The Wolf Den #271 - Nothing Has Changed Except The Price
Bitcoin Thoughts And Analysis
DAILY CHART
Little has changed since yesterday. Bitcoin continues to find resistance at the EQ of the newly formed descending channel. I am watching for a flip of that channel to signal a likely move to the top and the higher end of the current range. For now, price is at resistances, so there's no immediate expectation of higher prices.
The recent bullish divergence is still valid, and there are no signs on the daily of a hidden bear div, although they have formed on some lower time frames. This should mean that we eventually see at least a push higher, with the center of the range (shown on 4 hour) being around 36K.
For now, we saw a major reactionary bounce to a break of the range lows on volume, which was encouraging. That said, we need to see some follow through - otherwise bears can now push lower without the friction of the orders that were just cleared.
4-HOUR CHART
Nothing has really changed here either. The breakout through the descending blue resistance was weak and price consolidated along that line. It makes it seem less meaningful, but now we do have a clean break away and test as support. The EQ of the range is around 36K, that's where I am looking to reevaluate if price gets there. The reaction to 36K (if it even gets there) will give a lot of information as to whether we are likely to head towards the range highs or back down once again.
Altcoin Charts
BNB/BTC
To be VERY clear - I am not trading this or any other altcoin at the moment. I do not like the state of the market and do not think it is worth the risk.
This was discussed in the stream yesterday, and BNB technically did push through resistance and is attempting to flip it to support. Technically, this does look like a decent entry for a short term trade the .0097 area and the risk reward is decent with a stop a few percent below the current support.
If this fits your system and you are trading shorter term setups, you can consider it. I am not.
Legacy Markets
TSLA (TESLA)
Update from yesterday's setup. Beautiful move by Tesla with a gap up today on price, nearly reaching the descending blue resistance. At this point, I would watch for either a break of the blue line or a drop back to fill that gap and retest the 50 MA as entries, assuming you missed it yesterday.
Chart Requests
The charts are still a tough read, with coins capitulating and bouncing all over the place, not forming any clear patterns or setups. Here's a look at the coins you requested.
Cascading Liquidations Explained
This is a really important concept to understand for any trader or investor. The “narrative” may start with FUD, but until action takes place on the order book, the price won’t randomly go anywhere. The cascading effect often comes with stop losses and liquidations on an asset (Bitcoin, in the case of this video). When someone holds a large leveraged position, small moves up or down in price that are normally insignificant for spot HODLERs can spell danger. If price action continues against the desired direction i.e. a long position facing downward sell pressure, the account will quickly approach liquidation if the asset isn't sold to cover the position. The larger the leverage on the trade, the more fragile the trade is to downward volatility and the trader will be forced to sell sooner. If the position isn't sold, the account risks an entire wipeout, which happens more than you think.
In the video linked above, SBF explains that crypto derivatives traders often wait until a single percentage point away from liquidation levels before selling their position, most likely due to the extreme volatility of the asset class. When price does cross the threshold where a major player has to sell, price will inevitably continue to drop further as they are market orders that push further down into the order book. As the sell orders fill and price drops, other long positions caught offsides by the liquidation can be triggered by the first wiped-out account, causing a downward cascade. This is where the cascading effects turn into serious market swings as a few accounts - perhaps near a popular technical resistance or psychological resistance - cause massive moves in the market that wouldn't have naturally occurred in a spot-only market. Orders resting on top of each other cause a domino effect as each one knocks down the next, putting retail into a panic. This phenomenon also occurs in the opposite direction as seen with the GME short squeeze. As the crypto market matures, volatile swings like we are seeing now should eventually weaken in either direction due to a larger total market cap.
Here is another thread from Sam Trabucco, also at Alameda, that also touches on this phenomenon with more context of the current situation.
RIP John McAfee
John McAfee was arrested last October on a list of charges that would almost certainly keep him behind bars for the remainder of his life. He was just found dead in a prison cell in Barcelona, shortly after receiving approval for extradition to the United States. Setting aside the controversies and mixed opinions, McAfee was an early crypto adopter and an important figure in the development of 21st-century technology – RIP to a legend.
Another Billionaire Chooses Bitcoin
Ricardo Salinas, a Mexican businessman, is now on the list of billionaires investing in Bitcoin. Salinas has a whopping 10% of his net worth in the asset. When asked about why he believes in Bitcoin, he kept it super simple, “it has a fixed supply, it’s censorship-resistant, easy to carry, and very liquid.” Grasping the importance of Bitcoin does not need to be difficult. Billionaires, people that we consider to be the financially smartest people on the planet like Ricardo Salinas, appreciate Bitcoin for simple reasons. That's how you know the asset will persevere.
Brazilian Bitcoin ETF Begins Trading
While the United States remains in neutral on a Bitcoin ETF, the products are being launched successfully around the globe. There are a number of nations that already support ETFs and even more that are ready to come online. Meanwhile, the US has just delayed another ETF application, this time from Valkyrie, a company that I am personally invested in.
A Bitcoin ETF in the United States is somewhat inevitable, but unlikely to happen in the immediate future.
Basics Of Yield Farming And DeFi
Business Inside reached out to discuss yield farming, admittedly not my forte or focus. I gave them the basics and my general "it's safer to invest in the big projects" pitch.
The Wolf Of All Streets Podcast Ft. Scott Harrison
After a decade in the club scene promoting expensive alcohols, models, and music, Scott Harrison faced an existential crisis about the legacy he was leaving behind. Years of selling good times transformed into a burning passion to deliver and provide clean water to developing nations around the world through his Bitcoin Water Trust. We don’t choose the privilege we are born into, and for this reason, Scott Harrison has made it his mission to build an even playing ground around the world so men, women, and children can live healthy, wealthy, and prosperous lives with access to clean water.
In this episode, Scott Harrison and Scott Melker explore:
Unsettling statistics
The solution to inaccessible clean water
The pace of the problem
Finding purpose in water
From serving vodka to water
Fighting distrust in donating
Reinventing the donation process
The dollar cost to providing clean water
A problem everyone can agree on
The needs matrix
Bitcoin in Africa
Sustaining the water models
How can you help?
The paradox of giving
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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.