The Wolf Den #376 - El Salvador Is Setting The Standard
Bitcoin Thoughts And Analysis
Bitcoin rallied a bit over the weekend, but still looks weak to me based on the charts. I am still watching for some bullish divergence to form, which is likely if we get further downside.
WEEKLY CHART
Ugly weekly candle, bearishly engulfing an entire month of price action. I am still watching the 53K area as a key support that has remained untested to this time. I highlighted some price action from a few months ago. We had a similar weekly candle at the beginning, and saw a few more weeks of downside before bullishness continued. No reason to believe this repeats, I just think the candles are similar so it's an idea worth watching.
I am still leaning towards that 53K retest, which also leads me to believe we may see a wick go deeper than that to really put fear into the market. None of this has to happen, I just believe that this weekly candle makes it more likely.
DAILY CHART
Bitcoin is still holding support at $56,425, but things are looking shaky. The biggest daily volume candles of late have been selling, not buying. The 50 MA seems to be the major story here. Price has held above it since October 1st, and now is trading below. It also has retested the breakdown as resistance. Last time this happened, price spent a few weeks trading below that blue line. The first sign of a reversal for many traders would be flipping this back to support.
The daily still has not reached oversold RSI (not shown), which is inevitable at some point.
In a cruel twist of date, the Bollinger Bands seem to be expanding downward with price tracking the lower band, the opposite of what "should" have happened. This will be worth watching if price tracks support downward. We want to see price move up off the lower band and above the centerline.
4-HOUR CHART
As you can see, RSI has pushed up with recent price action, so any drop below $55.909 would likely start to form bullish divergence with RSI that originated in overbought territory. This is in play on basically every time frame from the daily down now, albeit with different low to validate.
I am still looking for a bit more downside to form these divs as I was most of last week. That would be a great reversal signal and fuel for a move up.
Altcoin Charts
The altcoin market continues to look exceptionally shaky, although there are a few outliers and they are coins that I have been repeatedly sharing, namely EGLD and AVAX. EGLD has arguably been the best investment of my life, and certainly the best that I have shared in the newsletter. We rode it from 15 sats to 300 sats as ERD and sold. Then we bought again when it became EGLD at $10 and have added a number of times on the way up. I am blown away to see it trading at $470.
Seemingly all coins in the Avalanche ecosystem have been booming. I have shared XAVA a few times, which has been hitting new highs. Another interesting coin in that ecosystem is Benqi.
QI/USDT
The Benqi chart is beautiful, with a massive move up to open and then a beautiful rounding pattern since the top. This could turn into a cup and handle, which would indicate it will find resistance around the highs at .41189. The best trades here would be a retest of the former resistance at .23059 as support, or a break of .41189 as resistance and flip to support into price discovery.
If Bitcoin makes a big move, I do not expect this setup to hold.
Legacy Markets
AAPL (APPLE)
I have shared a number of Apple setups over the past few months, all of which have played out beautifully. Apple is once again in price discovery, with a break of $157.26 and retest as support. This was a new all time high.
This is a great example of KISS - Keep It Simple Stupid. I view Apple as a long term investment, and look forward to any opportunity to add to my position.
Buy dips if you get them and keep the long term in mind.
Is An Ethereum Killer Here?
The tribalists inevitably emerge whenever an Ethereum competitor booms while the rest of the market down. Avalanche is exploding, following the bullish moves we saw from Cardano and Solana. Su Zhu, the CEO of Three Arrows Capital, fired off a charged tweet on why he has “abandoned Ethereum.” Below are the two tweets that started the storm
“Yes I have abandoned Ethereum despite supporting it in the past.
Yes Ethereum has abandoned its users despite supporting them in the past.
The idea of sitting around jerking off watching the burn and concocting purity tests, while zero newcomers can afford the chain, is gross.”
“Ethereum culture suffers massively from the Founders Dilemma. Everyone is already far too rich to remember what they originally set out to do. Perhaps a bear market is needed to remind them, or perhaps we must build elsewhere, but this is what it is--nothing new under the sun.”
I don't agree with these tweets, although I understand the sentiment. There is no easy way to build out a massive decentralized network at scale, especially if you are the first to try. Ethereum developers have not abandoned the network. If you don’t believe me, I encourage you to jump into the weeds and talk to the developers that have devoted their lives to this project.
We are all aware of Ethereum’s flaws, and I love seeing competitors like Avalanche stealing some of the spotlight. If anything, it tells us that smart contract platforms are in high demand and competition will keep developers on their toes. As I have said numerous times, I believe that we will see an interoperable world, with multiple chains finding their ideal use cases and working together.
Rome wasn’t built in a day. Until we have strong evidence to prove Ethereum (or any other competitor) is a failure, all layer 1 options are likely good investments. Let’s celebrate each other - this is not a winner take all market.
Doge And Shiba Are The Top Searched Coins
A recent crypto study found that meme tokens were November's "most searched" coins. In 30 of the 50 states in the U.S., the top searched coin was either Doge or Shiba. Doge ranked number one in 23 states and Shiba ranked number one in 7 states. Bitcoin ranked number one in 10 states and Ethereum was number 1 in 8 states. Do I love these stats? Not particularly. That said, this is the reality of the crypto space and a sign that more retail is entering the market. I'll take it.
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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.