Been watching $BTC closer than usual because we have a client with an extremely large position in crypto and we're working on partial liquidation plans in the very near future. Plans are to DCA (Dollar Cost Average) out of it to the tune of roughly $11MM net-after-tax (or $14MM gross), which would mean something like selling $3MM every week for four weeks, or $1MM every week for 14 weeks. The point of a DCA strategy is to "catch the market on a good idea," since no one can predict price.
That being said, the beauty of technical analysis is that, while we can't predict, we CAN define risk levels and lines in the sand below which we might want to accelerate our selling process... and Bitcoin just managed to find itself in a relatively bearish position this week.
What you're looking at is a daily chart of Bitcoin with the 50-day moving average (blue, dotted line) as well as the YTD anchored VWAP (solid blue line). The AVWAP tells us where the average investor stands, anchored to a previous point in time.
Since the crypto market really started to accelerate into the new year, I used the first of the year (or the turn of the calendar) to get a nice, anchored point from which to observe the average investor's P&L... and what it's telling us is that, as of yesterday, the average investor is under water, year-to-date.
Now, what makes matters even more concerning is the fact that the 50MA also sits right at the same price as at the YTD VWAP, which adds additional significance to this line in the sand.
Because BTC has fallen below its 50MA and YTD VWAP, I would personally want to see it re-claim these levels by the end of the week, otherwise, I'm likely selling a portion (if not all of it) - and if I'm keeping any of it, I'm looking at the horizontal-dotted lines as a 2nd, 3rd, and 4th floor below my feet.
If BTC can't hold the 2022 lows, then I think it's likely we see a test of 30,000... and if it can't hold 30k or reclaim that level within a few weeks after a potential breakdown, crypto could be in serious trouble.
Adam D. Koós, CFP®, CMT, CEPA
President / Portfolio Manager / Sr. Financial Adviser
Libertas Wealth Management Group, Inc.
That being said, the beauty of technical analysis is that, while we can't predict, we CAN define risk levels and lines in the sand below which we might want to accelerate our selling process... and Bitcoin just managed to find itself in a relatively bearish position this week.
What you're looking at is a daily chart of Bitcoin with the 50-day moving average (blue, dotted line) as well as the YTD anchored VWAP (solid blue line). The AVWAP tells us where the average investor stands, anchored to a previous point in time.
Since the crypto market really started to accelerate into the new year, I used the first of the year (or the turn of the calendar) to get a nice, anchored point from which to observe the average investor's P&L... and what it's telling us is that, as of yesterday, the average investor is under water, year-to-date.
Now, what makes matters even more concerning is the fact that the 50MA also sits right at the same price as at the YTD VWAP, which adds additional significance to this line in the sand.
Because BTC has fallen below its 50MA and YTD VWAP, I would personally want to see it re-claim these levels by the end of the week, otherwise, I'm likely selling a portion (if not all of it) - and if I'm keeping any of it, I'm looking at the horizontal-dotted lines as a 2nd, 3rd, and 4th floor below my feet.
If BTC can't hold the 2022 lows, then I think it's likely we see a test of 30,000... and if it can't hold 30k or reclaim that level within a few weeks after a potential breakdown, crypto could be in serious trouble.
Adam D. Koós, CFP®, CMT, CEPA
President / Portfolio Manager / Sr. Financial Adviser
Libertas Wealth Management Group, Inc.
CMT Association is a global non-profit credentialing body committed to advancing the discipline of Technical Analysis. Improve investment performance and career opportunities: www.cmtassociation.org
