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- [00:01]
A
Hey all, before we begin, I've got some exciting news to share. We've been working on something a little wild behind the scenes. It's called Unchained on Air, a revamped live stream series and podcast feed that takes you way beyond the headlines. It features sharp, maybe even controversial takes on major events and the kind of on chain intel that never makes it to your feed. It premieres this week and and it's packed way more shows way more often, each one laser focused on a different slice of crypto and finance. First up is Dex in the city where the wallets are cold and the takes are hot with Jesse Brooks, Katherine Kirkpatrick Boss and V. Lee, three powerhouse lawyers gathering to dish about the latest. From defi enforcement to token regulation and everything in between, it livestreams every Tuesday at 12pm ET. Second is uneasy money because what happens on Chain never stays on chain with Luca Netz, Kane Warwick and Taylor Monahan, three OG DeFi builders unpacking everything happening on Chain, from tokenomics to daos, from hacks to yields. It airs Wednesdays at 3pm ET. And finally, bits and the Interview in addition to our group chat show in which our Executive Editor Stephen Ehrlich takes you deeper with one on one conversations, this streams on Thursdays at 12pm ET. To catch the live streams, follow Unchained on x, subscribe on YouTube or find us on your favorite streaming platform now. And don't forget to hit the bell icon so you never miss a show. And if you can't make the livestream, these episodes will show up in your podcast feed the very next day. Thanks as always for your support.
- [01:49]
B
Since I'd say late 22 to 23, the character of the market in bitcoin at least has changed and we have to be adaptable with that in mind. These environments can change. The market structure can lead to changes. We've had that in the equity market with the advent of ETFs exacerbating these passive flows.
- [02:13]
C
Hi everyone. Welcome to the very first edition of Unchained On Air's Bits and Bips Live. The Interview. I'm your host Steve Earl, Executive Editor here at Unchained, and I am thrilled to have Katie Stockton from Fairlead Strategies to kind of walk us through the ebbs and flows of the crypto market. There's been a lot happening in the news these days. A lot of people are looking with a bit of worry at the bitcoin price as it's falling beneath its 200 day moving average and psychologically important level of $100,000 plus plenty of other things going on.
- [02:46]
A
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- [03:20]
C
Welcome, Katie.
- [03:21]
B
Thanks so much. Yeah, there is definitely a lot to talk about.
- [03:24]
C
Yeah. But before we get into this, I just want to make sure that everyone watching and listening understands who you are and what you do. Because your approach to understanding the markets, you have a very, like, esoteric niche, I've called it during previous conversations, technical analysis. And I remember you bristled a little bit at that and you said, no, it's charting. You really look at charts and in particular look at price movements to understand different things like, like momentum, etc. To really get a sense of where assets are going to go next. So why don't you just briefly explain what you do and sort of how you apply it to various crypto assets?
- [04:08]
B
Of course. Yeah. So it is technically technical analysis. Right. But we are chartists at heart and we're following price trends primarily and really understanding the supply and demand dynamics as it pertains to. To all asset classes, including cryptocurrencies. I do think charting is one of the best ways to understand the crypto market and to benefit from it because there is so much volatility and the charts can help us manage risk, they can help us stay on the right side of prevailing trends and look for catalysts. Right. Technical catalysts as opposed to fundamental catalysts. And I think that can be incredibly valuable. Valuable. And it's, you know, something that's become more popular too. So there's so many outlets out there that are covering the charts and putting out key levels and things of that nature. We have a real process here. At Fairlead Strategies, we've been covering crypto since 2019 on a weekly basis. And with that we really have gotten to know the character of these markets from a technical perspective. And they're, they're not, I wouldn't like them liken them to, you know, large cap equities necessarily. I know that's a comparison folks make a lot, but to me, they have their own distinct character and you know, the liquidity is sometimes an issue when evaluating these assets on the charts, but we do have enough to work with, certainly. And, and volatility is really the only guarantee, I think.
- [05:47]
C
So what would you say is kind of like the point of demarcation when it comes to having sufficient liquidity trading volume to look at assets, as you mentioned, I mean, the top assets by market cap account for 95, 97% of the entire crypto ecosystem. So I know in your reporting you typically just focus on the large cap tokens, the bitcoins, Eth, Solana, et cetera. But what would you say is that.
- [06:14]
B
Point of demarcation, you know, for the bigger coins? I think they're all certainly liquid enough to evaluate, certainly the top 20 or so. You can see reliable trends, the levels matter, things of that nature. Where it runs into a problem, I would say is more the small cap or even micro cap penny stocks that are trying to leverage these trends in crypto. You know, the digital asset, treasury companies, some of them are really just too thin to analyze, I think from a technical perspective, with any confidence, because when you look at a chart, a bar chart it is, you want to see some continuity from bar to bar or from day to day, week to week. And some of these penny stocks look like, almost like they've been acquired or something like that. They just kind of grind sideways with no discernible trend. So that can be problematic or, and, or they'll gap up and down constantly and it's hard to find key levels with that in mind. So once you get down to that, that kind of sort of spotty looking bar chart, that becomes problematic in terms of using technical analysis. So we, we try to stick to the larger cap coins, the larger cap companies, and they can help guide us for the smaller caps.
- [07:34]
C
Two more quick ones. And then I want to get into some of the assets for one. How, how much does history matter? I know when we've spoken in the past, I mean, stocks go back decades or even centuries at certain points. Crypto's only been around, I guess, for, I mean, we're almost coming up to close to 20 years or so, but most assets are about 5, 6 years old, with the exceptions of Bitcoin and ETH. But we also discussed before how crypto tends to condense market cycles like 10 year cycles into a year. So how much longevity, how much history do you typically need in a token to feel comfortable putting out analysis on it?
- [08:14]
B
It's funny because it's a viable question for equities as well. When you have a pretty new ipo, it's tough to have an opinion until you have at least, I'd say six months of history. And then your opinion can really only be very short term because you don't have a long term trend to reference. Or those longer term monthly indicators won't be viable yet. But I think we have plenty for most of the cryptocurrencies out there to understand the prevailing, at least intermediate term trends. And we can get some information on the shorter term ones, whether something's overbought or oversold, perhaps even if we don't have a good sense of trend yet. So. So I think we have enough to work with for sure. And for bitcoin and eth, of course, there's plenty of history to lend itself to evaluating cycles. And for backtesting purposes the data really became quite good, I would say in 2014 for Bitcoin on the charts. So we feel like that that good 10 year plus period is helpful enough and can provide guidance for the rest of the altcoins.
- [09:21]
C
Okay, and just last thing before we get to the good stuff, there is an Alphabet soup of different types of indicators, metrics that can be used in technical analysis. Can you just maybe share two or three of your favorite ones, ones you rely on most and to the extent you can, I guess somewhat succinctly talk about how sometimes you try to integrate them together. Because I know from again some of our previous conversations you can also get conflicting indications from some of the indicators you look at.
- [09:55]
B
Yeah, for sure. And I think it's a matter of multiple time frames and that's where some of the confusion sets in the methodology. The best way I could describe it is that we have three categories of indicators, so trend following or momentum, overbought, oversold metrics and relative strength input. So all of those things taken together can give us a good takeaway. And then we look at those same indicators over multiple time frames that I would just break down as short term being a daily bar, intermediate term being a weekly bar, and long term being a monthly bar to simplify it. And it's with all of that taken together that we arrive at a bias. So a long term picture, an intermediate term sort of swing idea of where we are, and then for the market timing and perhaps also risk management, we're honing in on that shorter term picture. So they're all very valuable for different reasons. As an example, a long term uptrend like bitcoins, we're going to be more inclined to look for buying opportunities right versus selling opportunities within that context. And it also can help us understand the indicators when things are changing. And that's the real value because I think we can all look at a chart and see a trend these days with all the tools that we have at our disposal like moving averages and the capacity that technology is allowing for. But it's when those trends are maturing that's harder to identify. And that's what our indicators do help us do. Their indicators like the macd, which is stands for Moving Average Convergence Divergence, it's a very common technical analysis tool. We use that. We use a stochastic oscillator that's an overbought oversold metric for relative performance. We'll use ratios, we'll use relative rotation graphs to understand the altcoin rotations from a cyclical perspective. So we have some go tos that we combine over those multiple time frames.
- [11:52]
A
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- [13:36]
C
Great. All right, so let's get into it first. Bitcoin. There's a lot of focus on the asset. I mean, many people in the industry are wondering when it's going to try to resume its uptrend, perhaps set new all time highs. There's a lot of concern about bitcoin debts right now. So why don't you walk us through the chart there. What are you seeing? What are the key indicators that you're looking for?
- [13:59]
B
So well, we're watching the long term uptrend primarily and watching some minor signs of upside exhaustion that we do have on the monthly chart, which I'll pull up for you now. On the monthly chart you can see the uptrend. It's very much evident in the rising 12 month moving average that you can see on the chart. There's an overbought downturn in our monthly stochastics that we're watching closely. It's a bit premature to get worried about. We've had them in the past without implications. In fact, when they turn right back up, that tends to be a positive. But if we have that and then also we lose this longer term momentum, that could suggest that Bitcoin's either moved into a trading range environment or a bear cycle. So we're keeping an eye on those monthly gauges. But for now it's almost always right to assume, assume the prevailing long term trend will maintain itself until you have enough weight of the evidence otherwise. This is a weekly bar chart of bitcoin and it has something called the cloud model. It's the shaded area and you can see it acts as a support level at times. You can see where the breakout was back here in late 23 acted as support here. So it is a gauge of support and it does show that bitcoin has upside potential into the sort of second quarter of 26. So we do still operate in the mindset of this uptrend maintaining itself just given the nature of this indicator. And yet we don't quite feel like we have that high conviction entry point from the more like market timing oriented indicators. But we are on the lookout for that at least for a short to intermediate term re entry point. One of those is the stochastic oscillator that you see here. When it goes below 20%, that's your so called oversold reading. But it's when you see that upturn that you tend to have opportunity. So if you look at past upturns near that 20% level, they've been great entry points for bitcoin. So we are watching exactly for that and it could take weeks, I mean we could be there very quickly before even year end.
- [16:09]
C
Okay. And I'm just curious too, does this particular, I guess, formation, for lack of a better terminal chart, remind you of any prior timelines, time periods in, in Bitcoin? It actually is very unique. I know your job is not to bring in like the fundamental drivers of what's happening here, but Bitcoin's retracing on the back of a massive bull run on the back of President Trump and then the DAC craze and, and right now kind of looking for that next drive forward. Are there any historical precedents that could kind of inform what you just walked us through, or is it really just a matter of kind of waiting and seeing for the, the technical stars to align as you just described?
- [16:52]
B
Yeah, you know, what we've identified is that since I'd say late 22 to 23, the character of the market in Bitcoin at least has changed. And we have to be adaptable with that in mind. These, these environments can change. The, the market structure can lead to changes. We've had that in the equity market with the advent of ETFs exacerbating these passive flows. So it has changed, which means we don't necessarily have an exact comp, but it doesn't minimize the value of the indicators. What we've noticed in this environment is that there's a propensity to stair step higher. Like the bulk of these up moves occur very, very quickly, even at times in just a one week period. And then it goes into a prolonged sort of stare or consolidation. So those up moves, you really want to be there for those up moves because they can be pretty explosive. So that's been the character of the market of late. And you can see it's quite different when you go back over history. They're just totally different environments. This was a, almost a parabolic up move that was very quickly retraced, which we've seen in other asset classes, of course, but we had not yet seen in Bitcoin. So there's definitely sort of a dynamic nature to the markets that we can try to leverage by just adhering to the methodology and knowing. I'd say this is the hard part is knowing when to wait. Different indicators at different times. An example would be, you know, wait momentum gauges like the macd, perhaps over an indication that would suggest it's overbought or oversold. And that is more the subjective nature of charting. And you know, sometimes if, if, you know, people have said, well, the charts failed us here. No, it's not the charts that fail us. It's actually the interpretation of the charts but that's where I think the error can come in. And we are always adherent to key levels. And for Bitcoin 100,000 as you sort of honed in on there is a key level just because of the psychological significance of it.
- [19:04]
C
Got it. Okay, so let's kind of stay on bitcoin but let's maybe you can add in or however you'd like to do it. Just talk about two other bitcoin adjacent stocks. One is the debt that we all know and love. Strategy mstr and then IRIS Energy Iron, one of the bitcoin mining stocks that is surging on the back of AI excitement. Been a little bit of the stocks have kind of been going in different ways. I mean bitcoin dats as we discussed and people watching and listening are well aware they've certainly been coming down over the course of the fall. As we move into the winter MNF premiums are dropping and in a certain way microstrategy or I'm sorry, Strategy I think might be the only bitcoin that, that still has a premium. And that's just because of Michael Saylor's ability to or proven ability to continue to raise money accretively, especially through preferred offerings in the market. A lot of people are wondering what's going to happen because dats, both DATS and bitcoin miners are supposed to be like high beta plays on bitcoin but there are some, they are diverging at least right now. So maybe you could talk us through what you're seeing from those two as sort of representative examples of their overall, I guess, market segments.
- [20:26]
B
Yeah, I mean I think you're spot on in that they're diverging and maybe there's information in that. You know, it's a relatively new sort of market environment for these DATs where we've seen strategy for one diverge on the downside from bitcoin. Both have been trending lower for more than a few weeks but strategy has actually broken that cloud based support that bitcoin is still holding. So the charts have really diverged and strategy is now testing former support. So back at these lows from February and it seems to be breaking and that would put next support in this range. So it does have support nearby. This is between about 183 and 200. So that would be the secondary support level that we'd watch. We don't have any buy signals from those overbought oversold metrics. What that would look like would be maybe an upturn here in the stochastics on this weekly bar chart or something from the demarc indicators which you can see. The demarc indicators are those numbers that are floating above and below the price bars are another one of our trend exhaustion inputs. When you see 13s, those are signals. So that would be a sell signal here. We love to see a 13 unfold on strategy. On the buy side. The soonest that could happen is in about seven weeks and that would be somewhat hopeful. So I think it's more of an early Q1 perhaps indication that we'd have some opportunity to benefit from an oversold condition here. So that's our thinking with these. It feels early to buy into weakness, but we do see there is support. Support is quite strong for Bitcoin itself and also strategy.
- [22:13]
C
Okay, so let's turn to eth. ETH was a big star through I guess the, the middle part of the year on the back of some significant demand from eth dats, Sharplink Bit, Mine, Ether Machine, etc but it has climbed down significantly from, from I, I believe, I think it set an all time high earlier this year. So what does the ETH chart tell us?
- [22:38]
B
We had a big breakout in Ethan and it's a breakout that we feel was pretty high probability in that we had a long term triangle formation. Hopefully you can see this here from on the monthly chart completed to the upside triangles are one of our favorite price patterns. What they essentially reflect are a converging series of lower highs and higher lows. And when you see the breakout that tends to be bullish and in this case it would be a very long term pattern. So a very long term bullish indication. It doesn't mean necessarily that it runs away from us on a short term basis. We saw some good follow through initially, but then of course a good retracement that you can see more clearly on the weekly bar chart here of Ether. So the next support sort of unfortunately for Ether is, is back here which is about 2750. And as mentioned the only guarantee here is, is volatility. Right. And, and we certainly had our share of it with Ether. But even back at 27:50 that triangle breakout I think would warrant, you know, sort of more buying interest than something that this is like the start of another crypto winter. As we're interested buyers into additional weakness. We'd love also to see from ETH some kind of oversold buy signal here as well. You see the stochastic oscillator in the bottom window is Approaching oversold territory. When you see that upturn, that becomes compelling as just one of several indications that we look for. What's been also interesting is just watching the ether and bitcoin comparison. In our research we like to do a ratio of the two and it's been a good, I'd say, helpful way to gauge risk appetite within crypto and we can gauge it outside of crypto in other ways. You know, for the equity market we'll use something like the VIX or the Fear and greed index. There is actually a fear and greed for bitcoin which is somewhat helpful too. So we like to have a sense of what risk appetite is. And when there is a good risk appetite, we tend to see ether do better. You. So this corrective phase naturally has been generally associated with ether underperformance versus bitcoin.
- [25:01]
C
Okay, yeah, I was actually going to ask about the bitcoin ETH ratio, so I'm glad you brought that up. And can you briefly talk us through bitmine just as a sort of proxy for the eth dots and I'm interested in any divergences or consistencies with strategy and the bitcoin dots.
- [25:20]
B
Of course, yeah. And listen, it's. It's been a little bit rough lately for this segment and it's not limited or specific to any one of these DATs. It's simply related to just what we were talking about, which is sentiment in the space and then of course the downside momentum. So this is an example of one of those sort of thinner charts. You can see the character. This is on a weekly too. So the fact that we can see that on a weekly, not just a daily, is really reflective of sort of that, that gappy range bound type of chart. That's not that helpful. But I think we've moved out of that sort of phase for bit mine with this breakout. That's a major long term breakout and it is bullish long term in the same way that that ether triangle breakout is bullish long term, near term. However, of course you've seen the momentum shift. It's very well evidenced by the weekly MACD here. You see that histogram ticking down, down, down. We don't have any kind of oversold indications as of yet from an intermediate term perspective. And that's what I would love to see, to feel confident in revisiting, you know, the bit mine, but also some of the other ones that perhaps are highly correlated to it. But I think we're seeing more and more charts do this, where they go from a Very thin sort of liquid type of feel to them, to something that's more mainstream and it shows that institutional adoption is growing and I can see it via the charts. There's of course other ways to measure that as well, but it's something I think that's worth tracking. And you know, the more and more that we can apply these, these charts and analysis in a professional and consistent, I'd say manners, the more we can get out of them. Here is Bitcoin to ether ratio by the way that we mentioned we'd saw or we had seen Bitcoin underperform ether for a pretty good period when we saw them both rally. But this counter trend move is reflective of the risk off that we've seen over the past three months or so in the space.
- [27:32]
C
Got it. Okay, I know you're getting close to time, but I want to just ask you to walk us through two more assets that have been in the news recently. One XRP as we're talking, I believe they're going the first spot XRP ETF is going to begin trading today so or has already begun trading. So can you talk about what you've seen recently in the XRP price chart? And, and perhaps if this asset, this product does see widespread adoption, where it could go?
- [28:04]
B
Yeah, of course. So it's been somewhat range bound. Despite the range, you can see that XRP has managed to hold the cloud. So the cloud as you can infer is one of our primary sort of trend following and support inputs and it is good to see that there is that cloud based support. The indicators are mostly neutral I would say for XRP at this time. So this big corrective phase has brought it closer to support. But it would be nice to see some kind of catalyst and we're on the verge potentially of that on the daily chart. So if we were to zoom in, what would what we've seen with this corrective phase is a bit of an improvement in short term momentum. What I would love to see is XRP get back above both the 50 day and 200 day which you can see have converged here. That would just mean a move above about 263 so not, not terribly far from current levels. And it, it just the, the whole takeaway is that we're always looking for catalyst to act upon. The maybe the ETF will actually exacerbate the short term improvement in momentum and we can get above that 50 day and 200 day as a positive technical catalyst to act upon. I'm a little concerned and this goes for the broader space by some of the deterioration that we're seeing on the monthlies, but it's not strong enough that it would be any reason to reduce long term exposure. If we, we do see sell signals though start to unfold in the monthly macds, I would certainly take issue with that because it would be more indicative of a more prolonged sort of bear cycle.
- [29:43]
C
Great. And then just finally privacy coins have been in the news and no token has benefited more than zcash. In fact they just got their very first debt yesterday. So please walk us through there. Is there more room for zcash to run or are we going to be looking at a drawdown and just due to buyer exhaustion and if so, where might it revert to?
- [30:08]
B
I mean I think that the. Yes, we will see a drawdown at some point. Right. I guess the question is more does it come from higher levels or not? A short term pullback has already started to unfold. But the big picture is this which is on the monthly chart. You can see this massive breakout even above this 2021 high and then all the way back to 2018 when it was launched there. So, so really pretty intriguing long term breakout. You can obviously see it. It has a visual sort of sense of being overextended. Surprisingly though, we're not seeing a cell signal yet. It could happen as soon as a couple weeks out. So, so it feels like it's sort of on the verge of that based on a combination of our weekly stochastics and demarc indicators, but we don't have it yet. So if, if a client were to ask me, well you know, what do I do with this position? Do we think this pullback is the beginning of a major retracement? I would say probably give it a chance to see some follow through because of the long term breakout, but because also it doesn't have any of the sell signals that you might expect expect it to have, you know, after such a steep up move. The other thing I would add on on the zcash is that with any kind of steep up move, this is on the daily chart, there's a good spread to initial support and like let's say we were to use the 50 day moving average, it's, it's really well below 287 is the level. So because there is such a spread to initial support there, there needs to be some attention to risk management and that that means different things for different people. Maybe just the stop loss or watching the curvature of a moving average, but it definitely warrants that.
- [31:51]
C
Okay. Well, Katie, thank you so much for taking the time to walk us through all of that today. Really appreciate all of your insights. We'll have to have you back.
- [32:00]
B
You'd love that.