The Wolf Den #333 - Danger Looms In China
Bitcoin Thoughts And Analysis
WEEKLY CHART
After weeks of watching and waiting, price finally came back down to retest the key 42K level as support. Price actually wicked below, almost to 40K. Now we need to see if it will hold.
I personally bought spot Bitcoin at this level for the long term, but that does not mean that I am trying to time the bottom. I have been watching this level for ages and it "should" hold. Even if it does not, I obviously believe that Bitcoin will trade much higher in the future, so any dip is worth buying.
The recent top at 53K does look like a clear lower high on the weekly, so now price naturally is on the hunt for a higher low, which would form a large pennant or triangle. If 42K breaks, that higher low could be anywhere in the 30Ks.
DAILY CHART
As you know, Bitcoin traded in the red range for 3 months after the May crash. So where is price sitting right now? Right at the range highs. That is exactly where yesterday's awful daily candle closed.
The entire 42-43K region is theoretically strong support, so we definitely want to see this area hold and not start trading aggressively back in the range.
We are almost halfway through the candle, so it is far too early to judge. If if closes here or higher, this would be a beautiful long legged doji or hammer and a signal of a potential reversal. Regardless, there was a lot of demand here at support.
Something that I failed to notice and saw after putting out the newsletter yesterday? If we pull Fibonacci levels from the all time high down to the recent lows around 28K, then the recent high at 53K was a golden pocket retrace. That means that it hit between the 61.8% and 65% levels, common and expected on any asset. I should have been watching that. Bitcoin loves a 61.8% retracement! That does not mean we go to lower lows now, it just was a clear area to look for a local top. Price has now dropped back to the 38.2% level and below, so it "could" be enough.
4-HOUR CHART
Price broke down from the ascending channel, retested it as resistance for a few candles and then dumped - hard. If we consider this is a bear flag (I do not, I think it is too long), then the targets are much lower. As a simple ascending channel, the breakdown is more than enough to downside to conclude the impact of the pattern.
What is notable here is the bottom candle - huge wick down, small body, right around support. That looks like a bottom, especially after being "confirmed" by the next bullish candle. We have seen these fail countless times - there are similar candles with smaller wicks yesterday that did not end up signaling a reversal.
But this candle has quite the wick. Tons of demand, regardless.
We have already seen bullish divergence on the hourly (not shown), but are yet to see it form on the 4-hour. It does NOT HAVE TO for it to be a bottom, but is my favorite signal. We would need to see another small dip and a 4-hour candle close below $42,650 or so, with RSI making a higher low.
At 21.56, RSI hit its lowest point on the 4-hour chart since last September, over a year ago. Even May's dump only sent RSI to 24, also quite oversold.
Altcoin Charts
FTM/USDT
I am generally avoiding alts right now until the dust settles, but this is a compelling setup, so I thought it was worth sharing. I would be watching for two potential entries. The safest would be a clear break of the blue line on increasing volume, signaling that consolidation is over and price is ready to reverse to the upside. The other entry would be a retest of the previous all time high as support, at .9587. This is a bit riskier, as it would be catching a falling knife as we have seen these setups failing in the past few days.
Legacy Markets
DXY (DOLLAR INDEX)
This is a bit of a head scratcher, frankly.
The dollar was squarely rejected at resistance. We can see a potential head and shoulders, unconfirmed until there's a break of the blue neckline. That is a distant possibility at the moment and not worth considering
What is notable is that the market sell off should have sent the dollar flying as investors rushed to its relative safety. Usually the dollar is up when markets are down. Instead we have a potential shooting star candle, which coincided with the late rally on stocks and the fact that stock futures are green.
Now the dollar looks toppy, locally. That would be good for almost every other asset.
Gary Gensler And "The Path Forward"
Today at 12 PM EST, SEC Chairman Gary Gensler is giving a cryptocurrency related speech titled, “The Path Forward,” which is hosted by the Washington Post.
Below is the official announcement and above is the signup link to listen.
“Gary Gensler, U.S. Securities and Exchange Commission Chair, is one of the world’s most powerful financial regulators and a key player in the push by the government to regulate the trillion-dollar plus cryptocurrency industry. On Tuesday, Sept. 21 at 12:00pm ET, Washington Post columnist David Ignatius speaks with Gensler about the cryptocurrency landscape, the growth in digital trading platforms and his call for more stringent financial disclosures around sustainability.”
Hopefully, the talk provides clarity on some of our most pressing issues, including the timeline on a Bitcoin futures ETF, and the SEC’s current stance on stablecoins, lending products, and altcoins as potential securities.
Coinbase Capitulates
Two weeks ago, I covered the strange situation surrounding the SEC, Coinbase and Coinbase’s new LEND product. Coinbase was vocal about their efforts to comply with regulators, only to be shut down and threatened with litigation. They approached the SEC directly about the product and were told that it was a security, with zero explanation or written guidance as to why. Most interestingly, Coinbase was simply attempting to offer a 4% yield on USDC holdings - far less risky than the industry norm of what other companies are offering.
I wanted to see Brian Armstrong mount a defense. Rather, the exchange decided to quietly throw in the towel. Here is what their updated blog post now reads: “as we continue our work to seek regulatory clarity for the crypto industry as a whole, we’ve made the difficult decision not to launch the USDC APY program announced below. We have also discontinued the waitlist for this program as we turn our work to what comes next.”
Many have pointed to Coinbase's new million dollar + government contract as a likely reason that they are hesitant to rock the boat, but that is purely speculation.
This exact product has been around for years and is offered by some of our favorite companies. Sadly, that means that regulators are likely coming for them in the near future as well.
Another Unicorn - Sorare Raises 680M Series B
The raise values the company at $4.3 billion.
Sorare is a European fantasy soccer and digital collectible platform that just raised 680 M in a Series B, valuing the company at an astounding 4.3B. This is the largest investment by far in the NFT space, and a sign of just how much institutional and investor is money is flowing into the crypto space.
"The company is eyeing basketball, American football and baseball as the next targets for its current model, a representative told CoinDesk in an interview.
As the global sports NFT market continues to mature, U.S. companies will look to take market share of the lucrative European soccer NFT space, and vice versa. Thibaut Predhomme, head of operations at Sorare, is not worried about having to compete on their own turf.
“We are the only ones that have bridged the gap between the game, collectibility and utility over the lifetime of sports NFTs,” Thibaut told CoinDesk in an interview. “U.S. companies are more about collectibility, so no, I’m not worried about them competing in the European market.”
The future is bright for crypto.
Robinhood Tests Crypto Wallet
Robinhood already offers crypto trading, which is one of the most profitable parts of their business. Critics have pointed to the fact that traders cannot withdraw their crypto from the platform - not your keys, not your coins.
It appears that is likely to chance soon, as Robinhood is purportedly testing a new crypto wallet that is in beta. This is an important step for the company in it's efforts to woo and satisfy crypto customers.
The Wolf Of All Streets Podcast Ft. Beniamin Mincu
THE YOUTUBE VERSION WILL BE AVAILABLE AT 1:30 PM EDT
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Beniamin Mincu and I discussed:
EGLD breaks all-time highs
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Crypto’s incredible impact
What is Elrond’s role?
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Who are the early adopters?
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Value across space and time
Differentiating from the rest
Living in the metaverse
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