Did SEC set themselves up for a short squeeze?
It's just been 2 days since the last update yet feels like ages, such is the action in the crypto space.
After years of trading, many a time you get a "feel" of what the markets would do, seeing the price action.
In the last update below was mentioned
Model continues to be long but the weekly closing isn't as strong as expected.
Markets have been choppy even on a weekly time frame which is unusual and not ideal.
Bias continues to be on the long side till we get invalidation or strong signs of reversals/trend breaks.
That's why there's a system in place to save you from yourself.
The analysis is not the hard part, controlling your emotions and following your own system is.
Charts were already looking weak (but the model had not exited yet) and the SEC news was the worst possible news you could get.
This is why time and again I emphasize HTF closing and not using leverage.
Both of these things just do one thing, they buy you time.
Time for the markets to digest the news and show its true direction, and time for you to respond and trade.
Earlier today this was tweeted where on LTF the model was picking up signs of reversals.
Added with the fact that we are getting reversals on major bad news is a strong sign of strength.
Heres another thing that never ceases to amaze. Markets ALWAYS ALWAYS know things way ahead of the news.
Nasdaq and Tech were rallying hard the last few weeks but Crypto just did not participate. It was truly perplexing but yesterday's SEC lawsuit sorta explains why.
Secondly, Model picked up
LDO and RPL as 2 of the 3 new entries this week (before the news broke out).
Both these decentralized staking coins stand to benefit from the enforcement action against coinbase staking.
LDO was up over 10% today.
Smart money tends to sniff all this from a mile away, and the footprints are all over the place.
Yesterday the markets were below invalidation levels but today's move has cemented the bull for now. This is the kind of strength we want to see, to go aggressive in sizing.
All this while the sword was hanging on Crypto, of what SEC might do? How far will they go? It appears that SEC has truly overplayed its hand for now by going after everyone at once.
Now for any reason, if they cannot follow through (it has been a while since the XRP saga and nothing really happened there yet), the regulator will appear toothless.
And if you are a strategist or an advisor to a competing nation, wouldn't you would put in special effort to make the US appear even weaker?
Especially considering crypto is global and wouldn't take much capital to short-squeeze it? Classic game theory.
Binance is sitting on a lot of CASH too which could be used strategically to improve sentiment. Coz there's an unsaid rule in the markets. NOTHING and I mean nothing improves sentiment as price does.
Also, countries like the UK are making the right noises regarding how they can provide regulatory clarity.
OK, so all of that is just mid-week musing. The big question is where are we headed next?
It appears that BTC is very likely headed to mid 30K region where the next cluster of resistance lie.
Also, strong trends give very shallow pullbacks. It does not give a chance for the shorts nor longs who capitulated to position back into the trade. Something to factor in during this leg.
As always, manage risk but things looking good for now.
See you in the next post!
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