Why the biggest threat to crypto is fear in the stock market | Interview with The Chart Guys

What is up, Dan? How are you today, sir?

Very good, thanks for having me.

Yeah. Welcome to the Market Report. We are happy to have you here today. I know we have some burning questions for you to get your insights about what's happening in the market. So just kind of kicking things off here. Like what is your overall sentiment right now in regards to the crypto market? Where do you see bitcoin heading here in the days and weeks ahead?

So I'm a bit cautious Bitcoin in the short term here. Over the next couple of weeks We've made this 70% move from 29 straight up to 65 or not 65 straight up to the 50s with a lack of weekly consolidation. So every week's a higher low and it's just been impressive and really frustrating for the Bears every leg up that we see. But we're getting to a point where I'm expecting an equilibrium pattern on the monthly time frame and an equilibrium is just a pattern of higher lows and lower highs in a tightening range. And I'm anticipating that we're going to be looking for a lower high compared to the all time high initially. And just, just watching the pattern of, you know, the last five weeks we've had a green day every single Friday. And that probably has to do with a bit with options expiration that Marcel was talking about and just watching for some short term patterns to shift to lead to some weekly consolidation which would be healthy, bigger picture to cool things off a little bit.

Right on. Now, what is going to push bitcoin like past 50k in your opinion? Is it going to be some sort of like catalystic event or is it going to be kind of several events that kind of all pair together? Like what are your thoughts on something like that?

So 50,000 is definitely a short term resistance level and I don't think it's going to take, you know, you don't need a news event to get over 50, but if we're talking a new all time high, I think you're going to need a catalyst to see an increase in volume. Because if we're going to get over 65 from here, it's going to have to be on the backs of a very notable volume. And as you mentioned previously, the potential for the etf, I think that could be a catalyst that could do it. But in the absence of a catalyst, I'm looking for that lower high compared to the all time high and a tightening range towards the end of the year.

Very good. Now, are we in alt season right now? What are your kind of thoughts about that?

I guess that depends on what the definition of alt season is. But the pattern that we've seen since bitcoin hit the new all time high, over 20,000 is essentially that when the altcoin market is strong, it shows confidence in the entire cryptocurrency space. So I personally am a more confident bitcoin bull when I'm looking and seeing all these other altcoins essentially stronger and leading the way. So I guess you could call that an alt season. We've got names like Cardano and we got soul and they're hitting all time highs. And that definitely again it just breeds confidence when there's profits flowing in the space. People are just moving their profits around one coin to the other and it's this perpetual confidence essentially. So I think it's a good thing for the crypto space as a whole. And again, I want to see the altcoins leading the way to have confidence in the strength of the entire sector.

Done, done. I kind of disagree with you on that because whenever we see a local top on BTC, okay, it tested 50,000, now it's back to 47, so we failed to breach 50,000. I think that people move their money out of bitcoin to altcoins so you see an altcoin rally. But it's not that market is gaining confidence in my view. It's just opposite. People don't see upside for bitcoin in short term, so they gonna risk on altcoins. Don't you think that what's usually happening.

I don't. I think that when there is a lack of confidence in bitcoin, when it starts to show a little bit of signs of weakness and a little bit of fear out there, it's that altcoins generally are dropping harder and you know, they've run harder, they've established less support on the way up. And so you'll see the dominance chart of bitcoin generally is going to be going up when the cryptocurrency space as a whole is dropping. And that shows me that the altcoins are dropping harder than bitcoin is. So I think that there's the most confidence in bitcoin. So I see that people flee altcoins when there's any kind of fear entering the space.

Fascinating. Now what are some of the biggest threats of to like some of the larger cap cryptos right now? Is there any threats really?

Honestly, one of the biggest threats that I see in crypto that I'm always watching for is fear in the stock market. I'm watching for the correlation of that fear because when fear is this, you know, it supersedes everything. It just, it hits all markets. And back in. When we saw the COVID dump, we saw bitcoin dump, we saw metals dump, everything was dumping. So when there is a prevailing fear in the stock market world, crypto definitely drops with it. And that's something I'm always watching for. And we know the stock market has been on absolute fire since that Covid low. Every dip keeps being bought. But I'm always watching, I'm watching for that fear and I know that it will very likely impact bitcoin and the crypto space. And again, we're talking short term, you know, the end of the COVID dump, the crypto space recovered significantly. But it's that short term correlation of everything where the baby gets thrown out with the bathwater. And that's what I'm watching for. For the next very significant dip in the crypto space, I think it would be accompanied by a significant dip in the stock market.

What is, what is fueling the stock market right now? Like in years past, like some argue that it's been like quantitative easing, like what is fueling this continuous rally going up and up and up and up and up. And is there going to be an end to it?

That's what everybody points to. Everybody points to the Fed. It's a manipulated market, the Fed. Honestly, I don't care why it's going up. I just care that it's going up and I'm going to continue to trade with the trend as long as that's the case. And we know that when we have these slow grinds up that are just continuous, that when they end, they end fast and hard and seemingly out of nowhere. So definitely want to be paying attention to that. But again, I don't care. You know, I put out my YouTube videos and every time people are commenting, it's fake, it's manipulated, I just don't care. That doesn't mean anything to me.

Exactly. I want to kind of shift here. Go ahead.

But if the Fed says, okay, we're going to start tapering, we're going to start not buying monthly assets anymore. The market, the exact month enters in panic in fear mode. Don't you think that could drive both S and P and cryptocurrencies prices down?

Definitely. We're starting to get that. You know, they're starting to change their language a little bit and they're starting to throw those keywords out there to almost, you know, get us ready for it a little bit. But with where we stand right now, the S&P 500, it hasn't seen any monthly consolidation. And I'm talking about the monthly timeframe where every candle is one month. It hasn't seen consolidation on that timeframe in something like nine months. And so we know it's due, you know, and the next time The S&P 500 sees monthly consolidation, it won't surprise me in the slightest. I know it's gonna happen at any point, so I'm ready for that. And it was the same thing with Bitcoin. When Bitcoin was running up to 65,000, I started getting cautious, granted, a little bit early. You know, I was scaling out upper 40s, low 50s. But it was because the monthly timeframe was so extended that I knew monthly consolidation is inevitable and just being prepared for it. So I am definitely prepared for monthly consolidation in the S&P 500. And whether it's not. Whether or not it's, you know, tapering that is the reason for it, it definitely could be. It is something to be paying attention to for the cryptocurrency space as well. It's something I'm always telling people in my videos. If you're trading crypto, keep an eye on the stock market.

And what are maybe some signals that. That you would see from the stock market that would be like, hey, that's a giant red flag. Like, that's a. That's something huge. I should definitely track volume.

I mean, volume. You can't go down the S&P 500. And I'm talking about, you know, Spy, the ETF that tracks it. It can go up on very low volume. It just grinds higher and higher, but it can't go down without a big spike in volume. So you keep an eye out for that volume. And I watch the major sectors because The S&P 500 has had this beautiful rotation going on where it's just, you know, the tech sector is going up and financials are consolidating, and then they flip. And so I'm watching for when all of our major sectors, the tech sector, financial sector, the healthcare sector, if they're dropping at the same time, that tells me that this isn't rotation. This is money leaving the market. So I'm watching all the little components of the broader market for clues as to whether it's just the continued healthy rotation or whether it's something different.

Yeah, those are excellent insights. Now I want to kind of shift Gears from Bitcoin over to maybe some altcoins. Are there a particular set of tokens that you are extremely bullish on right now? And if so, why?

So as a trader, fundamentals are at the bottom of my reason for trading. I'm a very much leaning technical trader, Marcel. So for me, honestly, when something's in Blue sky breakout, that is when I am, I'm most interested in terms of trading it. And we have a trade. I love playing bounces. So there's a trade that I call the back burner trade which is just if something is at all time highs, the first five minute oversold bounce, the first hourly oversold bounce generally had very significant gains. It's a high probability trade. So if something's in Blue sky and Cardano just had this happen within the past two days, it hit first hourly oversold conditions where the RSI is dipping below 30 and it has this very significant bounce. Now that's not to say that you're just blindly buying and you know, going headfirst in. You have to manage your risk as always. But those are very high probability trades. So when something's in blue sky, it has my attention. And back in 2017 when I was first getting interested in crypto, you know, I read some articles and okay, a lot of this is over my head. I understand some of it, but I looked at the chart and I said okay, ethereum, Blue sky, all time highs. I know what that means and I have confidence in that technical setup. So that was a big reason for me getting involved with the space.

Apart from the rsi, what other indicators are you most frequently using for altcoins?

Volume, RSI and price levels, previous price supports. I also like exponential moving averages. I like the 12 EMA a lot of and when things line up. So if you're getting first 5 minute oversold and the hourly is hitting hourly EMA12 support, looking for a higher price level to form on the hourly. Again, that's multiple things lining up that have that as a higher probability trade.

Yeah. And I've watched some of your AMAs and I love how you take this, this very like holistic approach to trading and it seems as though it's not just looking at numbers and charts, but it's also being in touch with the psychology, being in touch with yourself, your emotions, your environment. So like, how important is that to you personally when you're doing daily trading?

It's very important. I love that Jordan has a psychology background because I've always said psychologists would make really good traders. You know, learning technical analysis is one thing, the book learning part of things and a lot of people can do that, but it's, it's really, I mean it's a lifestyle, trading is a lifestyle and you have to be balanced in so many aspects of your life to be able to do it successfully, consistently. And recognizing yourself and recognizing your ego and constant self reflection are a huge part of evolving as a trader and constantly improving.

Do you think most traders are successful in like managing those things?

No, that's, that's why most people are not successful traders. That is, that's the hardest part. And it takes, it takes a whole reworking of your lifestyle. You know, if you're, if you get angry at people in traffic, you're not going to be a good trader.

Yeah, that didn't help me try and be a better trader. Like it's mastering your own psychology and like not buying when the, oh, I should buy it when you know you shouldn't.

Like.

Yeah, it's, it's a tricky game.

What are some of the characteristics that, that you were constantly like working on in regards to kind of like the mental game of, of trading?

Patience is a big one. And even outside the world of trading, patience was one that I had to look to master. And then again just self reflection. So, you know, I'm not immune to these emotions. I feel fomo. I can look at a chart exploding and feel fomo, but it's zooming out and recognizing I'm feeling fomo, I probably shouldn't trade right now. And that's a really important aspect because if you have your blinders on and you're not, you know, zooming out and watching the thoughts that are occurring in your head, it's how you're just suddenly placing a trade and how you have no game plan and next thing you know you're buying the top. So constant self reflection.

Now, is sometimes not making a trade the best trade?

Absolutely. That is very often the best thing to be doing. You want to have a game plan established before you're ever entering a position. You want to know where you're looking to enter, where your stop loss is going to be so you know your maximum risk and where your target's going to be. And you obviously want to ensure that your target has a greater value. You know your reward is higher than your potential risk. And so you have to establish this trade game plan before you ever click the buttons. Because again if you're just acting on impulse, you're acting on emotion and your emotions are guiding things and you will find the more you watch markets that it's, it's acting on the opposite emotions that you would normally be feeling that would be the best scenario. You know, when there is maximum fear, I love oversold bounces. It's one of my edges as a trader. And when there is maximum fear, that is when I am my most aggressive as far as looking at trades. And when there's maximum fomo, it's when I'm trading a lot less. And like I said I was, I was scaling out a little bit too early on bitcoin on this all time high run. But I was going to be darn sure that I was not holding when we saw that monthly consolidation take place.

And are there any like basic baseline tips or tricks for learning TA to help anybody that's kind of just getting started here watching today stop loss on every trade.

I mean there are, I don't know any long term successful trader that does not do this. And generally I know that even though I can say that to people 100 times that they still will not do it. And they have to learn for themselves. They have to feel the pain in their stomach and they have to be sick. And that is something that is part of the path to becoming a trader. And you have to feel that enough to say, man, I don't ever want to feel that again. Well, if I just put a stop loss on every trade and I know my maximum risk on every trade then that can be that that's a way to avoid that feeling.

Go ahead.

Are there any tokens aside from Bitcoin Ethereum that you more like a long term hold?

I have long term no touch in bitcoin Ethereum, some link and then some LTC from back in, in 2017. I'm not very hopeful for it but I designate these things as no touch. Psychologically that's very important for me and I just account for them as zero dollars. You know, they go to zero, it's zero. And anything else that they're going to be in 10 years, great. And that's just a way because as a trader when I'm constantly staring at the screen it's hard for me to zoom out. You know, I'm looking at these, you know, five minute candles. I need to be looking at the decade long candles so I have to designate those as no touch.

Yeah, well I do want to kind of move us into our fire round for today. This is kind of a fun little segment where we kind of ask you just a gambit of Rand questions to get to know you, Dan. So I'm going to kind of fire away here. So how do you. What is like one thing that you do to deal with the stress of trading? What is like an hour gardening outside?

I love growing plants. Had a little farming background as I was learning to trade and that is how I find balance.

Okay, what's your favorite cheese?

Favorite cheese? Oh, man. I guess I would go with Gouda.

Gouda cheese.

All right.

What is your price prediction for bitcoin and ethereum by the end of the year?

End of the year? Well, I mean, I could give without an ETF catalyst. I think that we're going to see a tightening range and I think maybe we'll be maybe in the 40 thousands towards the end of the year. I think we set a monthly lower high. I think we pull back and set a higher low compared to 29 and look for things to continue tightening if there's an etf. Marcel, I'll give you an all time high with an ETF.

Now, if somebody offered you five Bitcoin or 75 ETH, which one are you taking today?

I'm taking five Bitcoin.

Fair enough. Are you a believer in social tokens? If so, why?

Honestly, I haven't looked into them enough to have a long term viable opinion on them, to be honest.

All right, fair enough. And last question here. The fire round and then we're done. You're off the hot seat. NFTs, are they going to be a boom or are they going to be a bust?

I think like, like most altcoin projects where you see this, you know, huge rush and tons of things being established, I think 98% are bust. But there will be some booms.

Very good. Well, this was Dan McDermott from the Chart. Guys, today, we really, really appreciate you coming on. This was awesome. We hope to have you on again. Thanks for joining us today, Dan.

Thanks a lot. Have a good one.

Thank you, Dan.

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