Remember, remember, the month of Septembear

Views expressed in this article are the personal views of the author and should not form the basis for making investment decisions, nor be construed as a recommendation or advice to engage in investment transactions.

Two weeks after BTC’s heated bear rally climaxed in a wick above $25k, the leading digital asset finds itself below $20k as we enter what has historically been a poor month for crypto.

Bitcoin historical performance by month, 2013-2021

Crabs have sharp pincers

We are now entering the fourth month of a ~30% sideways trading range. Such a drawn out period of constrained action, invariably, can carry a heavy toll on bulls and bears alike. One need only look to Twitter to observe this frustration. Bears are roaring for capitulation, while bulls continue to cling to 1% upswings as signals that we’ve reached a picobottom. A unique manifestation of this frustration arrived in the form of an image of Vitalik posted to Twitter on Monday, alluding that the Ethereum co-founder’s technological expertise… isn’t his only strength (Please understand, I’m trying my hardest utmost here). 

Partly as a result of the image in question, ETH pumped almost 10% on the day, and currently sits flat below $1,6k resistance.

Despite outperforming BTC, ETH remains range-bound, having whiplashed between $1k and $2k since June’s drawdown.

Spot the difference

Coinglass’s liquidation data provides a visceral insight into the impact this prolonged crab has had on investors, with daily liquidations in excess of $100m observed consistently since June’s drawdown.

Macros

This perplexing price action belies an environment fraught with uncertainty and  hungry for a new narrative, as Merge fervour has all but evaporated following the latest drawdown. The current retracement has been compounded by flailing equities and growing concerns regarding the Eurozone’s outlook as winter approaches in the midst of an unprecedented energy crisis. 

The ECB has finally woken up to the grave reality of its current situation, and has announced a 75bps rate hike is likely on the horizon. While this is not nearly enough to curb rampant inflation in the region, it’s encouraging that those at the helm of global monetary policy are finally waking up to the reality that many analysts have attempted to signal for the past year.

Forward Focus

The instability of the global economy seems to incur more volatility by the day. This shouldn’t be surprising as unwinding 14 years of reckless leverage and loose monetary policy was never going to be a quick fix. After all, there’s a reason our present economic policy is characterised as “Boom/Bust”.

Directional bias in a trading range can be dangerously tempting, but as it stands, patience could likely end up being the best strategy in the near-term.

In summation, I offer you two thoughts to ponder in the common tongue of our people:

Resist the snib

Respect the range