (↓)
% Risk
Weight
70 (79) 22 (52) 48 (25)
Allocation Limit(0%) Invested 0% (0%)



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01 June close: Some people in this highly speculative industry say that technical analysis has no purpose. Because purpose is long term wealth creation? We would argue quite the opposite; technical anyalsis has every purpose to assist with reducing risk. It is so different and so much easier if the entry point was low enough to 'not worry about a 50% drop'. However, the crypto market is entirely speculative for 95% of participants, which is why so many major authorities seek to regulate, but don't yet know how. What we have seen in our technical indicators the past three weeks is an almost exact copy of Bitcoin indicators on most major and minor crypto tokens say from 50M to 1T market cap. So, looking at Bitcoin risk weight, which applies to most others, we see a bearish divergence in monthly risk weight that only materialized at the 31 May close, but became interim fact during the first attack on 12 May. Weekly and Daily were already in strong downtrends and the question now is; have we bottomed? From a risk point of view that is NOT the case. Given that Medium and Long term time frames have turned down sharply, based on a minimum 50% correction thusfar, we should expect to see at least a Medium term (weekly) risk weight bullish divergence before a more serious rally can be expected. Serious as in probably 25% to 60% from a recorded correction low. That low is now 30k since the 64k peak and risk is high that the current rally back towards 40k ends and turns into another bear section with new lows. We now see Daily risk moving up in a price range between 30 and 41k. The 4 hourly chart is already showing potential bearish divergence. Traders that were able to buy the dip should get worried at 38k or higher and put stops in. The unprecedented crypto rally we've witnessed between December and April, simply came to a halt as many started to cash some profit. For long term holders that stepped in late, the current level and higher is high risk. The chart suggests a good possibility of up to one year of corrections before a fresh advance can develop in earnest. Precious metals currently are a safer play for long term wealth preservation. Crypto, being highly volatile, is a technically tradeable marketplace when actively looking for divergence between all short term time scales. Long term holds are at risk of losing another 50% at least. 22 May close: Jan 2018 saw a drop of Crypto market cap of 52.5% during the month, whilst Bitcoin reached its intermediate peak in Dec 2017. May 19 showed an even larger high to low drop at 53.3% of total market cap. And the question is which of the relatively late converted whales will publicly loose their nerve if they haven't already? Both Weekly and Monthly risk weight are in (strong) downtrends and are now leading indicators to short term direction. Daily risk has not finished. It doesn't mean this down market cannot correct or even reverse, but the most likely technical scenario is for price discovery to find a moment of stability. The Quarterly log chart shows a 7 year channel with support at around 20k and resistance at 220-240k. The 4 year parallel channel drawn from the 2017 quarterly high shows support around 10k. This Long term chart shows a similar development as it did in 2018, but this asset simply has too little history to draw any conclusion except that is has now been proven for the fifth time that risk can be extremely high in a major bull run whilst being difficult to get timing right. As said in the mid-week comment; These kind of trend changes do not often V shape as too many investors get hurt in nominal losses or opportunity loss, that it takes time to recover from that emotion which is usually preceded by irrational trading behavior. Any sizeable price recovery will lead to intermediate pressure again until this major Bitcoin correction period is over. No Change.

BTC/USD interim Quarterly risk chart close 01 June


Bitpanda Pro - BEST Token Price Risk Analysis

(Previous week in brackets)

Bitpanda - BEST/EUR Monthly Weekly Daily
1.1340 1.2109)
↓22.7%
Trend ↓ (↓) ↓ (↓) ↑ (↓)
% Risk
Weight
62 (70) 32 (58) 30 (15)
Allocation Limit(variable) Invested 100% (100%)

BEST token live price



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Bitpanda BEST analysis 01 June

BEST actually looks equally worrysome for late entries, i.e current level and higher. No change for our friend's portfolio's having cushioned the original and just reaping monthly rewards benefits. This still makes BEST one of the most attractive tokens in today's market, but for late investors it would be high risk to gamble on serious upside until at least our medium term risk weight shows a potential bottom confirmed by short term bullishness. Speculative longs may well see a 10% or more advance from current level which would offer an opportunity to reflect (square up) on a medium term outlook. We could eventually see this market bottom out, just like BTC at a 50% lower level. Extremes however should not be underestimated. Several native crypto tokens would appear highly attractive if they can be acquired at 70 or 80% below current level. A fairly common panic move could trigger those levels becoming reality. Remember we were there only 5 months ago and that is the risk and opportunity on the table today.

22 May 2021: BEST has equally suffered and the correction is dramatic looking at opportunity loss. But the situation is different from Bitcoin and most other altcoins like Ethereum and Litecoin, because BEST is the only token offering a real minimum value with an attractive up to 1% per month reward system backed by a strong growth, well capitalized and regulated exchange. One can only hold on to Bitcoin and altcoins through major bull runs and full corrections if the entry point is far enough in the past that the minimum value is likely to remain above entry level. And that would have to be some 85% below the peak level at any time. That is guaranteed in the case of BEST and since we've secured our original investment during the bull run last month,'holding' is very safe and still generates a real cash return every month even though that value goes down with the price of the asset. We are now watching out for an opportunity to diversify some cash into several of the tokens on our watchlist if the opportunity presents itself. There are some very attractive propositions building for tokens isued by true quantum leap technical innovation companies. Jittery markets can see sudden deep throughs. Bids at low unexpected levels may get filled.
BEST looks technically stronger than BTC, but this too can be a false positive as is the situation with all crypto’s, none excluded at this moment. See BITPANDAPRO-BESTBTC

As a result of the large drop in the value of BEST this month, our precious metals portfolio has risen to 50% of total which feels very safe at this moment in time. A fall can only mean that crypto is back onto recovery, but this may take several quarters or even years, because Crypto is still hyperinflation price territory.

S&P, Stock Indices, Equities, High Risk, No Limits


S&P 500 Standard & Poor's 500 Price Risk Analysis Forecast

(Previous week in brackets)

Standard & Poor 500 Monthly Weekly Daily
4202 (4161)
Trend ↓ (↑) ↑ (↓) ↓ (↑)
% Risk
Weight
98 (97) 90 (92) 87 (50)
Max Allocation 20% (20%) Invested 0% (0%)


01 June 2021 close: The first trading day in June is now indicating a potential downturn of monthly risk whilst 31 May close is still pointing up. The absolute level of 98% high risk says enough whilst the current price of the S&P index is beyond normal price discovery given the very steady and near uninterrupted 100% advance since the March 2020 bottom. Our long term economic outlook since many years is a period of stagflation. What that means for equities remains to be seen and it has now become a historically less predictable asset class than precious metals, in our opinion.

21 May 2021 close: Equities are still a matter of 'when' not 'if' they will correct. As long the bearish divergence in long term risk weight persists, that risk is always imminent. An economic recovery may be on its way, but nothing is certain especially given the amount of capital needed, worldwide, to saignificantly reduce the carbon footprint. If public sentiment turns in favor of that transition even the best performing stocks could see substantial pressure. No Change.

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Posted in A - All Financial Blogs | 2021 Forecast, GLOBAL - S&P500 - CRYPTO | EYEFORGOLD.

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