The Wolf Den #308 - Taproot
Bitcoin Thoughts And Analysis
WEEKLY CHART
Price pushed beautifully into the weekly close, giving us 4 weeks of green candles in a row. This chart is still screaming for a pullback to test the 42K area, but no guarantees that we get it.
Even with the naked eye, you can see that price is at a key area of resistance. When you look at the price action around the top, you can see that the current price was roughly around the lows of all of that price action. So it makes sense to stall here. To push further, we need to see a ton of volume.
What is encouraging is that dips are being gobbled up quickly.
DAILY CHART
Bitcoin is continuing to build bear divs on the daily chart, coming out of overbought. That said, there are small hidden bull divs in between, with another likely to print if price drops further. Regardless, this still lends to the idea that we should see a healthy retracement before another push up.
NO GUARANTEES, just the idea that I am seeing on the chart.
Altcoin Charts
DOT/BTC
I shared this idea recently. It did not follow the path, but arrived at the destination in time.
Now that price has broken through these key levels of resistance, it should continue up. RSI is overbought, so I am looking to buy dips on this pair, with the first area of interest being the small red box at support and then the recently created demand area in the purple range.
I believe in DOT long term, so I am willing to ride this for quite a while.
SOL/USDT
I shared this idea in a video and livestream last week, but certainly did not expect it to play out so quickly! That said Solana is the talk of the crypto town at the moment and price is reacting accordingly.
To be clear, this hit the first target, which was the previous all time high. Now it has moved into price discovery, so the ideal entry would be a retest of that previous all time high as support, something like the line drawn above.
Invalidation would be candles closing a bit below that line, but I would give stop losses quite a bit of breathing room. I personally would NOT buy now, but would try to wait for the retest, knowing it may never come. There's always another trade if you miss this one.
What Determines The Price Of An Asset
There are many ways to predict an asset’s future price, but buy and sell orders are what matter the most. Price is determined by the order book, not the result of speculation, narratives, or emotions. There are numerous variables that impact the order book, but none of these are a direct influence on price.
Let's take Bitcoin as an example. If everyone that owns the asset decided not to sell, the price would jump to the level where the first seller caved in (assuming there is an interested buyer). If we all became HODLERs right now and picked $100,000 as our target to begin selling, the price would, in theory, jump to that level when a bid met the ask.
In this free-market, the entire market cap is carried by the rising price of the asset. If everyone held and one Bitcoin was sold at $100,000, the market cap would also surge up in proportion to the rising price. The entire Bitcoin market cap would increase by trillions of dollars based on a single event.
This is an example that works in a vacuum, not in the real world. Still it should illustrate the power of the collective choosing to hold an asset and reduce supply.
Every cycle has had HODLERs, but this time we also have an increasingly diminishing supply due to the halving and large players moving coins to cold storage - supply shock. These factors together can create some serious upwards price action.
Kevin O’Leary Partners With FTX
Shark Tank star Kevin O’ Leary has been very vocal about his favorable stance on cryptocurrencies. Once a skeptic but now a believer, O’Leary has now announced a partnership with FTX to bridge the gap between institutional investors and cryptocurrency. The last time I wrote about O’Leary was 3 months ago, and his opinion at that time was that institutions need regulatory clarity to adopt crypto. This has been proven correct, as our government debates legislation that could be damaging to the space.
In a comment on his partnership, O’ Leary said the following, “Institutional investors struggle with the decision to invest in crypto assets. Not because they don’t want to, but because they have difficulty in knowing with certainty that they will be 100% compliant with regulators and reporting requirements. I am no different.” With the partnership, O’ Leary will be paid in cryptocurrency and will also be a partial owner in FTX. As Kevin O’ Leary once said, “if institutions get involved, then Katy bar the door.”
Cardano’s Smart Contracts Are Coming Soon
The highly anticipated Alonzo hard fork will occur on September 12th, bringing smart contract capability to Cardano. Charles Hoskinson, the founder of Cardano, was one of Ethereum’s original co-founders back in 2014. He left to create Cardano, a coin with a similar vision. With smart contract capability, it will be interesting to see how developers react to a new option. Will preexisting developers migrate to Cardano? Will it attract its own community? Will it inspire new products? These are some of the important questions traders, investors, and institutions want to know. Competition is a good thing; it will push both protocols to innovate at faster rates and find their own niches in the crypto-verse. Over the past year, I have been aggressively investing in Ethereum, but am still excited and hopeful for what Cardano can do.
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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.