The Wolf Den #272 - Be Humble
Bitcoin Thoughts And Analysis
Bitcoin options expire the last Friday of every month, first on Deribit and then on other exchanges. The CME options close at 4 PM London time, in just a few hours.
We often see talk of price suppression into the expiry, especially when bears are in control. This could lead to some volatility after all options have expired. That said, the actual data does not show this trend, as you can see in this article.
DAILY CHART
Price is still consolidating around the EQ of the descending blue channel. Today's candle isn't great so far, but it has almost 12 hours left. For now, this is chopping sideways and still looking for conviction either way. Bulls have not done a great job so far of following through, so we need to see some real volume and key levels like 36K flipped back to support.
4-HOUR CHART
Still ranging, still unable to make it back to the EQ around 36K. That is the first step to recovery.
As you can see, price has made a series of higher lows and higher highs since the drop, but that's at risk with a drop below the red line at $32,318.
For now, there's really nothing to see on the Bitcoin chart.
Altcoin Charts
Altcoin charts continue to look weak, with the movement up the other day being a reactionary bounce to the drop, as discussed. Not much to see.
ETH/BTC
Ethereum looks weak on the Bitcoin pair... but did just perfectly tap support at the range lows. This is an opportunity for a trader to take a position with very high R/R. A stop loss a few percent down, giving enough room for a sweep of the lows with a long wick below the range would be the standard play, with a target of the range EQ as the upside. Even if you think price is going to drop, you can consider a trade and plan a small loss with a disproportionately high upside. This is a first test of support, usually good for at least a bit of a bounce.
Risky.
This can drop right through, stop you out quickly - but it would be a small loss.
ETH/USD
Almost the same situation as the Bitcoin pair, with potential bullish divergence on the 4-hour at support. We need a clear elbow up on RSI to confirm at the next close. It broke slightly, but still looks like a decent R/R setup, understanding a loss is likely. Target here is also the range EQ, the dashed line. Would be safer to wait until the next 4 hour candle closes to see if it has broken support or is trading back in the range.
Risky.
Today marked the largest expiry in Ethereum options ever. Again, there's not much data showing that this is significant, but you see plenty of talk of price manipulation or suppression.
Derivatives 101
By Sahil Bloom:
The term “derivatives” is often used in the world of finance. But for most people, it is just another example of complicated financial jargon. Often used, seldom understood. Let’s fix that. Here’s Derivatives 101!
A “derivative” is just a contract with a value that is based on something else. Its value is DERIVED from something else. If I create a contract called the SB that is linked to my # of Twitter followers, that is a derivative. The contract value is derived from my followers.
In financial terms, derivatives are a security that is tied to an another asset – called the “underlying asset.” The underlying asset could be: Stocks; Bonds; Commodities; Currencies; Interest Rates. Really anything can be an underlying asset. Get creative!
Derivatives can take on many different forms. The most common are: Options; Futures/Forwards; Swaps.
Derivatives are widely used by investors. The most common use cases are: Hedging – offset/protect a position; Speculation – bet on price moves; Leverage – amplify a position. Naturally, using derivatives for a hedge is less risky than using them for leverage.
This was a very basic, 10,000-foot overview on derivatives, their common forms, and their use cases. I will cover the common forms in additional detail (with simple examples, of course!) in future threads. So that’s Derivatives 101! I hope this was a helpful primer.
Amazing Thread On Risk Management
I have very little to add! He lays out a perfect case for solid risk management that should be mandatory reading for any trader, new or experienced.
Over 5% Of Ethereum’s Supply Is Staked
Prices may be dropping, but faith in the success of Ethereum 2.0 is continuing to grow. The last time I reported on the Ethereum 2.0 deposit contract which was 4 months ago, roughly 2.5% of the entire Ethereum supply was staked. There is now almost 5.9m Ethereum staked, totaling almost $12b. Staking Ethereum means locking up the coins until ETH 2.0 launched, which could easily be well beyond the end of this year. As long as this figure continues to grow, Ethereum remains a bullish asset. Staked tokens can’t be sold until released. You can view the contract on etherscan here.
Andreessen Horowitz Raises $2.2 Billion For Crypto Investments
Andreessen Horowitz, a major venture capital firm, started a fund with one focus - cryptocurrency. Here is their official statement, “Our new fund will invest in crypto networks and the founders and teams building in this space. This fund allows us to find the next generation of visionary crypto founders and invest in the most exciting areas of crypto. We invest in all stages, from early seed-stage projects to fully developed later-stage networks. The size of this fund speaks to the size of the opportunity before us: crypto is not only the future of finance but, as with the internet in the early days, is poised to transform all aspects of our lives.”
The first crypto fund from Andreessen Horowitz was launched about 3 years ago during the epic bear market post 2017, also at an "inopportune time." Considering their lack of concern for timing and their laser focus on ushering in the next big opportunities in crypto, it’s hard to believe that this is the end as many currently want you to believe.
El Salvador Is Giving Everyone Bitcoin
The president of El Salvador announced that every adult citizen that sets up a wallet will receive $30 – a nationwide, state-sponsored, universal airdrop. In line with inclusivity, the national “Chivo wallet” does not require data - anyone with a cellphone with or without a plan can receive the free money. It is predicted that if every adult claims the Bitcoin, the total user count on the network will increase by 2.5% or 4.5m overnight. El Salvador is continuing to pave the way, showing us what is likely to come in the following months for more countries across Latin America. Paraguay has already said their proposed legislation will come next month. The dominos are slowly falling.
Bitcoin 2022
Tickets are already on sale for Bitcoin 2022, happening in Q1 of 2022. The starting price for GA tickets is $250 if you pay with Bitcoin and $350 if you pay with fiat. Considering tickets went up in value a lot for the conference that just happened, I imagine this is the cheapest price you will be able to lock in for the next conference. Nothing official has been announced yet for the conference.
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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.