The Wolf Den #399 - Web 3.0 Debate Raises Legitimate Concerns
Bitcoin Thoughts And Analysis
Bitcoin is looking very strong... but on very low holiday volume. All hidden bearish divergences have been invalidated, meaning that the bullish divergences are in play. That said, the 6 hour and 4 hour are already back to overbought RSI, while the daily RSI is back to 50 - considered a meaningful level. Above 50 is bullish, below is considered more bearish.
Ultimately, the daily MACD was a great signal of a local bottom.
WEEKLY CHART
The weekly chart is shaping up beautifully if price can hold these levels. Just like in July, we had a temporary break of the blue 50 MA, followed by a bullish candle holding it as support. We still have higher lows and higher highs. In both cases, we have a bullish engulfing candle, meaning that last week's candle is entirely consumed by this week's. This is starting to look like a bottom.
We also have tweezer bottoms on these two weekly candles - a bottom signal.
That said, we need to get back above 53K before I will feel that this is a true reversal in the works.
DAILY CHART
Bollinger Bands are looking bullish once again, with price trading above the centerline and testing the top band as resistance. We also have the bands tightening dramatically, indicating that the downside volatility has at least taken a pause.
Beautiful, but low volume. Price broke through the descending black resistance yesterday, which was what I was looking for to signal the beginning of a reversal. We still have a lot of resistance above, but this is a great start.
4-HOUR CHART
The double bottom played out beautifully, so that pattern is finished. As you can see, price is approaching the range highs, although I still see 53K as more meaningful than 52K.
Altcoin Charts
SAND/USDT
My alarm went off yesterday when the descending black line was broken - unfortunately it happened after the newsletter went out, so I shared it on twitter instead. This culminated in a large move up, through descending and horizontal resistance. Now, I would be looking for a retest of $5.69 as support, if it happens. This looks like a good area for a healthy retrace of the move and continuation up. Ultimately, this should target the recent highs of $8.48. If that is broken, back into price discovery.
You could buy now, of course, but the safest play is to buy a retest of resistance as support and accept that you could miss the move. No big deal if you do.
XAVA/USDT
We have had a number of successful trades on XAVA, which looks to be setting up for another bullish move. XAVA made a new all time high and has been trading in a descending wedge since. A break of the top blue resistance should send price back to the recent highs of $21.77. A break of that level would be price discovery.
This is not a buy yet, in my opinion. We need to see a break of the blue line.
Set your alarms.
Pro Tip: Don’t Quit Your Day Job
The things you do to make money each day are the anchor, no matter what happens to your volatile portfolio.
Unless you are constantly selling from your investment portfolio to live, it should be viewed more like a savings account than as income. Of course, there becomes a certain point where, if invested wisely, you can simply live off of the interest from your investments and never work again. But for most, that will never be a reality and is largely dependent on the value of the investment portfolio never dropping. We know that is not something you can count on, especially in the crypto market. If you “retire” and then immediately experience a 50% drawdown in portfolio value, what will you do?
Most people who quit their job to go full-time crypto end up either broke or bored and unhappy. Neither is desirable. Finding a better job that makes you happy would be a more compelling idea than quitting altogether.
Just because the number is big, does not mean that it will always remain that way. Quitting the things that provide a solid floor and foundation is unwise until the number is so big that you can cash out and never look back. But that requires you to cash out.
And we know that nobody here intends to cash out their entire crypto portfolio yet…
My advice - remain sensible and grounded and keep doing what you are doing. It’s likely working. Then, have a plan for exiting so that you know what to do when the proper time comes.
Clarity Is Coming
2022 will likely be the year that we finally receive regulatory clarity. Community favorite Senator Cynthia Lummis proposed bill aiming to "provide clarity on stablecoins, guide regulators as to which cryptos belong to different asset classes and offer consumer protections." Lummis herself is a conservative, but she has made it very clear that she is looking for bipartisan support. Hopefully, we see another wave of widespread support from voters to kick off the new year.
Bitcoin Experiment Or Revolution In El Salvador?
Bitcoin adoption is changing El Salvador's economic landscape according to the Salvadoran president.
The world has dubbed El Salvador's move to adopt Bitcoin as legal tender and "experiment, one that they are watching with bated breath. International organizations like the World Bank and IMF are hoping to see the "experiment" fail, even working actively against El Salvador's efforts by refusing loans and assistance that were in the works.
Bukele pushed back, calling it "game over for FIAT."
We should all cheer the "experiment" in El Salvador, because it's success will lead to further adoption by other nations. If the "experiment" fails, then we will likely be waiting a long time for another country to try.
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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.