Where Art Thou Confluence, Why Time is Ticking, Key Elements Needed for Risk On

Romeo, Romeo where art thou confluence. Where art thou confluence to save the crypto market from oblivion? Where art thou market expansion?? Romeo oh Romeo why haven’t we expanded already!? Sigh. 😂

I hope you enjoyed my poetry, I have had a lot of time to practice during this downturn. 😂 All jokes aside let’s jump into the report. My response to bears 👇

1Let’s start this report with a summary of where we currently stand in the market. Currently, the market is in turmoil after rejecting off the .702 retracement on March 12th. This is very concerning because from a timing perspective, we are quickly approaching where we went into expansion in previous cycles but we haven’t achieved this yet and we also have headwinds like a restrictive credit environment, the largest consolidation in Magnificent 7 since 2007 right before GFC, no expansion in the Russel 2000 (no risk appetite from investors), consumer/household discretionary at lows, DXY still sky high around 105 and Gold around 3350 and the crypto sentiment is like a 2017 cod lobby right now. It is truly a nightmare environment for hopeful ‘risk on’ investors. However, during trying times like these my friends there lies the opportunity and in this report, I will outline why.

In this report, I hope to give you a comprehensive snapshot of where we are compared with past alt seasons from a timing perspective along with the key elements that were required to ignite previous alt seasons. The chart below is where we are now and like I said above the market is in shambles so why are we here and what confluence of events do we need to take place to get out and expand across all risk assets?

Confluence is a series of events that lead to a certain chain-like reaction that will help you build conviction in your bets during turbulent market conditions like we are in. Throughout past bull runs for risk assets (Russel 2000) and crypto (a risk asset by default) to expand into a true bull run requires multiple things ‘confluences’ to take place almost simultaneously for an expansion aka ‘alt season’ to occur. Typically alt seasons happen on the back of an expansionary credit environment where rates are close to 0% and it’s easy to borrow money and slosh liquidity around the system. Currently, we don’t have that and this is why so many respected analysts believe we are doing a repeat of 2019 where we merely do a retrace in a restrictive credit environment and then chop down till the eventual COVID black swan and then all market expanded 3 months later creating a V-bottom and leading us into one the most consolidated bull runs in history in 2024. Such a consolidated run I might add that we are mirroring levels of consolidation in the top 10 weighted stocks comparable to 2007 right before GFC. Currently, we have more confluence of market conditions that would lead us to more downside but I am an eternal optimist and I am here to give you hopium instead of more doom and gloom because I like to practice the ‘contrarian investor’ strategy.

So below want to share with you a thesis that could lead us into a true bull run. Let’s start by looking at this BTC fractal from the 2013 cycle. We have seen this price action for bitcoin before mind you right before we went into expansion for that cycle.

Next, let’s take a look at the 2013 cycle and the 2020 cycle overlayed to where we currently are in the altcoin market. It looks bleak I know but we are exactly in line for where we are supposed to be from a timing perspective.

For example, let’s single out the 2013 fractal (teal), this would suggest we could achieve expansion as soon as August 3rd or 4th. Whereas the 2020 fractal (red) suggests the decision time is NOW more specifically two days ago July 5-7th from a timing perspective.

Now a closer look at the 2020 fractal which suggests it’s currently showtime. This isn’t invalidated yet but with each passing day and no expansion, it becomes less likely.

From a time perspective, we are quickly approaching the time that has needed to pass in previous cycles to ignite alt seasons such as 2013 in teal and 2020 in red. However, we are also missing key elements of risk-on-season like Russel 2000 expanding, DXY weakness and Gold still consolidating near highs. So, what gives? How will we achieve said expansion and avoid a 2019 style cycle?

We are entering into a mission-critical window where it’s decision time for both fractals. The 2013 fractal suggests expansion could occur NEXT WEEK based on ‘time passed’ as early as July 15th, ironically this is the rumored date for the ETH ETF approval. Markets are very spooked here, you can tell by open interest (leverage/perpetual trading) which is completely flat and sentiment is at the lowest fear level in over a year. To me, this smells like the V bottom scenario for alts and catalyst to send us into alt season. But we can not merely rely on an ETF as hopium.

The other 3 unequivocal pieces of the puzzle that we need for alt season are:

1. The Russel 2000 needs to expand and show us that investors have an appetite for growth/risk assets after consolidating in Magnificent 7 in such a heavyweight.

2. The DXY needs to roll over and pave the way for liquidity to flow into more high-risk/growth assets aka out of bonds.

3. Last but not least we need Gold to also turn over and retest its breakout levels and maybe even break them if we want a true bull run in risk.

Keep an eye out for other hints from the market. If any altcoins in the top 50 start to make parabolic moves this may be a sign of what’s to come. Keep in mind this is the most volatile market in the world. Currently, the total market capitalization of crypto is less than 1% of global equities. Time is always one of the most difficult things to predict in markets and why you need to subscribed to Digital Asset Research. But, we do have the likes of some of the most respected financial institutions now taking crypto seriously and an election where crypto is taking center stage. Although they may be incumbents and their intentions are unclear, no PR is bad PR and if we get a crypto-friendly administration it will do wonders for the industry. Over the next decade, the entire crypto landscape will change and in my opinion, it will be one of if not the single greatest wealth transfers of all time from boomers to zoomers. Remember zoom out, don’t bet more than you can afford to lose, but make sure you LOCK IN because this moment, IF, and BIG IF magic confluence shows up these are the types of moments where patience/ conviction is rewarded and when dreams can become a reality. HAVE A PLAN.

I will leave you with that. As always CHEERS 🥂 AND AS ALWAYS STAY BULLISH. MY FRIENDS 🐂

*When DeRooster provides another hopium perspective for alt-season* 👇😅