The Wolf Den #198 - Have Conviction
Bitcoin Thoughts And Analysis
Bitcoin saw a nice dip over night and seems to be bouncing at the moment. On larger time frames, nothing looks bearish at all. We still have huge green monthly and weekly candles confirmed and a new all time high close. Very bullish. Also, as noted in the tweet below, we have seen drops like this almost every single Monday for the past few months to start the week - and they have ended up being the weekly lows.
We have also seen increased inflows to exchanges before each of these larger dips - notably a large 18,000 BTC deposit into Gemini (again) before the recent drop in price. Deposits to Gemini preceded the last correction as well, so this remains worth watching if we continue lower.
My gut instinct (which you CANNOT TRUST OR TRADE ON) says that this was just a normal and quick Monday morning correction and that we are bouncing. We will see.
DAILY CHART
The daily chart finally came very close to hitting the target of the bull flag that we have been watching for ages. I am confident it will continue past here, but as a trader I consider this idea finished. Patterns rarely hit their exact targets, so the move to almost $62,000 was "enough" for me.
4-HOUR CHART
This is the chart that I have largely been watching. On the positive side, it bounced nicely off of the blue support, with the current candle hitting it almost to the dollar. On the negative side, it broke ascending support and dropped below the previous all time high resistance. I would really like to se price trading above that former supply zone and that previous ATH. There was decent volume on the drop, so I will feel more confident if price rises a bit more.
HOURLY CHART
On any impulsive drop, you expect a bounce of roughly 50%. We see it over and over again. That would take price to $57,584. We want to see continuation past that level to show that this is more than just a reaction to the drop. After that, the golden pocket between 61.8% and 65% will likely be resistance as well.
The hourly also went deep into oversold RSI on the drop.
Again, I am trying to analyze this objectively, but my personal bias is that this is a big nothing burger for now.
Altcoin Charts
Altcoins moved really nicely against BTC on the BTC drop, so we could see some great opportunities. That said, I have found the alt market to be very hard to trade the past few weeks. Here are a few ideas.
1INCH/BTC
1INCH had a nice breakout on decent volume through descending resistance. It now appears to be going back down for a retest as support, which is technically a very good entry for a trade. The 4 hour 50 MA is sitting in the same spot there, which should also act as support, so there's some confluence in that area. I would exit if this started closing candles below the blue line, but for now this looks good.
ATOM/BTC
I posted this on twitter yesterday - unfortunately it was a weekend and there was no newsletter. ATOM dropped deep into a clear demand and support zone and formed a beautiful oversold bullish divergence with RSI. This is one of my favorite setups. The best entry for me was down in demand. That said, now that the resistance at 3301 is broken, a retest of that general area as support should theoretically hold and be a good entry for more price appreciation.
Notably, price is at descending resistance, so another trade would be a break of that blue line.
I would personally place my stops below the recent lows and that demand zone.
Targets are resistance levels above.
WABI/BTC
This is not a new trade - just a review of one that was recently posted and a great quick learning opportunity. It took a month, but went up over 2X.
The original setup is below, showing price entering the Ichimoku Cloud with a bullish TK cross. As you can see, price did end up going to end to end in the cloud as discussed, then flipping the cloud top to support. An absolutely perfect setup for an Ichimoku Cloud trade.
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Dave Portnoy Admits Crypto Defeat
Barstool’s CEO, Dave Portnoy, lasted only a few of days in the crypto market, starting and ending in the middle of 2020. He capitulated on a dip and panic sold within days of testing the crypto waters. This weekend, Portnoy publicly came forward admitting that he made a mistake in the crypto market and stated he felt more comfortable playing the game he knew best. When he purchased Bitcoin, he did it with zero knowledge and unrealistic expectations. Ultimately, he was a gambler who bought off hype rather than conviction, setting himself up for imminent failure.
Sure enough, he was almost instantly shaken out of the market on a small dip - a normal day for a seasoned crypto trader or investor. In his confession of defeat, he gave excellent advice to his followers: stick to what you know best. It takes courage to last in this market and on top of that, a little bit of understanding of what is going on. Financial markets, and especially Bitcoin, are a bad place to try something out when you have zero knowledge of how the game is played. I believe buying Bitcoin is wise, but blindly buying is an almost guaranteed road to disaster. As Dave Portnoy recommends, “stick to what you know” so you can sleep comfortably at night and still profit.
Bitcoin Historically Offers 230% Annualized Returns
Bitcoin is the best performing asset in the past decade against all major asset classes. Charlie Bilello lined up Bitcoin against 16 other major asset classes, ranging from gold, investment grade bonds, US REITS, US Nasdaq 100 etc. and compared the cumulative returns and annualized returns from 2011 to 2021. Unsurprisingly, Bitcoin destroyed the competition, boasting a 230.6% annualized return and 20,037,142% cumulative return since 2011. Its closest competition was the US Nasdaq 100, but Bitcoin performed 10x better in annualized return and 37,000x better in cumulative returns.
Elon Musk Tweets About Doge While Under Investigation
A couple of weeks ago, it was revealed that the SEC was investigating Elon Musk for market manipulation over his Doge tweets. Musk clearly doesn't care, because he continues to tweet about Doge this weekend - with slightly less effect each time on price. Most recently, he tweeted about buying a Shiba Inu dog, causing SHIB token to jump 300% in a matter of moments. It’s unclear whether he was intending to reference the token, but it is certain he still holds a strong influence on the market, which will probably increase the more the SEC goes after him. This could end up causing a lot of positive publicity for crypto in general if he is sued by the SEC. I wouldn't be surprised to see Musk use the lawsuit to his advantage, similar to what he has done in the past with Tesla.
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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. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.