The Wolf Den #267 - 6 Stages Of A Trader
Bitcoin Thoughts And Analysis
DAILY CHART
Nothing to see here, once again. Clear rejection at the 200 MA, which many traders are watching with the potential death cross in mind. Price continues to chop sideways, making life difficult for both bears and bulls in this range. There is no way to really discern what is coming next, and it could be a while if Bitcoin continues to range in the 30Ks. I wish I had more to share, but sometimes the market is just plain boring.
4-HOUR CHART
Price was once again rejected at the blue supply zone that has been major resistance since the correction to 30K. You can also see that price is currently losing the 50 MA after failing to hold the 200 MA. The clear signal that price had topped on the recent move (in retrospect) is the shooting star candle that the red arrow is pointing to. That was a perfect "bull trap," as traders began to get bullish right at resistance before price was rejected. Technically, we should now look a bit lower for support around the EQ of the red range, again. But that does not mean price has to go there.
The potential bull flag that I posted on the line chart yesterday was invalidated and dropped below. Since there was no breakout, there was no trade.
HOURLY CHART
I rarely zoom into the hourly so this is more of an educational experiment than anything else. As you can see, we still have a series of higher highs and lows, and anything above the recent low around $34,600 will maintain this local bullish structure. So nothing truly bad is happening at the moment. As you can see, there. is a key black resistance from the recent highs that would signal price is ready to head back up. Super zoomed in, there is also a small descending blue channel that should technically break to the upside. I would NOT trade a tiny channel like this on an hourly chart - just an exercise in finding patterns! Very likely it does not hold, because it's so local.
Interesting to watch, but not really tradable in my opinion.
We have persistent bullish divergence for now on the hourly as well. I do not like that it never reached oversold, meaning it is still likely to get there. But if we see a clear elbow up on RSI again to keep the bull divs valid, it could send price through the resistances discussed above.
Bottom line, nothing has changed. Sideways chop, nothing to discuss below 42K and above 30K. Just a big, ugly range. Also, global markets seem very jittery - hard to find anything that looks great at the moment. More on that below.
Legacy Markets
DXY (DOLLAR INDEX)
Something fishy is afoot at the moment. As I have said countless times, a strong move up in the dollar is generally bad for other assets, most notably stock and metals. While I am still macro bearish on the dollar, with endless printing, it is making a really strong move on lower time frames.
You can see that the dollar is breaking out of a descending channel that started in March 2020, when the dollar "died" and the stock market reacted with one of the bigger bull runs in history. Above 93.437 the dollar could confirm a double bottom, but that's not worth discussing yet.
If the dollar is really reversing here, we can expect a significant correction from the stock market, at least for a bit.
Last night saw the largest reverse repo in history, which is a tool used to remove dollars from the market. This is likely a short term phenomenon, but gives some credence to an argument for dollar strength. Anyone watching the formerly bullish Gold and Silver charts noticed a sizable dump yesterday.
Always worth watching the dollar if you are trading other assets.
Also, important to note - dollar "strength" is relative to a basket of other currencies. The dollar can be weak, but as long as the other currencies are weaker, the DXY will rise. So the Fed can print endlessly and the dollar can still gain against the basket.
Here is the daily gold chart, to show just how much dollar strength can effect these assets.
Here is the daily Dow Jones chart, which just opened and gapped below the trading range. Huge drop over night.
Money Printing 101
By Sahil Bloom:
By now, we have all seen the “money printer go brrrr” meme and have heard about the money printing exploits of central banks. But what is money printing and how does it work? Hint: it rarely involves a physical money printer.
Here’s Money Printing 101!
In the digital age, where money is more often just numbers on a screen vs. true cash tender, Central Banks generally “print” money (i.e. increase money supply) in one of two primary ways.
– Debt Monetization
– Quantitative Easing
Let’s hit the basics of each one.
“Debt Monetization” is just a fancy way of referring to the conversion of debt into money – think of it as you “money-tize” the debt. The government issues a new bond, the Central Bank buys it. This gives the government new money supply to finance deficit spending. “Quantitative Easing” is just a fancy way of referring to the Central Bank buying financial assets from non-government entities in the open market.
When the Central Bank buys, this has the effect of increasing money supply, as it gives money to the sellers of these assets. So while both Debt Monetization and Quantitative Easing increase money supply, neither one of them involves a physical money printer going brrrr.
More accurately, they print money digitally by buying assets from sellers.
So that’s Money Printing 101. I hope it was helpful!
Paraguay Is Following In The Steps Of El Salvador
When El Salvador made its first official move towards Bitcoin, Paraguay was one of the handful of countries to step up and make similar promises. Carlitos Rejala, the president of Paraguay, has reaffirmed his intentions and announced that legislation is coming in July. It is hard to imagine that the next countries to adopt Bitcoin will stray far from the path laid out by El Salvador, especially since Jack Mallers made it explicitly clear that the entire process would be available for other countries to study and adopt. This is a textbook grassroots movement. What started as an experiment in a small beach town is now making waves through Latin America. Hopefully those waves will envelop the globe.
Solid Predictions From A Solid Trader
This one is pretty simple and I tend to agree. When in doubt, zoom out. The bull market is probably not over, solid coins will eventually return to their all-time highs, strong regulation will come, and Bitcoin will probably have another bear market when it’s all said and done.
Grayscale Has Its Eyes On DeFi
Grayscale currently supports 13 different crypto assets, mainly coins ranked near the top by market capitalization. Their recent announcement revealed that they are currently adding 13 assets to their list of 18 assets under consideration, bringing their total to 31 under review. About 3/4ths of the new coins under consideration were DeFi coins including 1INCH, CRV, REN, and others. Grayscale is bullish on DeFi.
Miami Mayor Wants Nuclear Bitcoin Mining
In a bid to bring crypto miners to Miami, Suarez is working to lower the cost of energy for the entire city, a win for everyone in the metropolitan area. Miami has a nuclear power plant 25 miles south of downtown, meaning that electricity is potentially cheap, plentiful and clean. As China cracks down, Miami could be an alternative, adding to the flood of crypto entrepreneurs already setting up camp in the city.
My Recommended Platforms And Tools
This is where I trade with leverage and can also trade spot with no fees.
This is where I spend my days teaching and learning! Our Discord group is a one stop shop for everything you need to learn to trade and control your emotions. Feel free to DM me on Twitter or respond to this email for questions. Code Wolfsden50%off for a 50% discount on the first month.
This is where I invest, commission-free. They now let you earn interest on your Bitcoin held in Voyager, so you can compound while trading. Not only that, you’ll get $25 in free BTC when you download & fund.
Rewards Code: WOLF25
I use RoundlyX to buy small amounts of Bitcoin every single day. They automatically round up my credit card purchases (with 10x multiplier) and invest them in crypto. Absolutely brilliant. Passively invest money you don’t need without a thought. Further, they have integrated with Voyager (see above) to offer commission-free purchases.
Rewards Code: WOLF
Concierge Phone Service for Americans that protects your from SIM Swaps and other phone related hacks. I cannot stress enough how amazing this service is.
Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
On-chain and fundamental analysis, research, predictions and indicators, all in one place. Highly recommend.
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.