The Wolf Den #141 - Good Vs. Bad Trades
Bitcoin Thoughts And Analysis
After yesterday's newsletter, I shared a tweet on some updated thoughts.
As you can see, $23,236 became the key resistance - confluence of the 61.8% Fibonacci level (which is where you expect a retracement of a move to) and a key local resistance. The good news is below.
After seeing it rejected there multiple times, the last 4 hour candle managed to close above (and was predictably rejected at the 78.6% Fibonacci level. Now that line should be support, so a drop to that level is a nice potential entry for a resistance to support flip. It appears likely that this short term dip is over, but always be careful. As you know, I am still looking for a potential move back to the previous all time high around 20K, because it would be super bullish to see that tested as support. It may NEVER happen, but it would be extremely normal.
And just a reminder from yesterday - we had an oversold bullish divergence on the hourly. That was the local bottom.
Altcoin Charts
LINK/BTC
Yes, I posted this yesterday, but wanted to point out that it is currently at a major support. This is knife catching, so it carries some risk. But the Risk/Reward of a buy here is tremendous. You can use a tight stop (just below the blue zone) and the upside is somewhat endless. This is the trade I was looking for yesterday. I am already in the USD pair with leverage, so I am not actively trading this, but I certainly would.
Daily RSI is the most oversold it has EVER been on LINK. Also, I have seen about 10 tweets today saying LINK is dead and that it's going way further. That's a solid buy signal in my opinion.
A break of the blue line is still the safest entry.
LINK/USD
WAVES/BTC
Lucky or perfect stop loss placement? Not sure.
My stop is the red line. My thinking was to put it just far enough below the black line to account for a wick. I usually don't use round numbers, so 11.79 would have been more my style, but for some reason I chose 11.8. Missed me by fractions of a penny. You can see the trade on Phemex below.
I am thinking LUCKY!
Either way, this is playing out as expected - as usual, it dropped a bit lower first to punish stops and early longs. After I shared yesterday's setup. I put orders back around the middle of that range and filled at 12.16 on average. I was up, I was down, I almost stopped out, now I am up 50%. What a ride.
If I was to look for a trade now, I would want a break of the blue line or a retest of the purple line that I have added. Remember, that is an AREA, not a definitive line, so place some orders above it and in the area, if you are looking to trade it.
ORN/BTC
Update from yesterday. Beautiful bounce, already up about 12% from the entry. The blue line is now the key. A break and this should head up for quite a while. Revisit yesterday for more details.
SUSHI/USDT
I have been in Sushi for weeks, as have many of you. Above is the original setup. Let's adjust that blue line for time and move it to the right.
This is what I am watching for now. Exact same idea, just took a bit longer to develop. I am still very bullish and believe we will see higher targets. This is retesting support now, so could be a decent entry.
WAVES/BTC
I cannot currently trade WAVES after exiting Binance, which is good because I would have stopped out on the last trade at the red box. While that looked to be flipping to support, it proved to be strong resistance.
Price is back to a key level. Once again, this is catching a bit of a falling knife, but a close above 2981 would signal a resistance to support flip and would be the first test of this level, which is considered the best entry. A close above would also form a doji or another potential reversal candle. So a daily close above that line would be my signal that it's a decent idea to go long.
To be clear, this can easily fail! The risk/reward is good because you are at support and can use a tight stop with a target multiples higher.
MicroStrategy Buys Another 29,646 Bitcoins
As we all know, MicroStrategy raised 650 million dollars in senior notes - after only trying to raise 450 million. They were oversubscribed and used every penny to buy Bitcoin at an average cost of $21,925. That brings their cost basis up to $15,964.
That's a lot of Bitcoin.
The SEC Is Suing Ripple
Ripple has faced numerous lawsuits and unfavorable regulatory consideration since its inception and is now facing off against the final boss - The SEC. The largest controversy around the company regards their native token XRP and its status as a security.
A few of the facts to keep in mind before you make a rash decision to short the token or sell your bags are the following: many countries don't view XRP as a security, if the lawsuit ensues, it will last a long time, Ripple will fight tooth and nail, and a ruling that XRP is a security would be bad for countless tokens. As much as people hate XRP, labeling XRP as a security endangers a lot of companies that have continued to ICO with tokens that offer little to no utility. A win for the SEC would leave a huge stain on the industry.
Bitcoin Is In A Supply Crisis
I sound like a broken record at this point regarding this concept, but I found something I had to share. A Twitter user spelled out the argument as to why Bitcoin is in a supply crisis way. He stated the following: “HODLers are hoarding 14.5 % of the circulating supply, at least 1/7th of the total supply is lost, Grayscale has bought more Bitcoin in the last 6 months than what was mined, only 12% of the total supply is liquid, and more. If you aren't convinced, the link above has the graphics and data to back up the claims. This is a serious contributing factor to the bull run, potentially more so than the fact that Bitcoin is a hedge against inflation or a superior store of value. Bitcoin is simply becoming more scarce.
The Wolf Of All Streets Podcast Ft. Dan Held
Dan Held, a renowned builder and OG in the Bitcoin space, has invested over 80% of his net worth in Bitcoin and has held through multiple cycles. He still believes the asset is in its infancy. As a HODLer and Bitcoin Bull, Dan sees potential for Bitcoin to surpass gold, achieve a market cap in the trillions, and drastically change finance as we know it today. In this episode, Dan made the definitive case for Bitcoin, which can be understood by everyone from the casual investor to the most die hard maximalist.
Dan and I discuss million-dollar Bitcoin, holding your net worth in Bitcoin, the many advantages of Bitcoin, including, fungibility, scarcity, immutability, and privacy, depreciating cash reserves, the power of HODLers, cascading liquidations, borrowing against Bitcoin, timing the next top, investing with goals in mind and more.
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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.