Specialising in Bitcoin, Gold and Digital Assets

ByteTree Asset Management

Investment Manager specialising in bitcoin, gold and digital assets

CEO, ByteTree Asset Management

Crypto

<p>The US dollar has made a 20-day high as it passes above the blue max line. Price is above both moving averages, which are positively sloping. That’s a 5-star trend.&nbsp;</p>
<h3>Dollar Bull</h3>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/293/027/original/image_62932734521660936839995.png?1660936841" class="editor-image img-responsive" data-smartkarma-image-id="293027"></figure>
<div class="content-caption">Source: Bloomberg</div>
<p>When the dollar goes up like this, other currencies fall, and in this week’s&nbsp;ATOMIC, I highlighted the weakening Renminbi. It’s just one of those things that when the CNH falls, it’s rarely never good for crypto.</p>
<h3>Beware of a Falling Renminbi</h3>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/293/028/original/image_40615371231660936875079.png?1660936875" class="editor-image img-responsive" data-smartkarma-image-id="293028"></figure>
<div class="content-caption">Source: Bloomberg</div>
<p>The last couple of days have seen a sharp deterioration in crypto breadth. There is not a single 5-star trend, just five 4-star trends, and a deteriorating number of 3-stars. A quarter of the space is now in a (0-star) downtrend.</p>
<h3>Red Skies Return</h3>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/293/044/original/image_53177563041660936912135.png?1660936913" class="editor-image img-responsive" data-smartkarma-image-id="293044"></figure>
<div class="content-caption">Source:&nbsp;<a href="https://bytetree.us3.list-manage.com/track/click?u=a4a4461fba9ee073aaefd6019&amp;id=17cf31e57b&amp;e=7c019babf2" target="_blank" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://bytetree.us3.list-manage.com/track/click?u%3Da4a4461fba9ee073aaefd6019%26id%3D17cf31e57b%26e%3D7c019babf2&amp;source=gmail&amp;ust=1661023179877000&amp;usg=AOvVaw0_E7TSli3erGrE0W6-Qztx" rel="noopener">ByteTree Terminal</a></div>
<p>The stockmarket has ignored the dollar strength thus far, but as you already know, crypto is a leading indicator. In this bear market rally, or a new bull market, as some believe, there are still very few strong trends in dollar terms.&nbsp;</p>
<h3>Will the Red Skies Appear Like They Just Did in Crypto?</h3>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/293/045/original/image_7004189451660936946113.png?1660936947" class="editor-image img-responsive" data-smartkarma-image-id="293045"></figure>
<div class="content-caption">Source:&nbsp;<a href="https://bytetree.us3.list-manage.com/track/click?u=a4a4461fba9ee073aaefd6019&amp;id=136a50de94&amp;e=7c019babf2" target="_blank" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://bytetree.us3.list-manage.com/track/click?u%3Da4a4461fba9ee073aaefd6019%26id%3D136a50de94%26e%3D7c019babf2&amp;source=gmail&amp;ust=1661023179877000&amp;usg=AOvVaw27YDAogXHXM6E3OLi5cqiD" rel="noopener">ByteTree Terminal</a></div>
<p>Of course, this year, crypto and stocks have been correlated, and crypto tends to lead markets. In that sense, crypto is the canary in the coalmine. If so, expect to see the red skies in crypto appear in equities.<br><br>One example of a weak market is China (again). While stocks have recovered since June, China has lagged. Big problems always start somewhere, and you have to wonder if this great nation will play host to the next financial crisis.<br>&nbsp;<br>When a region or a sector persistently lags the global market, as China is currently doing, it generally ends badly.</p>
<h3>China Lags the World</h3>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/293/046/original/image_84660497361660936980790.png?1660936982" class="editor-image img-responsive" data-smartkarma-image-id="293046"></figure>
<div class="content-caption">Source:&nbsp;<a href="https://bytetree.us3.list-manage.com/track/click?u=a4a4461fba9ee073aaefd6019&amp;id=76bfd30d3b&amp;e=7c019babf2" target="_blank" data-saferedirecturl="https://www.google.com/url?hl=en&amp;q=https://bytetree.us3.list-manage.com/track/click?u%3Da4a4461fba9ee073aaefd6019%26id%3D76bfd30d3b%26e%3D7c019babf2&amp;source=gmail&amp;ust=1661023179877000&amp;usg=AOvVaw2iQ6uAX10PqeKl6214sJ9J" rel="noopener">ByteTree Terminal</a></div>
<p>We have no doubt that crypto is the asset class with the brightest future, while the traditional financial system rests on weak foundations. Balancing this journey is critical, and we are excited to be increasing our coverage of traditional finance, exploring how the old world sits with the new.</p>

The US dollar has made a 20-day high as it passes above the blue max line. Price is above both moving averages, which are positively sloping. That’s a 5-star trend.&nbsp;
Dollar Bull

Source: Bloomberg
When the dollar goes up like this, other currencies fall, and in this week’s&nbsp;ATOMIC, I highlighted the weakening Renminbi. It’s just one of those things that when the CNH falls, it’s rarely never good for crypto.
Beware of a Falling Renminbi

Source: Bloomberg
The last couple of days have seen a sharp deterioration in crypto breadth. There is not a single 5-star trend, just five 4-star trends, and a deteriorating number of 3-stars. A quarter of the space is now in a (0-star) downtrend.
Red Skies Return

Source:&nbsp;ByteTree Terminal
The stockmarket has ignored the dollar strength thus far, but as you already know, crypto is a leading indicator. In this bear market rally, or a new bull market, as some believe, there are still very few strong trends in dollar terms.&nbsp;
Will the Red Skies Appear Like They Just Did in Crypto?

Source:&nbsp;ByteTree Terminal
Of course, this year, crypto and stocks have been correlated, and crypto tends to lead markets. In that sense, crypto is the canary in the coalmine. If so, expect to see the red skies in crypto appear in equities.  One example of a weak market is China (again). While stocks have recovered since June, China has lagged. Big problems always start somewhere, and you have to wonder if this great nation will play host to the next financial crisis. &nbsp; When a region or a sector persistently lags the global market, as China is currently doing, it generally ends badly.
China Lags the World

Source:&nbsp;ByteTree Terminal
We have no doubt that crypto is the asset class with the brightest future, while the traditional financial system rests on weak foundations. Balancing this journey is critical, and we are excited to be increasing our coverage of traditional finance, exploring how the old world sits with the new.

Dollar Index

I Blame the Dollar