Unfortunately, crypto continues to sell off.

It still looks like there is more downside ahead before we see a meaningful bottom.

Since crypto acts as a signal for risk appetite it will also be hard to see a sustained rally without any crypto-related participation.

If we take a look at Bitcoin, we’ll see a ton of distribution. Institutions are selling Bitcoin at record volumes. Very few are actually buying.

It’s now below all major moving averages. So until it can reclaim at least some of those levels, rallies are more likely to get sold, not bought.

And that weakness is dragging down the entire crypto sector. They are all breaking down lower. It’s simply not looking very bright in crypto land.

Crypto has been bleeding slowly over the last year. And typically, corrections like these end with a final flush to shake out the remaining buyers before it resumes higher.

This weakness has now also spilled over into other momentum names. Nuclear, neocloud, quantum, and drones have all been hit pretty hard.

While this is certainly not an ideal market environment for speculative assets, the overall market is holding up surprisingly well. The S&P has barely moved, small caps are doing okay, and only the Nasdaq is back below its 50d moving average.

It’s important to track how this develops going forward. But some caution is clearly warranted right now. There is no reason to be overly aggressive, especially if you’re more active and focused on growth or risk assets. Being impulsive or overtrading at this stage will likely to a lot frustration. And that’s best avoid, if possible.

It’s so much easier to be make progress in a favorable market environment. The key is to be patient and for confirmation.

Right now, it will likely take some time and consolidation before the next leg higher. Too much damage has been done at this point. So, keeping an eye on your risk exposure is essential. Depending on how the situation evolves it might make sense to rotate or trim some exposure, if necessary.