The Wolf Den #227 - Abstraction Of Value
Bitcoin Thoughts And Analysis
I am seeing a lot of signs that the bottom of this correction is either already in or is close. I am receiving countless angry comments on any positive tweets about bitcoin, there has been endless fake news aiding the push down in price and people seem to be extremely fearful.
And we now have confirmed oversold bullish divergence, which I mentioned to look for the day price dropped.
DAILY CHART
We presently have roughly a 27% correction from the recent highs. This is totally normal in every bull market, and we have already seen larger corrections this year. A 30%+ retracement would also still be normal, and would send price down into the massive demand zone on the daily chart between 43K and 46K. That could happen, but we do we know about price action?
When everyone is watching a level, usually price either bounces above it or passes right through.
As I said, I have had bids spread between 45-50K. I bought at $51,700 and filled a number of lower buy orders. I am a dip buyer, regardless of whether it continues to drop, because I believe it will eventually trade higher.
Price broke market structure if you count the wicks to make a lower low for the first time since earlier this year, when we saw the massive bull flag form. If you use a line chart or count closes, this break in structure is not confirmed. If price closes above $50360 on the daily, we would not have a lower low. That would also form quite the bullish SFP below that swing low, as well as a candle with a huge down wick. I will be watching for that.
The 50 MA break proved to be a good signal that price was heading down.
Daily RSI has not been oversold since the crash in March of 2020, but is very close to tapping that area now. I would actually love to see one more push down to close the day, giving us oversold RSI on the daily, usually a catalyst for a major move up. As you know, RSI eventually travels from overbought to oversold and back. It has hit overbought quite a few times since being oversold over a year ago.
4-HOUR CHART
We have confirmed bullish divergence with oversold RSI on both the 4 and 6 hour charts. Nice. Also, even the second low on RSI is in oversold, which usually is a slingshot for an eventual move up. We can still see price drop further, building larger and more powerful divs. We just need RSI to say above that first low.
This is my favorite bottom signal, and has been effective probably 9/10 times in the past few years that I have been using it on Bitcoin.
Nothing is guaranteed, but I think the bottom is in or near.
RSI And Divergences
Those of you who have been with me for a while have likely already seen this post, but it's still a good refresher. I wanted to share it again, because many people have not seen it and because it is particularly relevant in the current market conditions, as we have confirmed bullish divergence with RSI on the 4-hour chart. This is my favorite trading strategy for finding reversals.
10 Threads On Growth
Instead of sharing a single story from Sahil Bloom today, I decided to share the above thread with 10 threads to you on your growth journey. Dig in, there's some amazing content.
Bitcoin Is Becoming More Expensive For The Average User
Higher transaction fees may be behind Cash App's revised Bitcoin withdrawal policy.
Every platform that offers Bitcoin has a minimum denomination to purchase or withdraw your crypto. Depending on the platform, a typical amount may be .001 or .0001 Bitcoin. Square’s Cash App just raised its minimum amount to withdraw to .001, or roughly $50. The increase could be due to a reluctance to let capital leave the platform, increased fees on the Bitcoin network, or lack of interest in catering to the smaller fish. Either way, as Bitcoin moves to a 6-figure price, I expect that it will continue to be more expensive for newbies to participate in the market.
Coinbase Pro Ads Support For Tether
You can now transfer USDT (Tether) into Coinbase Pro for trading. Upon the announcement of the support, Coinbase did not take a stance on whether Tether is fully backed. Instead, they stated, “for stablecoins like USDT, the company behind the protocol is responsible for holding reserves that fully back each token. The company behind Tether, Tether Limited, claims to hold reserves that fully back each USDT. As of 2021, USDT is the most widely-used stablecoin in the world, with a market cap over $30 billion.” Coinbase does claim to conduct thorough research prior to selecting support for any token, so it's safe to say they are confident in the token despite their lack of public acknowledgment. This is another blow to the endless Tether FUD.
Charles Schwab Wants Into Crypto
Charles Schwab wants to be a player in the cryptocurrency space
According to Schwab’s CEO Walt Bettinger, “we would like to see more regulatory clarity. And if and when that comes, you should expect Schwab to be a player in that space in the same way it has been a player in other investment opportunities across the spectrum. If Charles Schwab, the company, decides to participate in the crypto market, we will be highly competitive, we will be disruptive, and we will be client-oriented.” The list of hedge funds and banks actively exploring crypto right now is monstrous, so there is no reason Charles Schwab needs additional legislation to begin participating - talk is cheap.
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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.