The wind changes
This is the first of many articles reviewing the crypto market price action and market sentiment. I will also be handing out calls for projects that I think have some very strong upside potential.
My name is Wolf, your in-house analyst here at DystoApez, and I hope you garner some useful information from the following article. It contains some vital information on the current market state, and I would classify it as a must-read for anyone looking to invest in the cryptocurrency markets due to the extreme volatility we are currently seeing.
In this article, we will review the general market coming into the second half of Q4. There is a multitude of current events that make this article necessary in order to make clear investment decisions in the cryptocurrency markets.
To start, we will discuss the options close out happening this week, and why this is so important for the market. We will go over market manipulation in the recent weeks, and give you some basic technical education in the markets.
We will then review the market caps of the largest coins, and start to evaluate a thesis on the flow of money for the end of Q4, as the wind changes…
To finish our journey through this article, I will unwind with a personal addition. Alongside recommendations for the coins I believe will do amazingly well in these upcoming months.
Futures, Options, and Maximum Pain
I’m sure many of you reading this article are fairly new to financial markets, so the idea of an “option” or “futures” may be a foreign concept to you. Hence I will explain these terms below. If you already have a deep understanding of these terms, feel free to skip to the next break in the article.
Futures are a contract that allows an entity to enter into a promise to buy or sell an asset in the future (upon the expiry of the contract). These contracts can be undertaken with 2 options:
Calls - Long positions.
Puts - Short positions.
If you enter into a call option, you are betting that the price will be higher than when you entered come expiry date.
If you enter into a put option, you are betting that the price will be lower than when you entered come expiry date.
To ensure that you understand this fully, we will go over an example contract:
Let’s say that Person X entered into one of the most traditional futures contracts, Gold.
Person X enters into a call option for Gold on the 11th of October when the price for Gold was $1750. Let’s say this contract has an expiry of 1 month.
Person X has entered a contract in which he “promises to buy” Gold on the 11th of November (1 month from the 11th of October), for the price of $1750. You can imagine entering into a futures contract as “locking in” the current price until the expiry date.
When the 11th of October rolls around, the price of Gold has risen to $1865. However, due to the futures contract, Person X buys his gold at a price of $1750. Meaning he has made a $115 profit.
1865–1750 = 115
If person X was to enter into a put option instead of a call, he would have sold Gold at $1750, meaning he would incur a $115 loss.
Futures, Options, and Maximum Pain - Continued
I hope you enjoyed our breakdown of Futures contracts, now we can evaluate why this is so important for Cryptocurrency.
This article is published on the same day as the options close-out for Bitcoin, or the “expiry date” for these contracts.
These futures contracts induce heavy speculation in whatever asset class they are established in, for a volatile asset such as cryptocurrency, they result in extreme volatility.
The reasoning for this comes down to smart money and market makers.
Let’s say a firm with $100M in Bitcoin has entered into a massive Put contract on Bitcoin. When the 26th rolls around, they want the price to be as low as possible so they can make more profit from their sale.
Do you think this firm will sit idly and watch as the market makes its decision? No. They will move the market in their favour.
This is the reasoning for the following movement today. The below chart shows the current daily candle for Bitcoin at 11:28AM GMT, 11/26/2021.
Here we see a 10% drop in bitcoin prices, a $5000 change in price. This is extremely manipulative. And done so to get Bitcoin away from the “Max-Pain” price for institutions.
Max-Pain refers to the price where the highest financial loss will be incurred for institutions on either side of the market.
The max pain price for Bitcoin is $58,000 for this options close-out, and there is high confluence for this to be hit due to the clear manipulation in the markets.
The above chart shows the max pain price, along with the open interest for put calls. The open interest for shorting Bitcoin is currently much higher than the interest for longing BTC with regards to a futures contract. Bearish sentiment on BTC from institutions is the narrative here.
The wind changes. Hope glimmers.
This article so far has been rather gloomy, as the narrative seems to be that the bears are in control of the options close-out. However, this narrative is fabricated entirely to induce fear in the market.
We have some key pointers that indicate intense manipulation, one of these is clear order block manipulation in price.
I have been a student of price for over 4 years now, the majority of my time is spent in the Forex markets, the most manipulated market to ever exist. So I have an eye trained for spotting manipulation.
One of the easiest signs of manipulation is a clear order block. An order block is where the price is bought up before it is sold, or sold before it is bought up.
There are some characteristics for defining a true order block (sometimes called a sponsored candle or SC for short.)
You can see a strong example of a bearish order block with all the necessary characteristics below.
Understanding order blocks fully requires years of experience, but these are the basic characteristics to identify them.
An order block is the footprint of a whale in the markets, a whale cannot sell if the liquidity is not there to sell to. How do you sell 1000 bananas if nobody is buying bananas?
To fix this liquidity problem they first drive price UP to trigger stop losses and release liquidity, they then sell into this liquidity heavily and drive the price down.
Footnote: “They” refers to the market makers, or the “composite man” in traditional economic theory.
It is unlikely to see a clean order block in Bitcoin, and when we do it is usually indicative of some serious manipulation in the markets.
I have highlighted all of the order blocks that are currently valid on the Bitcoin chart below. I have chosen only the most refined and clean ones for the truest analysis possible.
From the 1st September — 1st November we had 2 order blocks in 2 months. Both bearish.
In the last 13 days, we have had 2 extremely powerful order blocks to the downside. Pending the daily close on 26/11/2021.
This tells me that big institutions want to push Bitcoin prices to the downside. The white lines drawn represent a break in structure to the downside.
The headline of a retail investor article somewhere will read the following:
Bitcoin options close-out ended today. Bears are victorious, a new cryptocurrency bear market?
This is what they want you to think. If big institutions want to buy up Bitcoin (after the futures close-out of course) they will ensure that you are fearful while they are buying. A 10% downside move on options expiry day does just that.
Now the article gets exciting.
I thank you for sticking with me through all of that gloomy explanation of the current Bitcoin state, and I’m sure your question will be that if Bitcoin is falling, surely the rest of the market will follow. Bitcoin is king!
This has historically been true, but the market has changed heavily in 2021, blockchain now offers far more than just a payment system.
The winds of change are inbound. One very interesting confluence for manipulation and bullish sentiment is the current divergence between Bitcoin and Ethereum.
I worry that this article will turn too lengthy if I explain every financial term I mention, so for the short explanation, divergence is where you have two correlating assets. One makes a lower low (or higher high) and the other fails to do the same.
Let’s use correlating assets A and B as examples.
A makes a lower low, B fails to make a lower low. This means that asset B is being so heavily bought up that it causes a divergence in the correlation between the two assets.
This divergence was something I recently called out to members of my community yesterday, between BTC and ETH.
Here we see BTC make a lower low, breaking the previous swing low on the 28th of October.
If we study the volume signatures, the bearish volume that happens on the break is stronger than the bullish volume that occurs after the break.
Here we see ETH failing to make a lower low, confirming divergence.
This has a massive confluence in that the bullish volume of the 19th (the day after Bitcoin broke the low) is higher than the bearish volume of the previous day. (See volume signatures on the chart)
What does this mean?
It means that ETH is being bought up, heavily. At a rate so heavy that even the market manipulators are failing to bring it below lows with Bitcoin.
This is my reasoning for the wind changing. I believe that the flow of money is moving away from Bitcoin and into alts, hence the Ethereum purchasing. Many well-respected individuals in the space are also agreeing with this narrative.
Granted I do believe Bitcoin will flip and go on to make new ATHs before Q4 has ended. However, I think that the gains we will see in Ethereum and other coins will far outweigh any performance from Bitcoin.
Another interesting thing to look at is the Total3 chart. The total market cap of cryptocurrencies, excluding ETH and BTC, is now around 900B spiking at a high of 1.131 trillion.
This is extremely important, the total market cap of all of crypto is currently 2.4 trillion.
Let’s do some math.
9/24 = 37.5
37.5% of the crypto market is now altcoins, this is massive. BTC and ETH now only make up roughly 62.5% of the market share of cryptocurrency.
This high of an altcoin market share usually does not hold long, we saw a similar scenario in May, where alts had around 35% market share before a market crash.
This led to a massive crash in the crypto market, we saw the same scenario in September. However this time the crash was much less harsh. See the following Total chart.
We have never seen altcoins sustain this large of a market share for this long before.
I believe this is largely due to the Metaverse, and the heaps of new investment it brings.
Coins, Catalysts, and new beginnings.
If you have suffered through my whole article, I thank you greatly. I wish that I could make it slightly more entertaining, however covering this much data in one article is a massive squeeze.
There are some other pieces of data that I have left out as the information is not as niche and can be found from any old influencer, this includes things such as the leverage chart, which is very dangerous currently due to it being at an ATH for the year. So it still requires a mention in this article somewhere.
I intend to only bring you data that I find vitally necessary, and try my best to give you information that you will be stretched to find anywhere outside of the DystoApez community.
I hope to help many people make large amounts of money throughout this next market cycle. And will keep you updated as things change. If something crazy happens, you will have an article and an update faster than you can imagine.
Please ping me in the discord with any charts you want to be marked up or any coins you want analysed. Crypto, Forex, Indices, Precious metals, I do it all.
I intend to release a full article detailing exciting coins and other money-making opportunities such as IDOs. You can rest assured that I will only bring you projects I believe in fully.
Most of all, make sure not to get lost in the Cryptoverse. The bear market this year was stressful for everyone, some of you may be riding your profits now, maybe some of you got in after the metaverse wave and are currently down. Don’t lose sight of the goal, don’t lose conviction.
Crypto isn’t going anywhere, and I hope you don’t go anywhere either.
Without further ado let me introduce my calls for gaming/metaverse.
StarLink - Space Metaverse
Seedify - Launchpad
Sandbox - Metaverse
UOS - Gaming dex (If steam announces they will indeed allow NFT games this will tank)
SOUL - NFT ecosystem
Gameswap - Gaming dex (potentially landed a triple-A game already)
Thetan Arena - Mobile game (buy after launch sell-off on 27/11/2021)
IOI - Race manager game
NGL - Triple-A game, brand new, under the radar.
Neo Tokyo leaked coins
These coins were given to me through a contact in NT. Please DYOR and NFA. This contains many coins for “behind the scenes” protocols, that will support the metaverse.
Coins I am familiar with and heavily vouch for are highlighted:
GRT, WAVES, REN, SRM, AAVE, SUSHI, RNDR, 1INCH, SUPER, JOE, WAXP, STARL, PYR, RMRK, LYXE, ALU, FISH, XED, REALM, THETA, KSM, LUNA
You’ve made it to the end of the article. I thank you greatly for your attention and hope you enjoy your stay as a DystoApe.
We are here to help day and night, and make sure not to Ape into anything I say without proper research; although I know some of you can’t help it.
I look forward to my time here in the DystoApez community, and I truly believe that we will build something special in this weird and wonderful emerging asset class.
I think it fitting to end this first article of many with my pinned tweet, which pays homage to this incredible strength and belief I see in this blockchain communities.
I bid you adieu.