The Wolf Den #269 - Corrections Will Likely Continue To Exist
Bitcoin Thoughts And Analysis
DAILY CHART
Bitcoin made a weak attempt at a bounce over night, but has dropped back to the lows. On the bright side, price is still holding ascending support (for now, but it looks weak) and is still actually making a higher low. We still have not even revisited the lows from the original drop, which one would expect to truly test the bottom of the trading range that price has been in for over a month.
We "survived" over night, with Asia not dumping price further. It will be interesting to see what Americans do today, as Europe is clearly watching and waiting.
Yesterday did see a spike in volume, roughly equivalent to that of the last drop - the difference is that the last drop closed as a hammer. Yesterday's daily candle was hideous, closing the day near the session lows.
If we see no further drop today, we could have tweezer bottoms on the last two daily candles.
As I have continued to say - there is no reason to be particularly bullish below 42K. That said, as ugly as price action is at the moment, we are still in the range, albeit at the bottom. That may break, at which point we will reevaluate. For now, it is scary but normal.
As you can see, we have potential bullish divergence in multiple manners on the daily chart. These have been weak signals on this drop, honestly, and have always been replaced by hidden bear divs. The smaller div could fail, but the larger one would be likely to confirm at some point. It could take a long time, but RSI will eventually head back to overbought.
4-HOUR CHART
The 4-hour chart gives us a better look at the trading range. As you can see, we are approaching the bottom but still have not actually hit the lows at any point in the last month. A break of the descending blue line would be a decent signal for a potential reversal back to the range EQ or highs, but for now the trend is obviously down. This is effectively the 4th time that we have been in this area in a month - the last 3 price has risen again to the top part of the range. Each time we visit support here, it gets weaker, but still we have some precedent for a reversal.
As I said, it looks ugly, but technically we are ranging, albeit near the bottom.
The bullish divergences yesterday were not meant to be. We, once again, have potential bullish divergence on most time frames, including the 4-hour coming out of oversold. That could at least signal some temporary relief, if confirmed, but that would require price to head back up during the next candle and make a definitive elbow on RSI.
Bottom line: 42K is a distant hope at the moment, and that would signal the first real hint of bullishness. For now, we are ranging and consolidating after a major move down, which is more bearish than bullish. If we exit the range to the bottom, we will have to reevaluate - the hope would be a quick wick down and price coming back into the range, being a liquidity grab. A break down and sustained price action would indicate a longer bear market is more likely.
Altcoin Charts
Altcoins continue to suffer as Bitcoin corrects. Before the daily close last night, a number of coins really started to dive hard, a potential sign that alts could be capitulating. I shared a few of those charts on twitter - major drops into the close. Here is that tweet, showing $BNB $DOGE $EOS and $LTC. $ETH has held up surprisingly well against $BTC for the moment, but I do not expect that to last if $BTC drops once again.
Alts are incredibly oversold on lower time frames ($DOGE RSI was 12 last night on the 4-Hour chart), so they may bounce a bit, even if they are going to continue down. I am not trading them, this market is terrible for the moment, but very short term traders may find some opportunities.
BITCOIN DOMINANCE
Bitcoin Dominance is not a tradable asset, so using the chart is a bit of a meme. Still, we can see that it bounced hard from a predictable area and seems to be headed up for a retest of 50% as resistance. This would mean more short term pain for alts but then potential relief. We are in the worst possible situation - Bitcoin price dropping and Bitcoin Dominance rising as a result. When that happens, Bitcoin price goes down and altcoins drop disproportionately further.
What Is A Crypto Exchange?
This article is part 6 of our beginner's series on crypto. If you have been following along, we have covered a number of basic topics to help get new people in the space up to speed.
In this article, we explore what a crypto exchange is and how to use it, including best practices. A worthy read for beginners and intermediate enthusiasts alike.
VanEck Files For Bitcoin Futures Mutual Fund
VanEck is on an application filing spree with the SEC. They have relentlessly filed crypto funds, including their Bitcoin ETF, a recently proposed Ethereum ETF, and are now filing for a Bitcoin futures mutual fund. It is probably safe to assume that any of their proposed applications regarding Bitcoin will extend to Ethereum as well.
The Fund seeks to achieve its investment objective by investing, under normal circumstances, in bitcoin futures contracts (“Bitcoin Futures”), as well as pooled investment vehicles and exchange-traded products that provide exposure to bitcoin (together with Bitcoin Futures, “Bitcoin Investments”). The Fund does not invest in bitcoin or other digital assets directly.
Israel Exploring Central Bank Digital Currency
Israel has been running a pilot program to test a digital shekel, even though the central bank's deputy governor is apprehensive and believes that Bitcoin is a "pyramid scam." We know that technology is unstoppable and that CBDCs are inevitable everywhere in the world. At the end of the day, more people transacting digitally will be good for Bitcoin.
Extreme Fear
The crypto fear and greed index stands at 10 - extreme fear. That is usually a good sign that the market is ready to bottom, at least temporarily, so it's a factor worth monitoring.
The Wolf Of All Streets Podcast Ft. Cory Klippsten
THIS EPISODE WILL BE AVAILABLE ON YOUTUBE AT 10 AM EST AND OTHER CHANNELS AT 7 AM EST.
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In this episode, Cory Klippsten and Scott Melker explore:
Bitcoin as legal tender
Volcano mining in El Salvador
Government officials spreading FUD
Can Bitcoin & the dollar co-exist
ESG concerns & government bans
CBDCs & their relation to Bitcoin
Bitcoin vs. repeated FUD cycles
Geographic miner redistribution
5% CPI on goods
Swan Bitcoin & Bitcoin’s future
Bracing for a bear market
How Swan Bitcoin works
Swan’s customers & their behavior
Bitcoin’s role in Latin America
The fight against inflation
Sats vs. Bitcoin denomination
Bitcoin causing friction
Are stablecoins better?
A bitcoin-based future
Countries, institutions, & companies buying Bitcoin
Writing a Bitcoin book
Do individual investors matter?
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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.