Thread by @BullfortJordan

1/19 $BTC Thread About Economic Context📈

Why do we often see a weekend pump followed by a monday dump?

So i sometimes post about BTC Dominance, Total Marketcap, DXY and the SPX.

We are trading crypto so what does these have to do with us? well actually alot, i will explain.

2/19 So i figured instead of posting a bunch of seperate posts which might get lost in your timeline (and on their own they offer less knowledge) i thought lets string them together and make the importance of these factors known and share how i use it to trade.

3/19 The SPX / S&P 500, its an index with the bigboys, like Facebook, Amazon, Tesla, JP Morgan. They call crypto a bubble, but this thing has been going straight up for 1,5 year. I use this as a general indicator of market sentiment. lets dive in.

4/19 So when the SPX is pulling back, we will often feel it to in crypto, but why? well it is all intertwined on a bigger scale, and because when institutions, hedgefund, whales and traders see a pullback, they want to minimize losses, so they will derisk, and what do you derisk?

5/19 Well the first thing you are going to derisk in your portfolio is ofcourse the most riskt and volatile asset. You guessed it; Crypto. We often trade in a positive correlation with the SPX.

6/19 DXY the Dollax Index, this measures the relative strength of the dollar against other currencies;

EUR (57,2)
JPY (13.6%)
GBP (11.9%)
CAD (9.1%)
SEK (4.2%)
CHF (3.6%)

Why is it important to look at? well BTC has a -90% correlation with it historicaly. when it pumps we dump.

7/19 US10Y, this is a complex topic, but i will crudely summarize it. US print money, Banks lend that money, Banks buy US10Y. US get to print more money, Banks lend that money, rinse and repeat. So how do we use it in trading?

8/19 It is a big indicator of the greed/fear on a macro-economic scale. so when we see a rise in the US10Y banks and investors are choosing to put their money in this very low risk debt obligation, meaning there will be less growth in other markets, or even a decline.

9/19 So if there is confluence within these factors you can hugely increase your trading edge since you know better how to position yourself in crypto.

10/19 Why do we often see pumps in the weekend and dumps on mondays? Well all the factors named above, dont trade in the weekend, so that is one part.

Big players often are on the sidelines during the weekend because there is lower volume/less liquidity,

11/19 meaning the most active market participants are mostly retail, and they like to buy in general. This is also fueled by a pullback we mostly see on Friday, and this dip creates market inefficiencies which the price likes to revisited (hence the bounce).

12/19 So why do we see a green weekend often followed by a red monday? Well it has to do with the legacy markets opening, and the CME gap that has been created. This is the gap in price. this gap is measured between the friday close and the monday opening.

13/19 And more often than not we are going to fill this gap (market inefficiencies) in this case the Friday close was; 47,5k. big chance we are going to revisit that area when Monday comes. but first lets enjoy the green and pump into the weekly close.

14/19 How do i find my setups and how do i start the day? well first thing i look at the legacy market performance during weekdays. afterwards i look at the funding rates in crypto. Right now on #BTC we see neutral/negative rates. Meaning traders are getting paid to LONG.

15/19 $BTC dominance, and why are we even looking at it? Well BTC dominance tells us how big the market share is from the total marketcap, if #BTC dominance is rising it means it is/will outperform Alts, if it nosedives it means ALTS are outperforming BTC (#ALT SEASON).

16/19 Now if you have been trading crypto for a while, you know that there is a money rotation pattern (BTC Dominance), that is stuck on repeat. And it is wise to follow the money when you see the steps in this rotation happening. Or you will be a "bagholder".

17/19 $BTC Volatility, we all know crypto can be volatile to trade. usually when we are nearing bottom levels, we are in for an increase in volatility and a explosive move. The direction isnt always clear, so all the factors above can tell us more about it.

18/19 Lastly when i have made up my directional bias for the day, i will take a look at the most "reactive" coins, you want to trade the most lively coin to get clear and fast validation or invalidation of your trade setup. i often post these daily in the "top 5 best performing"

19/19 Alright the end of my ramblings, hope this provided some insight!