The Wolf Den #133 - Trading Should Be Boring
Bitcoin Thoughts And Analysis
Bitcoin continues to look a bit shaky, erasing the slight gains on yesterday's small bounce. No surprises here. Let's look at the chart that I shared yesterday as to what I was watching for on the 4-hour.
A 4-hour candle close below $17,903 would make a potential bullish divergence possible when accounting for candle closes and not wicks. If we see this happen, we would then need to see a clear move up in price and elbow up on RSI. You can see the path that I drew yesterday and that it could possibly happen. If this does not happen, we will have a higher low locally on price, which would still be a decent sign that we could be reversing. Right now I have low conviction on a move in either direction, so I will sit on the sidelines, waiting to see if we get that divergence or not.
I added a trend line on RSI that coincides with the channel resistance shown about on the candle chart. As you can see, RSI is still well below. We often see RSI (or other oscillators) break trend before price - this can be a good way to get in early or predict when price is ready to follow. I have an alarm set on that RSI line for a break, which would be another clue to go long.
I believe we are in a bull trend, so I am not looking for shorts at all. The risk reward of betting against Bitcoin for me seems clearly poor.
Altcoin Charts
I had this cued up and ready to share for the newsletter yesterday and it somehow slipped through the cracks. Damn! It was a great play and I shared it immediately on twitter after the newsletter went out.
I am trading this on Uniswap and was also an investor in the presale - it's been incredibly profitable for me, and I legitimately believe in the team and the project. I have a sizable position in this that I have moved to my "long term hold" bag and that I intend to forget about for a long time. But I am actively trading it as well.
At the moment we have a clear breakout from a flag after a clean bounce from support. Now it's retracing a bit, so I would look for a potential entry around the next support at .394 or a retest of the flag top as support. Trading is risky right now and you can't use a stop loss on uniswap. So if you do choose to take this, I would take a very small position and be prepared to hold it for a while - that's just my approach.
Legacy Markets
XAU (GOLD)
Revisiting the gold trade, because I still think this is setting up for another nice move to the upside. As you can see price held support at $1795.8, which was the first level we were watching. It never made it to the demand zone below, but that could still happen. I did not take the trade at $1795, even though I intended to - I was just not trading at that time.
Regardless, this is in a clear bull flag, so the real trade would be a break of the descending channel to the upside. Set an alarm for price exiting the channel and make a decision if that happens. Simple.
Chart Requests
There were a LOT of requests this week and I had a great time analyzing these charts for all of you yesterday on YouTube. Keep them coming!
US Unemployment On The Rise - Again
Your weekly remind that things are once again getting worse, and not better with regards to jobs. As the winter progresses and we see more lockdowns and spikes in Covid, this trend is likely to continue.
"Worker applications for unemployment benefits rose sharply last week, an indication layoffs remain at a high level nearly nine months into the coronavirus pandemic.
Weekly initial claims for jobless benefits, a proxy for layoffs, rose by 137,000 to a seasonally adjusted 853,000 in the week ended Dec. 5, the Labor Department said Thursday. That marked the highest level of applications since September, but was still well down from a peak of nearly seven million in late March."
BitPay and Paxos File to Become Federally Chartered Banks
BitPay, a bitcoin payment service provider, and Paxos, a crypto service firm, are both seeking federal charters to operate as banks. The license can only be granted by the Office of the Comptroller of the Currency (OCC), which happens to be headed by Brian Brooks who served as Coinbase’s chief legal officer from 2018 until mid-2020. Not only is this a serious threat to banks, but it's a huge plus for widespread crypto adoption bringing public legitimacy to the crypto space.
Congress is Demanding Crypto Clarity From the SEC
A bipartisan group of representatives from the U.S. House have signed and sent a letter to SEC Chairman Jay Clayton demanding clarity around the issue of broker-dealer custody of digital securities. This news pertains directly to the Bitpay and Paxos news above. Earlier this year, the OCC released a letter allowing national banks to provide custody services for cryptographic assets. However, the guidelines to do so from the SEC and FINRA are missing. Basically, crypto companies have been told they can become a bank and custody assets but haven’t been given instructions on the logistics and rules - there is a complete lack of infrastructure. The letter was headed by Congressman Tom Emmer and was extremely simple. It demanded that the SEC: publicly announce banks mcan custody digital securities, advise FINRA on the requirements for these companies to operate, and approve more applications rather than ignoring them. If both sides of the political aisle can comprehensively agree on this issue, there is no reason for the SEC to remain silent. Here is the full letter.
Movie Based On Silk Road Coming To Theaters in February
Lionsgate has bought the rights to an upcoming movie about the Silk Road. Nick Robinson will portray Ross Ulbricht, the creator of Silk Road who is now serving two life sentences plus 40 years. Nick’s last big film was Jurassic World in 2015, playing the character of Zach. My hope is that this movie does not exaggerate the story or paint Ross in a harsher light than is warranted. Ross will likely never be a free man. I had the opportunity to get to know his lovely mom - she came on the podcast to share her story, doing everything in her power to reduce her son’s charges and or earn him clemency. Regardless of your opinion on the whole case, Ross played a huge role in the early days of crypto and was smashed with the legal hammer.
The Wolf Of All Streets Podcast Ft. Pablo Gonzalez
Pablo Gonzalez, the Co-Founder of Bitso, Latin America’s most popular crypto exchange, first started using Bitcoin in 2011. Pablo was also one of Mexico’s first residents to use the internet when it was first being installed in the country. Pablo’s expertise has allowed him to gain a unique perspective on how Latin America is rapidly adopting crypto to combat hyperinflation and an unstable financial system.
Pablo and I further discuss currencies losing value overnight, 6/10 Mexican’s lacking access to a bank, stacking USD in safety deposit boxes, the banking cash cow, buying Bitcoin on Mt. Gox in 2011, building Bitso, cryptocurrency as superior money, using XRP for remittances, Bitcoin as magic money, the failed Petro, the complicated nature of Sats, and crypto as a world-changing movement.
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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.