The Wolf Den #342 - What Is The Root Of Your Conviction?
Bitcoin Thoughts And Analysis
Larger time frames look absolutely bullish, which means that we should technically have bottomed and should be heading up.
That said, the 4-hour chart looks like another drop could be in store first.
These are just ideas - no crystal ball. Simply what I see on the chart with no bias.
WEEKLY CHART
Incredibly strong weekly close, wicking once again below support at 42K before printing a bullish engulfing candle with a huge grey body. This means that the weekly candle completely consumed the previous down week and is a very positive sign. Nothing to dislike here on the weekly chart, technically this should signal that price has bottomed and that we will continue up. But remember, nothing is sure, and we need confirmation with more upside this week.
DAILY CHART
We had the beautiful breakout from the descending wedge on Friday and largely saw sideways price action through the weekend. Price is at a very strong area of resistance, right where the last major dump was initiated. The question is whether price will drop a bit before heading up or move from here, technically. I am favoring another small retrace first - the reason is below.
4-HOUR CHART
There is clear overbought bearish divergence on the 4-hour chart. It was almost replaced by hidden bullish divergence, and almost certainly will be with any more downside, which is why I favor one more drop before heading up.
$48,834 is now the key level for me on the chart. As you can see, it was a previous swing high before the crash and is where price is finding strong resistance. Not only that, price wicked above the line and closed below, which is technically a bearish SFP (swing failure pattern). That would indicate that liquidity was engineered above that line with someone pushing price there to fill sell orders. Either way, there's a lot of selling interest above that line, so I am not low time frame bullish until we see candles closing above. Price action also looks like the making of a "bart pattern" at the moment, where we see a drop down a bit after consolidation. There is no clear bullish pattern formed.
I am NOT BEARISH. I always err towards higher time frames. I just think that we had a nice move that is potentially exhausted, so some consolidation into a flag or pennant or a bit of a drop is expected.
Altcoin Charts
A few weeks ago, the dominant altcoin pattern that we were trading was all time high resistance flipping to support. It worked over and over again, so the goal was to find coins that were close but had not pulled the maneuver yet. As I said at the time, with a strategy like that, you do it until it stops working, which was the case when the market hit the local top.
Now we are back to trading a very common set of technical patterns - bull flags, bull pennants, descending wedges and descending broadening wedges. Regardless of which one (the targets are different, but idea is the same), we are seeing coins consolidate, with price drifting down on decreasing volume, before breaking descending resistance and heading up. I went into it in more detail at around 19:45 in last Friday's live stream, linked here below.
I cannot track every chart, but this is a common pattern that you can look for yourself and learn to trade.
All of that said, if Bitcoin does retrace a bit, so will these. That could offer opportunities to buy a retest of those descending lines as support.
MATIC/USDT
MATIC broke descending blue resistance as well as horizontal resistance at $1.25. The retest of $1.25 as support is the area I am watching here, which is happening basically as I am typing. This will drop much further if Bitcoin goes down as well, so always proceed with caution. First target is $1.79, but if the bull market rages this should go much higher.
XTZ/USDT
I have shared multiple potential entries on this pair, shown in the circles on the chart. Now we have a break of the descending blue line and of the all time high. The break of the blue line is already played out and has really hit the target at the all time high. So this one is in price discovery, with the trade having been the retest of the all time high as support. Either way, this pair looks like a clear "buy the dip" situation now that it is in price discovery, with a confirmed close above the previous all time high and retest as support. You are a bit late here now, but it should continue up.
Making Sense Of NFTs
Are you still struggling to understand NFTs? Have no fear, we wrote a quik primer on making sense of NFTs on the blog.
President Biden Has His Eyes On Crypto
October 1st marks the beginning of cyber security awareness month, a popular political initiative that originated in 2004, designed to keep Americans safer online. Joe Biden and the White House released an official statement regarding a new initiative involving 30 countries, including NATO allies and G7 partners. In an effort to “modernize our cyber defenses,” Biden made a wish list for our countries and others to act upon. Mentioned in the statement was “cryptocurrency."
“This month, the United States will bring together 30 countries to accelerate our cooperation in combatting cybercrime, improving law enforcement collaboration, stemming the illicit use of cryptocurrency, and engaging on these issues diplomatically.”
I have been a victim of multiple hacks. Cybersecurity is of the utmost importance. I support this initiative, yet simultaneously wish there was more focus on “building” along with “protecting.” Luckily, cryptocurrencies are at the forefront of global technology and almost everyone in the world is free to opt-in. It’s an amazing thing.
ETHE Outperforms GBTC
For the first time in history, daily trading volume in Grayscale’s popular GBTC product was eclipsed by ETHE. ETHE is Grayscale’s Ethereum Trust, which has received attention in the news as Grayscale has repeatedly hinted at its rising interest. I pulled a few highlights from their September report below about Ethereum’s growing success.
Bitcoin AUM fell 7.8% in September to $35.1bn - its lowest share since April (67.9% of current total AUM).
Ethereum-based products reached their highest market share of AUM at 25.9% - a movement that suggests investors are seeking alternatives to Bitcoin for cryptocurrency exposure.
Grayscale’s Ethereum Trust (ETHE) was the most traded digital asset product in September - with average daily volumes increasing 29.0% to $250mn (42.4% market share) - dethroning Grayscale’s Bitcoin Trust (GBTC) for the first time ever.
Not Your Keys, Not Your Coins
One of the most damaging security issues in the crypto space is the use of SMS authentication. When you set up a wallet or exchange, you are typically prompted to add an additional measure to secure your account. A lot of platforms suggest SMS, which is actually far less safe than other methods. SMS is recommended because it is convenient, but connecting your cellphone to your money is a horrid idea.
Coinbase just announced that 6,000 accounts using SMS were hacked earlier this year. All that was needed for the hackers to steal funds were the victim’s email address, password, and phone number associated with their Coinbase account, plus access to their victim's email account. This may sound like a lot of separate pieces of information, but for a seasoned hacker, these are easy to obtain.
If you aren't keen on going the cold storage route, your best bet for multi-factor authentication is using an authenticator app set up on an offline device. This is far safer than 2FA on a device you carry around every day that can easily be lost or stolen.
Conversation With G. Love
This is neither "news" or a podcast, technically, so I am including it here at the bottom. For those of you that don't know, I had a nearly 20 year career touring as a DJ and producing music. One of my close friends since the 90s in the music business is Garrett Dutton of G. Love And Special Sauce. He has an NFT collection dropping, so I jumped on to discuss his interest in crypto and NFTs. This is a really fun conversation about the intersection between music and crypto.
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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.