The Wolf Den #161 - Don't Panic
Bitcoin Thoughts And Analysis
Healthy retracement. It happens. For now there's no reason to view this as otherwise. That does not mean price cannot drop further. In fact, we still have daily RSI around 50, weekly RSI overbought etc. So it would be nice to see those reset a bit. As you know, RSI eventually (could take years on the weekly) will make the trip from overbought to oversold and back. The daily has not made it back to oversold, so that is something I will be watching for to eventually happen.
MONTHLY CHART
4-HOUR CHART
Plenty of time left in this candle, so hard to gauge. I would say that it's fair to finally add a new level, at the recent highs around $42,000. Otherwise, the monthly chart looks the same as always. That previous all time high remains technically untested as support, so always be prepared for a drop to that level, however unlikely.
4-HOUR CHART
I drew this idea when I woke up this morning and altered it a few times, but it is something I was looking at before price broke down from the EQ of this potential channel. This is JUST AN IDEA, I am in no way saying this will happen. Price could bounce from the current price and I would not be surprised at all.
At the moment, that channel is not valid, aside from the top resistance. We have heard calls across the cryptosphere for a retest of the 25K area, and this is what could transpire if that happens. I drew the blue rectangle off of the price action cluster that you can see on the left, which does appear to be begging for a retest. But a drop to this area would not be particularly bearish - just a healthy retrace that could potentially create a sizable bull flag.
I decided to take a bit of a fresh look at the market structure, because the drawing I have been using started at the lower high since the all time high, where the second top red check is shown. Zooming that out to the all time high gives us a better picture. We have the all time high, a clear low which forms the range, and then a lower high. For now, we do not have a lower low in this structure confirmed.
The pink box is an area where I would strongly consider a scalp long. A drop into this area COULD cause a bullish SFP - a wick below the previous swing low. If the range lows are "swept" here and the candles close back in the range, it's a strong signal that liquidity was engineered below the range and that bids are being filled for a move up.
To truly see bullish price action now, we need to be trading above the red line to make a higher high.
As you can see, there was strong selling interest as we predicted in the area of the green box. Still a lot of interest in selling there.
You know me by now, right? I have drawn these 3 times in the past - 2 came to fruition and the most recent one did not. That was "a" bottom, but looking back now it was not "the" bottom as 4 hour oversold bullish divergences have been in the past.
Again, this is JUST AN IDEA, I have no idea if it will happen. But this is what I personally look for as a long signal. RSI did NOT make the trip from oversold to overbought this time, and we now that will eventually happen. RSI is just closed oversold so I am watching this idea very closely - but remember, that would require price to make another low at some point in the future, and we could also see this continue down much further to make the first low.
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BlackRock Is Looking To Bitcoin
This won news event of the day yesterday as every major crypto media outlet covered BlackRock’s recent official mention of Bitcoin. That's saying a lot, considering the United States got a new President. The news is a big deal because BlackRock is the world’s largest asset manager, with over 7 trillion in AUM. Their AUM is almost the size of the entire gold market cap, meaning in theory if they were to purchase unnoticed, they could almost afford the entire gold supply. As far as Bitcoin goes, BlackRock could buy the entire Bitcoin supply almost 12 times over. This is only hypothetical, as such an event could never occur. Regardless, BlackRock just submitted two prospectus documents to the SEC outlining the strategy of two of their investment funds. The documents are outlines of the funds, giving guidelines to consumers on how the fund may operate. The documents were identical, each mentioning Bitcoin 25 times in the filing. Bitcoin was first mentioned in the derivatives section, when it listed the different derivative instruments that the funds may invest in. The documents told investors a few things: basic Bitcoin disclaimers including the risk of volatility, fraud, manipulation, and illiquidity; basic Bitcoin descriptions including decentralization, open-source software, and peer-to-peer network; and lastly the funds may only engage in futures registered with CFTC. I did a keyword search in the filing to make sure there were no other important mentions and neither the words “digital asset” nor “cryptocurrency” had any relevance in the documents. At this point, it goes without saying that major institutions are primarily looking at the king and very slowly considering Ethereum. The old narrative used to be institutional money will arrive, the new narrative should be institutional money wants Bitcoin.
FinCEN’s Harmful Crypto Regulation Is Frozen
On Biden’s first day, one of his early executive actions was to freeze a number of regulatory processes, including the proposed FinCEN rules on the crypto industry, for 60 days. Many federal agencies were placed under the freeze, so it would be naive to view this as Biden saving the day with specific concern for the future of cryptocurrency development. All of the frozen regulations will undergo a review, then either return to normal, be altered, or be completely terminated. If the proposed regulation does happen to cross his agenda and he freezes it (big if), this would set a very strong tone for his administration’s view towards the crypto space. I am not counting on this, but do hope that evidence and public outcry and backlash could help prevent this terrible legislation. The legislation poses a threat to many in the crypto space including exchanges, DeFi, emerging markets, and overall the general public with regards to privacy and the ability to get money in and out of the market.
Learn About Bitcoin From Gary Gensler
This section contains the videos that were captured of the course during the semester.
Yes, you can take a full 24-hour free course from the new SEC chairman, filmedat MIT. The material covers a broad sweep of the crypto market including blockchain economics, use cases, cryptography, payments, and more. When it comes to education, this is as good as it gets, because some unfortunate college student probably paid thousands of dollars for this exact same material. Whether you are an investor or new to the crypto space, this is an excellent insight into the mind of the man that will write our laws for the years to come.
The Wolf Of All Streets Podcast Ft. Ryan Selkis
Ryan Selkis is the co-founder and CEO of Messari which boasts the longest running crypto daily brief in the world, with over 40,000 readers. Their readers and platform customers include retail traders, investors, family offices, hedge funds, crypto institutions, governments and more. Placed at the heart of the operation, Ryan is inextricably tied to every important aspect of crypto and has a keen awareness of what's likely to unfold in the coming years. This conversation focuses on the potential explosion of interest in the crypto space in 2021.
Scott Melker and Ryan Selkis further discuss the 2020 Crypto Thesis, aggregating high signal information for investors, GBTC’s premium, alpha for whales, a crypto bubble that won't pop, the gold market as a proxy, the legitimacy of Tether, threats to Bitcoin, top DeFi blue chips, sending money at the speed of light, Ethereum as the backbone of DeFi, a Bitcoin ETF, Picasso’s Bull, NFTs 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.