The Wolf Den #273 - Sentiment = Anger + Depression
Bitcoin Thoughts And Analysis
First, this is an EXTREMELY thorough analysis of Bitcoin, which I felt was worth sharing. It goes into detail on almost every relevant metric for analyzing the asset. Worth looking at before we dive into the charts.
WEEKLY CHART
We now have SIX consecutive candles that have held the 50% retracement level of the move up from $3,800 to $65,000. That line refuses to break on the weekly, with most candles wicking below and closing above. Those are the black lines that are drawn. You can also see that last week's candle touched the 50 MA as support for the first time and also wicked into the "golden pocket" between the 61.8% and 65% levels on the red Fibs, which are from $9,800 to $65,000.
The weekly still looks solid, with a beautiful hammer candle confirmed last night. That would require bullish follow through this week to confirm, and weekly candles are hard to trade because they can take months to really play out.
Things are still encouraging on the weekly.
DAILY CHART
Nothing has really changed on the daily. Price is still in a descending blue channel and still held support on candle closes of the ascending blue line. Right now, price is trying to flip the EQ of that channel to support, which is worth watching. It broke above once before, but failed to hold. Holding the dashed EQ would be a signal that price is ready to head to the top of the channel, but we can see the 50 MA pointing aggressively down that will likely be strong resistance, as so many traders are watching it.
Also, volume is almost nonexistent, so it is hard to get too excited.
We also had more bull divs confirm on multiple time frames, but we have potential hidden bearish divs also looking likely, so nothing to see there for now.
4-HOUR CHART
Ranging. Nice bounce off of the range low, almost to the penny and then a move up once again on oversold bullish divergence at support. Now price is back below resistance, around the 36K range EQ that we have been watching. People were again bearish at support and are once again bullish under resistance.
We have confirmed hidden bear divs on the 4-hour, although a slight move up would easily invalidate them. Seeing these on multiple time frames.
Altcoin Charts
ADA/USDT
This is a USDT pair setup, so this only goes up if BTC does as well, most likely.
As you can see, there are two ways to draw the descending line, depending on your bias. I would have drawn the black line originally, because it's the first two peaks. If you use that line, price has broken out and is retesting the line as support - the problem being that there were multiple fakeouts above this line before.
The blue line shows price still under resistance, so that's the "safer" one to trade. This is the line you would more likely draw now.
Either way, if BTC pops up, ADA looks likely to outperform based on the consolidation here at resistance.
I am not trading it, but worth watching.
ETH (BTC AND USDT)
Update of the idea that I shared last week in the newsletter and videos. Perfect tests of the range lows on the EHT/BTC pair with slight wicks below support to find liquidity. This should technically target the range EQ, so still plenty of room left. The R/R of a trade here now is a bit worse than at support, where I posted it, because that had a tighter invalidation.
I still think ETH looks better than BTC from here, for what it's worth.
ETH/USD looks similar, with bullish divergences before the move, at support. That was an easy trade.
For now, price is at local resistance, but still targeting the EQ of the range.
Liquidity And SFPs
You often hear me mentioning SFPs (swing failure patterns), engineered liquidity and how whales fill their orders. Above is a great thread that just crossed my timeline on this phenomenon, how it works and how to utilize it in your trading.
A Massive Drop In Bitcoin’s Difficulty Is On The Way
A relative measure of how difficult it is to mine a new block for the blockchain.
About every 10 minutes, another block is solved for and added to Bitcoin’s blockchain. As miners enter and exit the market, Bitcoin’s difficulty adjusts. Miners plugged into the Bitcoin network solve complex computational problems to add the next block. To make sure that a new block is discovered every 10 minutes at a steady rate, the difficulty of these problems naturally adjusts every 2016 blocks to ensure a steady pace. So why is the difficulty all of a sudden about to drop massively?
This relates directly to the recent ban from China. As miners go offline, there are fewer total miners searching for blocks. In simple terms, this means there are fewer brains solving a hard math problem that was designed to have more brainpower to solve it in 10 minutes. Many on-chain analysts are expecting the difficulty to drop by +20%, which is likely to be the largest drop in Bitcoin’s history, but is this a bad thing?
In short, no. The only stakeholders that have to worry are miners that have been forced to close shop in China, who lose their chance to profit. For other miners, the difficulty adjustment will be a good thing. Miners have the sole purpose of stacking more coins, meaning the lower the difficulty, the more coins miners will be collecting. That being said, the recent FUD storm has driven down prices, but it is actually expected that this adjustment will increase revenue significantly for well-established miners. The takeaway here is that Bitcoin, by design, is built to last and weather all storms.
Is Binance Banned In the UK?
Confusion ensued yesterday when the Financial Times released an article stating, “the UK’s financial watchdog has ordered Binance to stop all regulated activities in Britain and imposed stringent requirements in a stinging rebuke of one of the world’s biggest cryptocurrency exchanges.”
The official note has a slightly different focus. It states, “Binance Markets Limited is not permitted to undertake any regulated activity in the UK. And that, “No other entity in the Binance Group holds any form of UK authorization, registration or license to conduct regulated activity in the UK.” News sources were quick to take this as a complete ban, but it sounds more like a crackdown on derivatives and a threat to comply.
Binance won’t be stealing your coins. If anything some of their riskier (ie. leverage) products may be shut down. It has been reported that Binance has until Wednesday to comply, so we will have to wait and see what is actually being shut down - for now, it isn't entirely clear to the public. That said, Binance immediately responded, saying that customers will in no way be effected and that this is completely FUD - which is par for the course during this correction.
Jack Dorsey And Elon Musk Will Discuss Bitcoin
What started as a lighthearted joke on twitter has evolved until an actual "main event" for crypto enthusiasts, to be staged next month at The B Wolrd even in July. Both Dorsey and Musk are fans of crypto, so this isn't exactly Peter Schiff vs the community, but it will be interesting to see how this conversation shakes out.
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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.