The Wolf Den #284 - Potential Turbulence
Bitcoin Thoughts And Analysis
BREAKING NEWS! BITCOIN MOVES 3% AND CRYPTO TWITTER PANICS!
Bitcoins is finally showing the slightest, minuscule hint of volatility and the community is seemingly overreaction. The reality is - our beloved asset is still chopping sideways and we are all victims of over analysis paralysis. People are analyzing every small move and trying to assign meaning, but nothing has changed.
DAILY CHART
Looking at the daily chart, you can see that very little has happened in weeks. Price is testing the ascending blue support once again and has broken slightly below the EQ of the descending blue channel. We have seen both of these things repeatedly, so for now there's not much to analyze. If they break down with more volume and clarity, we can discuss. The community is seemingly bearish at support, as is tradition.
4-HOUR CHART
Bitcoin has been ranging now for months, and has struggled mightily to break into the top half, above 36K. For now you can see that price is at a local black support and has formed a new descending channel (darker red). This is all purely for fun, to take a look at the chart. None of it is going to give us much info if you zoom out, so this is only useful for scalpers or those looking to learn more from watching price action on lower time frames. At the moment, it looks like price potentially found some liquidity once again below that black line.
HOURLY CHART
Potential bullish divergence with oversold RSI on the hourly. Small time frame, small move if confirmed with clear elbow up on RSI and price. As I am writing this, we have about 20 minutes left to confirmation.
Watching for confirmation, then for higher time frames to follow. If this hourly div confirms, there's a good chance it could lead to a 4-hour div as well in the coming candles. A 4-hour bullish divergence would be a decent signal for a sizable move to the upside, but not worth worrying about yet.
A Supply Shock Despite Low Interest?
The crypto market should be prepared for a supply shock, according to Troy Gayeski
On-chain analysts are continuing to point out that, despite the lack of interest in the market, supply across exchanges is continuing to decrease. The last time we saw a hint of a supply shock, Bitcoin’s price was in bull mode and exchanges began to send warning letters to their users to expect trouble filling orders.
When I first began covering supply leaving exchanges, I pointed out that this was a first, because the 2017 run-up actually saw a steady increase of supply moving onto exchanges. This cycle has now seen diminishing supply in both bull and bear price action, something we are just being able to gather enough data on to start making conclusions.
We have yet to see exchanges show concern this time around, which is likely due to low volume. Still, this could be meaningful if interest picks up. The limited supply narrative will probably resurface once momentum picks up more heavily. For an asset to go from 1 user (Satoshi Nakamoto) to a global monetary system, it makes sense that there will be periods of high and low supply. It is reasonable to expect a macro trend towards reduced supply as adoption picks up, regardless of price action. Skybridge Capital's Troy Gayeski in a recent interview with Bloomberg said, “Bitcoin is setting itself up for some time of supply shock that will be similar to the one that took place in November a lot of strong holders are currently “reasserting” themselves bases on the flagship’s cryptocurrency on-chain data.” It’s hard to say exactly who is accumulating, but I do believe that eventually this narrative will return as a strong catalyst for volatile moves.
Fidelity Digital Assets Is Ramping Up Its Manpower
The Fidelity Digital Asset division just opened in 2020 and the firm is already gearing up to hire 100 new employees. The research put out by the firm about crypto has been some of the most extensive and well-thought-out that we have seen. Fidelity is offering 17 positions at the moment in crypto, including software engineers, marketers, client managers, and sales positions.
Even if this is the beginning of an extended market downturn, major institutions are continuing to expand as if they are certain the digital asset space will continue to thrive. Fidelity Digital Assets is increasing its headcount by 70% and adding about 100 new employees. Assuming these quoted figures are accurate, this means Fidelity currently has about 140 employees working on crypto in some capacity. As proof of how early we are, Fidelity employs over 41,000 people. The 70% increase is bullish, but there is a LONG way to go.
Institutions Are Being Cautious
Cointelegraph reported that outflows have continued to rise from individual crypto investment products and inflows into basket goods have slightly increased. With the dropping volume, minimal inflows of new money, and increasing outflows of products, it seems that institutions are solidifying their positions on the sidelines and reducing risk. Typically, single asset products see the most interest, but multi-asset products have now slightly pulled ahead.
Binance Blocked By Clear Junction
The hits keep coming for Binance, as yet another payment partner has decided to suspend payments on the crypto exchange. In the past few weeks, Binance has been under fire from regulators and partners for operating an unregulated exchange in their jurisdictions.
It seems likely that Binance will work hard to become compliant - the rules were vague when they started in the first place, so they are in uncharted waters.
The Wolf Of All Streets Podcast Ft. Michael Saylor
Last year, MicroStrategy publicly announced their decision to buy $425M worth of Bitcoin with their cash reserve. Since then, the trailblazer behind that company has continued to do what he believes in most - buy more Bitcoin. Michael Saylor believes that our inflationary macro environment can be arbitraged by taking on low interest debt to acquire more Bitcoin and outpace interest payments. Ultimately, it is Michael Saylor’s die hard belief that has thrust him into the spotlight as one of the most important figures in the crypto community.
Michael Saylor: https://twitter.com/michael_saylor
In this episode, Michael Saylor and Scott Melker explore:
Can MicroStrategy default?
The debt and equity of MSTR
Sentiment of long-term investing
Making the world rich
Mortgage debt
MSTR yield strategies
Investing a million dollars
Investing in Bitcoin early
China’s Bitcoin crackdown and capital control
China’s CBDC
Bitcoin is digital property rights
How will countries adopt Bitcoin?
Bitcoin as currency in the U.S.?
What does a Bitcoin standard look like?
The universal Bitcoin strategy
Borrowing against your Bitcoin
Parting thoughts
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