The Wolf Den #213 - Treat Trading Like A Business
Bitcoin Thoughts And Analysis
Bitcoin is practically behaving like a stablecoin. Absolutely nothing interesting os happening, which is totally fine. It has found itself in a tight local range for now, with no clear direction. A move above or below the blue range below would give us a bit of information. All large time frames still look super bullish - nothing has changed at all. The price action here somewhat reminds me of the feeling before price finally smashed through 20K.
Price is trading below the 50 MA on the 4 hour and in the bottom half of the range. If you are purely scalping in this range (I wouldn't) then you want to see a move above the EQ.
I wish I had more to report, but this is boring coin for now.
Altcoin Charts
BITCOIN DOMINANCE
Watching Bitcoin Dominance is a useful tool for determining when altcoins are likely to do well or poorly. Charting it is a bit of a joke - it is not a tradable asset and therefore does not have true support and resistance which is normally created on buy and sell orders stacked in certain areas. That said, many people believe you can chart anything and see familiar patterns. We did use Dominance charts to effectively trade alts all last year.
As you can see, Dominance has been dropping and is currently at support. If that breaks, you can expect a great environment for altcoin trading. But if it bounces here at support, we can expect altcoins to suffer. This is a bit of a wait and see moment, after Dominance just dropped.
Look at the far left of the chart. Do you see those MASSIVE blue candles down? Those were the true alt seasons of 2017. We have been in am alt season since the end of last year, as you can see. The drop in Dominance has just been slower.
It is also important to note the velocity at which new coins are being added. This can naturally bring Bitcoin Dominance down, as there are more coins working against it.
1INCH/BTC
The key line for me on this chart for a short term trade is the ascending blue support. It is easy to cut a trade on this pair if candles start closing below that line. Price is currently attempting to break through resistance at 8036, first targeting 8627. Not a huge move, but a nice trade if you are looking for a scalp. I am far more interested in a flip of 8627 to support and a move to 11000 and eventually the top of the blue descending line.
Price is currently flipping the 50 MA to support on the 4 hour and breaking through it on the daily (not shown). This very much looks ready to break to the upside for me.
TRX/BTC
TRX has already made a somewhat massive move the past few days, so I would proceed with caution. That said, it is currently potentially breaking through a macro resistance on the weekly chart that started in April of 2018. There is plenty of resistance up ahead, but this break should signal continued movement up in the coming weeks and month. Remember - this is a weekly chart, so the move will be tracked over a much longer period, in theory.
At this point, I would really like to see 259 flipped to support, immediately targeting 308. If 308 breaks, I think the much higher target at 471 is very much in play.
UTK/BTC
Simple setup. Price is breaking out of a descending wedge - the last candle close above, this candle has retested as support. Volume has increased on the past two candles, confirming the move. The target is the top of the wedge at 1400, with key resistance shown in between here and there at 1206.
Three Black Crows Candlestick Pattern
The three black crows candlestick pattern comprises of three consecutive long red candles with short or non-existent wicks. Each session opens at a similar price to the previous day, but selling pressures push the price lower and lower with each close.
Traders interpret this pattern as the start of a bearish downtrend, as the sellers have overtaken the buyers during three successive trading days.
The Michael Saylor Strategy
Michael Saylor has continued to urge Bitcoin holders to never sell, criticizing those who have even considered the thought. As shown in the Tweet above, he even recommends mining companies to follow the same approach, which is happening now. Keep in mind, it is likely that the future of finance does not require selling your Bitcoin, but instead taking low-interest loans against your stack as the asset gradually increases in value, thus avoiding capital gains tax.
To take this a step further, some investors have taken loans to acquire more Bitcoin - a risky strategy that has probably worked up until this point. Acquiring more Bitcoin as either an individual taking an equity loan or a business issuing debt is a risky strategy no matter how convinced you are that the price of Bitcoin will rise. Similar behavior of being over leveraged crushed optimistic homebuyers in '07 and '08. Not everyone can be Michael Saylor or have his safety net to fall back on. But sure enough, miners are now buying more than they are selling. Read below.
Miners Are Now Buying Bitcoin
Miners are currently buying more Bitcoin than they are mining. The last time miners did this was back in December, right before Bitcoin had its explosive move past the old all-time highs. I had Peter Wall, CEO of Argo Blockchain on the podcast last week and he admitted to this same behavior - even using capital raised to run the company to buy more Bitcoin. Miner buying is bullish. More interesting is the severity of the impending Bitcoin supply shortage. This will be a major catalyst as to whether Bitcoin has a normal cycle or super cycle, as some analysts are calling for.
NFT Market Crashing?
According to Nonfungible.com, an NFT marketplace data analyst, “the average prices for NFTs have fallen nearly 70% since their $1,400 peak in February.” But not everyone believes the end is near, an associate professor at the University of Pittsburgh said, “NFTs aren’t in a bubble any more than ‘cryptocurrency’ is a bubble. There will be manias and irrational exuberance, but cryptocurrency is clearly here to stay with us for the long term and NFTs probably are too.”
As I have said a number of times, the best thing to do right now in the NFT market is proceed with caution. The facts show prices faaling, likely the result of overhyped NFTs finding their fair value. This certainly can occur while Beeple NFTs gain in value. The cream will continue to rise to the top, but things being sold for a premium just "because they are NFTs" will eventually head to 0.
If SNL is having a skit on the space, it's probably time to move slower. Performances like the skit are almost always a strong signal of a local top in the market.
Is Walmart Buying Bitcoin?
Only a rumor at this point, but anything is possible. Their quarterly earnings are set to be released on May 18th. If they were to announce Bitcoin on their balance sheet, that would be the time.
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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.