The Wolf Den #396 - Fear Is A Bottom Signal
Bitcoin Thoughts And Analysis
I bought Bitcoin yesterday (publicly, as always) as an investor, not a trader. It was right at the bottom, based on the idea of continuing to add on dips, the seemingly endless bullish divergence that I was seeing, the clear bullishness in MACD that I shared, and the hate that my bullish tweets were receiving on twitter. These coins are being moved to my long term investments for now.
If I was buying as a trader or with leverage, I would be looking to scale out around 52K-53K, at the range highs where sentiment will predictably turn overly bullish.
WEEKLY CHART
It is only Tuesday, but we are seeing a nice early reaction to the 50 MA and the descending blue line as support. Still 5 days to go. For now, this looks a lot like July, when price last tested the 50 MA. We had a candle just like last week's that closed slightly below, which was the trigger for the next run up. Let's see if we can get a similar reaction this week.
DAILY CHART
Price reacted nicely to the break below the 200 MA, faking out a breakdown for now. As I said yesterday, the fact that price has been hugging that red line rather than dumping way below was an interesting signal. Price is working on a break of local resistance (blue) but still is yet to test the more important line (black). A break of that could be a real signal that price is ready to reverse. For now, remain cautious. We had a nice move from the lows here, but still on very low volume without breaking a meaningful level
Bullish divergence is playing out beautifully, as it usually does. That said, we now are approaching higher highs on RSI, without yet breaking a higher high on price. This means that hidden bullish divergence is a possibility, so we have to watch for that. We need to see price back above the highs after the dump a few weeks ago, around $50,600.
4-HOUR CHART
At the end of the day, Bitcoin is still in a range. It is testing blue resistance (the line I showed on the daily chart). We also now have a confirmed double bottom, with a break of $48,307. If you are trading, a retest of this level as support should send price to $51,200, the target of the double bottom based on the depth of the pattern.
Nothing has changed from a macro perspective.
Altcoin Charts
ETH/BTC
ETH/BTC is generally a decent gauge for what is happening with altcoins in general. As you can see above, we have a massive bull pennant that is yet to reach anywhere close to its potential. Price is predictably finding resistance at the black line, but is consolidating just below it. This usually leads to expansion through, which could mean that altcoins will once again be outperforming Bitcoin in the not so distant future.
I would not buy ETH on the BTC pair here at resistance, but would be very interested once that line is broken and tested as support.
LUNA/USDT
LUNA is the one chart that I have shared repeatedly since the market correction began. I chose wisely, as it has doubled in price in a matter of weeks. It hit the target that I shared, but has now entered price discovery again after just making a fresh all time high. Anything above $78.22 remains extremely bullish.
We Are Still Early
At some point in your crypto journey, you have probably found yourself banging your fists on a table, angry that there is no tech-support phone number that you can call for a quick fix on your favorite crypto platform. It is rare to see a crypto company offer a direct line that you can call to assist you in addressing an error message, retrieving lost funds, or speeding up your verification. This can be a huge turn-off for newcomers who have always relied on the immediate responsiveness of their bank or legacy exchange, but this is just the way it will have to be for a while.
I interviewed Ray Youssef from Paxful many months ago, and he is the perfect example of why this is the case. When he was first starting Paxful, the company received so many calls that he had to list his personal cell phone number on the site to assist in helping customers. In our podcast interview, he said that the majority of his calls were mothers needing assistance in setting up a Bitcoin wallet on their mobile phones. Granted, his business is international and geared towards the developing world, but his story is one that rings true across the industry. There are so many people that would use these help lines that an army competent employees would unlikely make a dent in demand. It's simply impossible for companies to scale at the rate of adoption.
If you are old enough, think back to when the internet was first becoming popular. Your best chance at receiving help wasn’t a phone number or customer support line - it was your co-workers, neighbors, or a physical visit to a specialty shop. Diagnosing problems back then was a lot harder than navigating a Bitcoin wallet or exchange today. You had to actually work with the code if you wanted to fix something, and if you deleted the “startup file,” your PC would be completely useless. It was a nightmare.
Nobody likes sending in a support ticket, but this does not detract from the legitimacy of the space. It is a sign that we are early and flooded with people who are eager to learn and participate.
If you are looking for help, the best strategy is to find a group of experienced people with similar interest to your own. There are an endless amount of Discord groups, Telegram chats, and Reddit threads that offer up valuable information. We are lucky to have a passionate community, because there are a lot of anonymous people out there willing to offer help if you simply ask.
Ethereum 2.0 Inches Closer
All the latests news on Crypto, Blockchain, Bitcoin, Ethereum, Tokens, ICOs, Fintech, and more.
Ethereum 2.0 is inching closer to the finish line. The first-ever public testnet for the full upgrade to POS was a success. Called the Merger, the upgrade entirely removes Ethereum miners from the network. In doing this, Ethereum’s environmental impact should drop by about +99%, because POS removes the need for consumption mining that ETH once required. Fundamental news like this tends to be largely ignored when market sentiment is negative. 2.3M Ethereum have been staked and 1.2M have been burned. Whether it feels like it or not, Ethereum 2.0 is still one of the most important events in the history of crypto.
The Wolf Of All Streets Podcast Ft. Willy Woo
Willy Woo needs no introduction. In this episode, he shared his thoughts on why 2021’s price action has broken many of the popular price predictive models that have historically been accurate. It’s his belief that 2022 will be a strong year for the crypto market, backed by compelling on-chain analysis. If you are looking for an incredible summary of the past year and an honest appraisal of what is to come, then this is the episode for you.
In this episode with Willy Woo, we discussed:
Is The Bull Run Intact?
Why Has The Market Changed
Will The Market Become Less Exciting?
The Picks And Shovels Approach
The VC Crypto Strategy
The Supply Side Shock Narrative
Are Models Broken?
Outperforming Inflation
Trading Against Whales
Should You Be Buying The Dip?
Bitcoin Will Eat Capital
This episode is sponsored by: AMBER GROUP, HORIZEN, and HBAR FOUNDATION
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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.