Cantering Clark 5/17 Stream Summary

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Intro:

*Nothing is financial advice

Phemex exchange shout out. Non-KYC exchange and non adversarial. Spot, perp pairs, and yield options.

After streams CC will go live on Callin to answer any questions live you might have. Link to download available here: https://apps.apple.com/us/app/callin-social-podcasting/id1568011211

Important Terms to know:

HTF- High time frames. Think days, weeks, months

LTF- Low time frames. Think hours and minutes

VIX- Volatility index. Measures the markets expectation of volatility currently.

CPI- Consumer product index. Measures inflation of goods

FOMC- Monthly meeting of Federal Reserve officials that decides monetary policy (rates, printing etc.). Generally expect markets to be volatile around FOMC

OI- Open Interest. Refers to total number of outstanding contracts in derivatives yet to be settled. In crypto terms, think market participants opening positions as OI rises, or closing positions as OI falls.

Backwardation- When dated futures price moves below current spot price on BTC. Example could be December quarterlies trading at 29k while the market as of right now is pricing spot BTC at 31.5k.

OPEX- Options expiry. Occurs on third Friday of every month in legacy and is normally an event that moves markets as options dealers unwind their hedges based on their dealings.

Macro

“Know what you’re trading” which… is the BTC500 currently
  • FED still non-accommodative policy
  • Recession narrative starting to grow louder recently
  • FED can hike rates into recession in order to combat inflation. Inflation is always FED’s first order of business
  • FED thinks economy is very strong. However, markets lead economy so while employment rates are high etc., markets could be showing the weakness in the economy to come.
  • No tailwinds currently to markets, only headwinds.
  • Bulls are currently doing what bears normally do: fighting against the trend along with fighting against macro headwinds. Bears have for years tried to call tops on bull markets while the trend is up and the FED is accomodative. Now, it’s flipped in reverse and bulls are trying to call bottom without the FED’s help.
  • Need a major shift in language or shift in policy for those headwinds to cease.
  • A major contagion in credit markets or something breaking elsewhere would be needed for the narrative to shift.
  • FED has been explicit that there is going to be pain in markets (very hawkish)
  • Spot buying here and there is fine, but there’s no reason currently to increase exposure past spot for any sort of long term play without help from equities.
  • Currently very negative skew (aggressive put buying or “insurance” for downside)
  • Basis not in backwardation yet
  • Signs of bottoms take time to develop. No where near a situation where we might get a “V” bottom currently. Would need a buildup of OI and persistent negative funding (barring an unforeseen catalyst)
  • Market is currently in the process of digesting all of the news and language from the FED.
  • Analyzing the COVID crash as a piece of important market structure/fractal is foolish because of the black swan nature. Market was probably going to move up anyways without the crash.
  • Expecting much more clarity HTF in markets after labor day (End of Q3/Beginning Q4)

Chart Analysis:

Options Skew: As pessimistic as it’s been in a long time
  • Genesis options skew as negative as it’s been in a long time
  • Can see the difference in pricing between calls and puts.
Futures still in contango for now
  • Previous bottoms have seen backwardation generally
  • Normally bull markets will involve spot trading at a discount to these dated futures
  • Further out expirations trading at a premium still currently
  • Things are different now compared to pre-2020 because of how many new participants have entered the market
  • Still futures basis can be a good judge of sentiment alongside skew.
  • Currently a very pessimistic market
Monthly (please go up soon)
  • Monthly structure broken
  • Still can’t be confident on a bottom because of how high legacy correlation is currently
  • Market is only giving you evidence of weakness currently. Listen to the market and take it level to level. Long term targets aren’t wise right now.
  • Quarter long range/broke through every HTF value level
  • As far as looking for bounce/bottom spots lower: If we reach 20k and don’t react rapidly and instead bleed through, you could expect the next destination to probably be the 13k range.
Price forming balanced structure around these levels. Rotating from one side to the other without follow through on LTF’s
  • LTF
  • More bullish than bearish
  • OPEX this Friday
  • Probably get a bit more mean reversion than we’ve had so far, but would want to see a bit more basing out around the lows
  • Currently just establishing value and rotating between the highs and lows within this value. No leg behind any sort of trending move
  • Not a great area to currently enter into a position where we are now. “Don’t diddle in the middle”
A rip upwards from here is probably fade-worthy
  • Since our bias is that the market won’t be putting in a V-shaped reversal, we’d look to fade a move from here into 33.5/34k
Same with a move straight down from here (without a new catalyst)
  • On the flip side if we got something that looked like it was torching towards the lows, 25–26k would be a good area to look for longs
TPO showing balanced rotations of price
  • First time in weeks currently that buyers and sellers are in agreement in value in this area. Because of that, getting involved in an area of balance like this one makes it difficult to define risk for a trade.
  • Essentially looking to fade violent moves to either side currently operating on the thesis that we will range for a while.
  • If you do get a move through those value areas, you’re looking for acceptance on the other side of those areas for the trend to continue. (breaking above 34k and then holding and finding supporting instead of moving back down)
  • Likewise, breaking through those value areas and re-accepting back into the old range is a good signal that players are trapped at the extremes and the market will move against them (breaking down to 25k before moving back to 28k)

ALTS

  • Alts are currently nuked right now
  • Even if most end up at 0, they won’t take a straight line there. Too much incentive from MM’s to not induce bounces to try and pull more money out of these coins before they fall further
  • Books are extremely thin around all markets currently
  • Because of this, not interested in shorting alts even if you know they are going to trend down just because you could get blown out on a random thin move up
  • Alts are great trades currently if focusing on ones with volume. Don’t expect trends, most are probably on their death spiral. But you can certainly play both sides because of the pickup in volatility lately.
Very similar chart to BTC currently
  • As far as ETH goes, holding up slightly better than BTC. Still in mostly the same position as BTC.
  • With the merge coming, could be a positive price catalyst but from where does that catalyst happen? Don’t want to buy ETH now expecting a 2x from the merge when the 2x actually happens from 1k -2k instead of 2k-4k
Still room for upside on Solana, but take note if price reaches that 75 area for signs of a rejection
  • As far as shorting ALT’s, you want to look for ones with more volume thicker books and you want to do it from a significant HTF area.
  • SOL and GMT are both interesting ones. For SOL (pictured above) you’d look at that 75 region as an area to short based on a reaction from that level that was previously HTF support.
  • If looking to buy bottoms on ALT’s, looking for RSI divs on HTF’s as nice spots to start accumulating.