The Wolf Den #302 - Structure Your Trading
Bitcoin Thoughts And Analysis
DAILY CHART
Bitcoin bounced nicely from the top of the blue descending channel, continuing to hold the top as support. This appears to be consolidation below the key 42K area. It's very encouraging to see price holding this area and not dropping further for the moment. Consolidation below resistance usually leads to expansion through.
The idea that I drew with the Bollinger Bands has been playing out beautifully thus far. I still expect to see further movement to the upside after the break up on volume with volatility.
The bearish count on TD Sequential following the sell 9 is already over. A new bullish count started yesterday, with TD printing a green 1.
HOURLY CHART
I rarely zoom in this far, but it appears we have a bull flag on low time frames. As you can see, we have 2 touches on the top and 2 down - although true confirmation requires alternating touches. A break to the upside of this pattern should target the 45K area, depending on where price exits the flag.
Consolidation below resistance.
Altcoin Charts
DOT/USDT
No trade here yet, but DOT is pushing hard against descending resistance. If Bitcoin rises, I would expect DOT to also rise on the USDT pair, breaking descending resistance and targeting $28, the overhead resistance.
Descending wedges are a reliable bullish pattern, so this should eventually break up and head towards the target.
Ethereum Is Burning!
track ETH become ultra sound money
Since the London hard fork and implementation of EIP-1559, over 10 million (at the time of writing) dollars worth of Ethereum has been burned. Someone took the time to create a really cool site based around the idea of Ethereum’s “ultra sound awakening.” The website is a tracking tool with an aesthetically pleasing interface. The tool shows how much Ethereum is being burned, who the top burners are, how much Ethereum is burned per block, the projected supply of the token, and a lot of other features, all updating in real-time.
The tool answers a lot of important questions around Ethereum and supports many beliefs that I have with real data. First, I want to point out the “burn leaderboard,” which ranks the top Ethereum burners. It ranges from websites to exchanges and personal addresses. If you were confused as to whether Ethereum has real utility, the leaderboard is proof that dexes, stable coins, and markets need Ethereum to survive.
Scrolling down on the tool, you’ll find a section dedicated to the supply of Ethereum. One of the main criticisms that the protocol receives is based on an unfixed and growing supply. According to the graph, the introduction of the merge should shift the supply from an increasing one to a decreasing one - inflationary to deflationary. This is contingent on the POS issuance being smaller than the daily fee burn, which seems likely assuming Ethereum users will burn at a faster pace than the issuance. The tool is amazing and actually makes EIP-1559 feel tangible, adding to the excitement and FOMO around the asset. I suspect this tool will be heavily referenced in a lot of research articles and reports moving forward. To finish this segment, I will leave you with a couple of very recent quotes from Vitalik.
“That change to ETH 2.0 will be carried out by a process called the merge and is expected by early 2022 but could come as early as year end.”
“The London hard fork definitely makes me more confident about the merge.”
New Bitcoin ETF Filed With New Goal
Since Gensler’s recent speech, a new Bitcoin ETF proposal has been submitted with a different strategy, focusing on Bitcoin futures. Invesco manages $1.5 trillion and is responsible for 233 different ETFs in the U.S. - they are a serious player in the game. In the speech, Gensler had this to say in regard to Bitcoin ETFs:
“I anticipate that there will be filings with regard to exchange-traded funds (ETFs) under the Investment Company Act (’40 Act). When combined with the other federal securities laws, the ’40 Act provides significant investor protections.
Given these important protections, I look forward to the staff’s review of such filings, particularly if those are limited to these CME-traded Bitcoin futures.”
Sure enough, Invesco’s ETF proposal does not provide direct exposure to Bitcoin, but rather it describes itself as the following:
“The fund is an actively managed exchange-traded fund that seeks to achieve its investment objective by investing all or substantially all of its assets in exchange-traded futures contracts on Bitcoin and Collateral investments (as defined below).”
An ETF is coming closer and closer to being a reality and for the first time, the SEC has not only hinted at the possibility of one but they have also provided specifics on what they are looking for.
Infrastructure Bill Remains Problematic
I have shared information about this bill on a daily basis, because it's important and could severely debilitate the crypto industry in the United States. SBF has a great thread simply explaining the issues and summarizing the potential fixes. Worth reading for sure.
Binance Stops Futures Trading In Hong Kong
This hit just keep on coming for Binance. After halting derivatives trading in Europe, now Binance is ceasing to allow customers to trade with leverage in Hong Kong. It is clear that they are working hard to get out ahead of coming regulation around the world.
My Recommended Platforms And Tools
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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.