Pareidolia
The difference between conviction and delusion is often just timing.
Hello my tasty friends, I hope you’re all having a wonderful start to your weekend.
We haven’t discussed price action and the broader crypto market for some time, because frankly, we haven’t seen much action. As a proxy for everything crypto, the price of BTC hasn’t really changed since the collapse on February 6th. We’ve been range bound, between 65k-75k for the last two months… Boring!
We demand action.
Fortunately for my Action Boys, and Girls, we are seeing some early signs. Now, I’m not going to get overly excited as there’s a fine line between signals and pareidolia when you stare at the charts for hours at a time, but let’s walk through what I’m seeing.
Then, we will also pound the table on where I’m bullish and briefly discuss the absurdity of shipping companies paying a toll in bitcoin to transit the Strait of Hormuz.
BTC ETH SOL Price Momentum - Daily, Weekly, Monthly
No one is bigger than the market and there’s no single approach to trading. I can’t teach you how to trade, though you can learn how to trade. We can all have wildly different approaches to the market, and still all make money. - Which is the key. It’s not about being right, not about wins, or predicting some grand outcome. It’s about making money.
As I attempt to make money, I’ve tried to simplify my approach, in an effort to simply stay on the right side of the trend, at least over the intermediate timeframe. I’m not trying to predict the weather, but I’m trying to get the season right.
To do this, I use some basic moving averages to get a sense of trend and price momentum across sequential timeframes. - This is something I picked up on from Steve Miller during the early days of tastytrade.
Using exponential moving averages for different periods (8,13,21) we can derive buy/sell signals and observe shifting market conditions.
For example, bullish conditions are observed when the 8 EMA is above the 13, and the 13 is above the 21. - The opposite order would indicate a bearish trend/condition.
If you’ve followed our work at tastycrypto over the past few years, these are the price momentum signals we use in our performance dashboards (below). I’ve also included theses indicators on charts for BTC, ETH, and SOL to better visualize this.
Green = Bullish, Red = Bearish, Gray = Neutral
What do you see?
On the daily timeframe: BTC and ETH are looking better, showing some very early, initial signs of bullish price momentum, while SOL is still exhibiting bearish conditions. Though as you can tell, we’ve been here before and these positive signs have quickly reversed within the longer-term structure. Head fakes, if you will.
On the weekly timeframe: Everything remains bearish trend/momentum. This is a stronger, more important signal than the daily. Longer timeframes are naturally slower, but less noisy. Of course, price momentum transitions timeframes sequentially, so it’s positive that we’re seeing early bullish “noisy” daily signals, but this has not yet been confirmed when looking at the weekly picture, which is a much stronger signal in my view.
We’re seeing some very early signs that conditions might be improving. What about the long-term trend, the mother indicator, what is it showing us?
This is where I’m a bit concerned…
On the monthly timeframe: BTC is neutral (for now), while ETH and SOL have already experienced a neutral to bearish trend shift. Not good, but it clearly reflects the crypto bear market we’re currently in. You’ll also notice that historically when we’re in this market environment, these conditions tend to persist for roughly a year, which aligns with the post-halving cycle analysis of 12-18 month bear markets, post-cycle peak.
Now, it’s entirely possible we undergo a massive reversal and everything is awesome again in short-order, but I’m not getting my hopes up. What I am doing is remaining patient, and keying in on the weekly signal for any confirmation of changing conditions given the sequential momentum pattern across time.
Yes, there’s an initial buy signal as of writing, but jumping on every daily signal can get you chopped up quickly. Waiting for monthly trend changes, and you can miss a majority of the move. So, I’m looking for a weekly price momentum shift from bearish (currently) to neutral before I consider adding any significant capital to my long crypto position vs other opportunities in the market that are currently in play (e.g. oil vol, energy equities, rates).
For a more granular view of short-term price action, our weekly trading ranges are below, and on a realized basis, after the local bottom on Feb 6th, BTC has consolidated between approx. 62.5k-76k, ETH 1,800-2,400, and SOL between 75-97.
Iran Hormuz Bitcoin Toll - Why It's Not Bullish For BTC
$2 million in bitcoin and we won’t blow up your ship.
No.
Seeing a lot of chatter on X about how Iran charging a toll (payable in BTC or Yuan) for safe passage is somehow a positive for bitcoin. I think this is dumb.
It’s nuanced and arguably there are reports the IRCG already had approximately $1 billion in sanctions evasion infrastructure running through offshore crypto exchanges (per TRM Labs analysis), but consider the following:
Sanctions risk. No major Western shipping company, insurer, or bank can pay tolls to the IRGC which is a designated Foreign Terrorist Organization. This would result in existential legal exposure under U.S., UK, and EU law. Crypto payment rails don’t change this.
GCC nations will not voluntarily concede and instead will likely take military action before ever agreeing to a toll. The political, strategic, and economic costs of recognizing Iranian sovereignty over Hormuz are incompatible with Saudi Arabia’s position as swing producer, the UAE’s role as a trading hub, and Qatar’s LNG export dependence.
International law is unambiguous. There is no legal basis for tolls on a natural international strait under UNCLOS or customary international law, and the Suez/Panama analogies are structurally invalid. For example, as an international strait UNCLOS Article 26 prohibits charges “by reason only of their passage.” Fees are permitted only for specific services rendered to the transiting vessel, applied without discrimination.
Maybe I’ll be proven incorrect here, as I suppose a $200 oil price could change things, but to think this is in any way a positive for BTC or crypto is absurd.
Pounding the table - Bullish HYPE
While the signals we shared above for BTC, ETH, and SOL, are still leaning bearish, HYPE weekly price momentum is “green.” - We won’t go into all of the fundamental details, because we discussed them last week, but this one is certainly on my radar (READ).
That’s it for this week. Keep your head on a swivel.
And, as always…
Stay tasty,
Ryan
Trading platform and brokerage: tastytrade
Crypto trade ideas and more content: YouTube
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Disclaimer: None of this is to be deemed legal or financial advice of any kind and are solely the opinions of the authors. tastycrypto is provided by tasty Software Solutions, LLC. tasty Software Solutions, LLC is a separate but affiliate company of tastylive, Inc. and tastytrade, Inc. Neither tastylive, Inc. nor tastytrade, Inc. are responsible for the products or services provided by tasty Software Solutions, LLC. Cryptocurrency trading is not suitable for all investors.