Thread by @MrBenLilly

0/14 Pareidolia - the tendency for one's perception to impose a meaningful interpretation on a stimulus to see a pattern where in fact there is none. In trading we call it bias.

Many crypto traders are forming one right now. Here's what I mean. 🧵👇

(charts🙏 @cryptoquant_com)

1/14
Many might remember the chart below from our last issue, When to Strike: jarvislabs.substack.com/p/when-to-stri…

It shows onchain support/resistances near $50k and $35k.

We are now in the green band.

2/14 Now that we are at support it's good to evaluate onchain netflows to determine the market structure. Yesterday 8k BTC left exchanges. And over the last few days, netflows are negative - meaning less selling pressure. How negative? About 28k worth of BTC.

3/14 ETH, similar situation... In fact, reserves have dropped 704k ETH since May 27th.

4/14 Here we are near a support... Multi-day negative netflows, El Salvador views bitcoin as legal tender, Microstrategy loading up on more BTC... bitcoin's price feels like a steal. Right?

5/14 But diving into the data a bit more we see our long-term UpOnly bias might cloud our judgement on the near-term.

(I personally am subscribed to @zhusu and @kyled116 #uponly on a yearly timeframe - which I believe is similar to their timeframes)

6/14 First up, Kraken witnessed about 16k BTC exit their exchange over the last few days. Traders don't go to Kraken to accumulate, the liquidity is just not there for that.

This BTC will likely return to another exchange shortly.

7/14 Second is Huobi's netflows. The exchange saw a significant outflow after the China ban last month. The exodus is continuing, luckily at a much slower pace.

Similar to Kraken, this will likely wind up on another exchange. Neither of these exchanges reflect accumulation to me

8/14 Which is not to say no accumulation is happening. Bitfinex saw about 10K BTC leave over the weekend, which is a place accumulation does take place. But back up a bit to our onchain support/resistance chart, we had some recent dots that are now resistance.

9/14 Pair this up with our notorious mega Bear whale, Pablo, who made some moves yesterday and again today... Market movers are not bullish.

10/14 So stepping back from the data, we see the negative netflows might not be as bullish as we originally believed. Pairing this up with market movers selling, a rest of prior lows are expected. In fact, we are already seeing the price action...

11/14 Pair this up with negative funding rates, meaning the market is leaning overly bearish, we might get the setup for a short squeeze via a "V" shaped drop. Call it a liquidity sweep, bear trap, luring in shorts and liquidity... doesn't matter. All the same.

12/14 What's important is this type of behavior can help create upside momentum. And it's important to not get caught up in it. If anything, just scale in on spot and wait for things to clear up before trading with size or via leverage.

13/14 As for now, change your perspective from time to time. Force yourself to look at things differently. Because depending on your bias or perspective when viewing the rock at the start of the thread, you may have seen an elephant when in fact it was a rock.

(Elephant Rock)

14/14 Did you enjoy this thread and find it useful? If so, please retweet. You can find the analysis in its entirety in the link below.

(h/t: @SahilBloom for inspiration via his brilliant threads)

Thanks! : jarvislabs.substack.com/p/pareidolia

looking at bybt.com, i don't see any funding rates higher than neutral. full court press on the shorts.