Blocksmith Says: Tailwinds for Blue Chip Crypto

25 October 2022

There is a shift underway in the markets that is forcing a rethink. The working assumption has been that we are due a 20-week cycle trough in the S&P 500 in mid-November. This is a big cycle and if the low is only three weeks away then the cycle’s status must be “hard down.” 

However, with sentiment still extremely bearish (which is a contrarian indicator for bullishness) and data showing CTA (commodity trading advisor) buybacks starting this week, it’s starting to get harder to hold the downside view. And if S&P 500 rallies, it’s because US 10-year yields are about to fall and the charts are pointing to this right now (not shown). In which case, we have an earlier than expected tailwind for blue chip crypto.

Yesterday we looked at the ETH | BTC spread and it pointed to a breakout and run up in ETH versus BTC. And a week or so ago we looked at the range bound nature of ETH and the outlook was “wait.” The picture is changing now and ETH looks like its setting up for a hard challenge to the c US$1,400 ceiling, which of course could lead to a breakout. Start hedging accordingly.

Christopher Grafton
Christopher Grafton

Chris has been working in the markets for over 15 years variously as a broker, analyst and researcher. He is the author of a well-known book on Hurst cycles analysis, and runs his own market analysis software platform on Bloomberg. He’s also a keen student of both the cello and Brazilian Jiujitsu.

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