The Wolf Den #120 - Being A Bull Is Profitable
Bitcoin Thoughts And Analysis
Bitcoin remains bullish. It's hard not to expect a retrace, but I think that we have left technicals and are trading largely on fundamentals right now - supply vs. demand. Every asset eventually retraces, but I have no interest in trying to figure out when that is going to happen. For now, dips are for buying and have been consumed with vigor.
MONTHLY CHART
This is a LINEAR chart, meaning it shows the candles scaled without percentage based (logarithmic considered). This is presently the largest candle body that we have ever had, presently over a 5K rise. If you include the wicks, the largest candle was when we previously hit an all time high.
I do NOT use linear charts, because the percentage move relative to the past is far more important. Still a marvel to see this monthly candle taking form.
The log chart is a marvel of its own. As I have been saying all month, there's nothing ahead but a single line of resistance at the previous all time high. If broken, Bitcoin goes into price discovery and charts will become futile.
WEEKLY CHART
Last week's weekly candle was spectacular. Solid volume, only a slight wick on top and almost no wick on the bottom. It was the 7th green weekly candle in a row, which is a bit ridiculous and not something that we see too often. Retracement will eventually come, it always does. Hard to predict. For now, this still looks very bullish, even if we see price drop for a bit.
4-HOUR CHART
We have another ascending channel, which technically would be more likely to break down than up, but only targeting the beginning of the channel. Further, in a bull run Bitcoin has a LONG history of destroying ascending channels and wedges to the upside.
You can see the 50 MA, which I have discussed quite a few times on the 4 hour - it has been a great trade every time that it has been tested for quite a long time.
Altcoin Charts
I am pretty sure that every trade I shared from last week is in profit. Certainly all of the trades from Friday have done well, some with incredible weekend gains. Leveraged positions on ADA, EOS and XRP went insane (I believe I was the first to call XRP) as well as DOT and COMP, which I still have position on at Phemex. HOT is going well from last week. ALGO and EGLD are very much worth revisiting from Friday, as they have started to move. VET went up 35% and has broken through the main macro resistance. Even DOGE is already up a few sats.
I am not going to post the same valid trades again - just check Friday's newsletter. When we get into these full blown alt trading frenzies, it's up to you to track my previous setups - there are too many for me to utilize future newsletter real estate updating. That's why you should make the charts your own.
I am trying to limit the amount of setups - there are already a lot and I will be adding daily if the market remains bullish.
BITCOIN DOMINANCE
Beautiful! I mentioned that I was looking for a break of support at the most recent blue circle, but we have seen dominance continue to aggressively drop.
The weekly is the real story. Last week we were trading above that line, but I mentioned I was looking for a close below. We saw just that, and now are seeing Dominance drop dramatically after failing at resistance. This candle is brand new, too early to tell. We could see consolidation under resistance. But at this moment, Dominance says continued altcoin action.
DOT/BTC
I am trading the BTC pair on Binance, but also have a leveraged long running on the USD pair on Phemex. As you can see, this is another perfect example of RSI breaking resistance and price following. We now have a perfect retest of the descending blue resistance as support and price moving away towards higher targets. My stops for now are comfortably back in the wedge, below that blue support and the purple line. I intend to move them up if this goes as planned. Targets, as always, are the lines on the chart. We are presently coming into a key resistance, so it may be safest now to wait for a clear break through 31968.
INJ/BTC
INJ is at resistance here, so no trade yet. I want to see a break through the descending black line and above the confluent purple horizontal line. This has maintained its bullish market structure of higher highs and higher lows - the last low is not confirmed until another higher high is made. Still, this is a new coin, lots of hype and looks generally bullish and ready to break out. I am not trading this until it breaks those levels!
TOMO/BTC
I posted the above chart on November 5th, saying that it was sitting on a major support and wildly oversold. Here is the chart now:
Price indeed found support and now looks quite bullish after the break through descending resistance. I view the purple line as a key resistance being broken, so I would look for a retest of that as support, or if you are buying sooner to put your stop comfortably below that level. I am not currently in this trade.
TRX/BTC
This is a rare moment where I am less interesting in the chart than the idea. Most larger cap coins that are available on leverage trading exchanges have moved quite a bit. TRX showed some promise but appears to be lagging a bit. I just believe that it's more likely than not (no guarantees at all) to eventually follow.
Zooming into the hourly (also something I do not do often), we can see a clear bull pennant with a break above and perfect retest as support. If you are trading this on smaller time frames, the ascending line is the key support that I would watch.
Above 164/165 this should fly. Need to flip that to support. The target of this bull pennant is 186.
Ethereum Deposits Picking Up Steam
Last Tuesday, we detailed a slight concern for the slow rate of Ethereum flowing into its deposit contract for the necessary proceedings of Ethereum 2.0. In less than a week, deposit flows saw a massive increase, hitting over 50% completion as of Sunday, 11/22/20. Completing the 524,000 ETH is a huge milestone for the highly anticipated upgrade and it's a positive sign to be seeing inflows moving from 1-2% a day to +8% a day. If you want to track the progress of deposits, check out the linked Twitter page.
XRP Holders Earn a Free Airdrop
Back in newsletter #91, we mentioned an incoming airdrop for all XRP holders this December. Now that the airdrop is less than 2 weeks away, a few essential details are below.
To claim the free Spark tokens, XRP tokens must be held on participating platforms. Ther list supporting exchanges/wallets is growing, and includes Celsius, (one of our sponsors) Bithumb, Etoro, Ledger and Exodus. Rumors are circulating that Binance, Kraken, and Poloniex are in talks to support the airdrop. If you plan to participate in the airdrop, now is the time to check on these exchanges/wallets and make sure you have access. XRP must be in a participating location at the time of the snapshot and this is the only opportunity to claim free Spark tokens. Every question you may have about the airdrop can be found at the link above. DO NOT send your XRP to any person or entity claiming they will give you Spark tokens. As an important side note, it is likely that the imminent airdrop is a factor driving up XRP’s value and will continue to do so as people buy more XRP to claim more free tokens. Be cognizant that this may lead to a drop in XRP’s value on December 12th (or before), the day of the snapshot.
NFT Art Sets Record
Our good friend Trevor Jones (who was on the podcast last week) just sold an NFT he co-created for 260 Ethereum, worth $146,120. This is the most ever paid for a digital painting. Quite an accomplishment, and the ceiling continues to rise with each new piece.
PayPal + Cash App Buying More BTC Than Being Mined
We already know that Grayscale is buying more BTC than is being mined as well.
From Pantera Capital:
"In last month’s investor letter we discussed that after 30 months of operation, Square’s Cash App is estimated to be buying around 40% of all newly-issued bitcoin.
PayPal just launched their new service that enables customers to buy, sell, and hold cryptocurrency directly from their PayPal accounts. It’s already having a huge impact.
The bitcoin community is proud to have grown to 100 million users over twelve years. PayPal has 300 million active users. As we’ve argued — and will argue more fully in our December investor letter — this rally is much more sustainable than 2017. One of the main differences is the ease of investing in bitcoin now — via PayPal, Cash App, Robinhood, etc.
Previously the friction to buy bitcoin was pretty onerous: take a selfie with your passport, wait days to a week to get activated, daily limits.
Three hundred million people just got instant access to Bitcoin, Ethereum, and other cryptocurrencies.
BOOM! The results are already apparent.
PayPal’s crypto infrastructure provider is Paxos. Prior to PayPal’s integration of crypto, itBit, the Paxos-run exchange, was doing a fairly constant amount of trading volume — the white line in the chart below.
When PayPal went live, volume started exploding. The increase in itBit volume implies that within four weeks of going live, PayPal is already buying almost 70% of the new supply of bitcoins.
PayPal and Cash App are already buying more than 100% of all newly-issued bitcoins.
The dashed horizontal line in the graphic represents the total supply of newly-issued bitcoins plus the original itBit volume. If their growth persists, PayPal alone would be buying more than all of the newly-issued bitcoin within weeks.
Where would Cash App get their coins? That’s where the finite-supply, inelasticity part comes in: At a higher price.
That is THE story in Bitcoin right now.
When other, larger financial institutions follow their lead, the supply scarcity will become even more imbalanced. The only way supply and demand equilibrates is at a higher price."
BlackRock's CIO Says Bitcoin Could Replace Gold
Another major fund player is predicting that Bitcoin could replace gold as the best store of value. Most importantly, the narrative has changed from "speculative asset that could go to 0" to "Bitcoin is here to stay."
USA Using USDC To Send Money To Venezuela
Just wow. Read the article. The United States is using USDC (stable coin) to send money to Venezuela, bypassing the country's dictator Nicolas Maduro.
Phemex Offering $600 Trading Bonus
Phemex is offering a massive trading bonus of up to $600. Valid deposits will be counted between November 23rd, 2020 and December 22nd, 2020.
All bonuses earned through this promotion will be distributed on January 4th, 2021.
If you are considering signing up or are looking to add funds, do it during this window.
Sign up HERE - https://phemex.com/a/ScottMelker
More info below:
For a limited time, all BTC deposits will be rewarded with a generous trading bonus of up to $600!
TradingView Black Friday Sale!
This is the time that EVERYONE should upgrade or extend their TradingView account. I do it every year during the Black Friday sale. They are not technically a "sponsor" but I wanted to make sure to share this deal with all of you, because paying for TV any other time of year is highway robbery!
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor.