The Wolf Den #405 - Hash Rate Has Returned
Bitcoin Thoughts And Analysis
The Bitcoin chart is muddled and confusing, continuing to chop sideways as predicted. As much as I would like to assign meaning to the chart, the reality is that we have both bullish and bearish signals and are trading in a range. Until price is above the 52-53K region (or below 42K), there is very little to discuss.
MONTHLY CHART
Not ideal, but not convincing. As you know, price has retested the EQ (center) of the ascending channel repeatedly over the past few months. The candle closed below the line, which is worth watching. That said, just a few months ago we had a very similar situation, where price broke below for a month and then immediately moved back above. That's what I will be watching for here. Further chop sideways or failure to recapture support could be viewed as a support break, putting the lower resistance of the channel in view as a potential target, although I see little reason to be concerned with that for now.. This would be a departure from history, where price has always gone to the top or bottom first on a flip from resistance to support or support to resistance. You can also see a time when resistance "broke" for one candle before price headed back down.
WEEKLY CHART
Not much has changed here. For now we have multiple successful retest of the descending blue line as support, still have bullish market structure with higher highs and higher lows. The weekly shows a fresh range between the blue lines, $51,995 and $45,496.
Price is trading around the 50 MA, losing it as support this week, but really just consolidating in this area.
I still expect things to remain boring for a while until we have a clear break and a return of volume.
DAILY CHART
The weekly chart above is from Coinbase, while this daily chart is Bitstamp. The lines are not exactly the same, but the idea of the blue lines is presented here. You can see the tighter range that we are trading in. Price is still below the 200 MA (red) on the daily, but not by far. I would view this as consolidation around this line, neither a clear hold as support or break as resistance.
Volume is nonexistent.
MACD has avoided a bearish cross of both the MAs and the histogram... for now. This was a nice indicator of the bottom last week, so we want to see the blue line remain above the grey line and the vertical lines to be up, not down.
Bitcoin had confirmed oversold bullish divergence which is still valid on the daily chart. There are no hidden bear divs yet on this chart, and we have another tiny bullish divergence. This should be a signal that price will head up and that RSI should hit overbought. That said, the last bull div brought price up a bit and RSI to 50... a huge rise with a tiny move on price. That means we could hit overbought without really seeing a move out of the range.
4-HOUR CHART
Lower time frames also confirmed recent bullish divergence, but were followed by hidden bearish divergences, somewhat dampening my excitement around the idea. The 4, 6 and 12 hour bull divs confirmed on the last candle of the entire year, which was cool... but again, they have somewhat been "canceled."
Bottom line - Bitcoin continues to range sideways on extremely low volume, with mixed signals depending on your system. Nothing to see here, and could be this way for a while.
Altcoin Charts
There are a few coins that have made decent moves in the past few days, but largely the altcoin market is moving sideways with Bitcoin. Hard to find many convincing setups at the moment.
ETH/BTC
Ethereum looks like it may be reversing against Bitcoin, ready to head back up and test resistance. The weekly candle was a small hammer and Bitcoin Dominance continues to drop. Price has not fully come back to retest the bull pennant as support, which could still happen. Generally though, this appears to be consolidation below resistance, which usually leads to a significant move to the upside when resistance finally breaks.
Predictions for 2022
To only share bullish predictions for the new year would be unfair, so I included a more negative list. Granted, the predictions above are more akin to "Doomsday Scenarios," but they are still worth considering. After all, our space is still young and there is a non-zero chance that one of these events could take place.. To lighten the mood, I have also included Nayib Bukele’s 2022 prediction HERE. I will copy it below so you can read it without having to click out of the newsletter.
Bukele's 2022 predictions on Bitcoin:
•Will reach $100k
•2 more countries will adopt it as legal tender
•Will become a major electoral issue in US elections this year
•Bitcoin City will commence construction
•Volcano bonds will be oversubscribed
•Huge surprise at The Bitcoin Conference
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Doomsday:
“Ledger wallet seed generation found not to be truly random, allowing hackers to steal funds from hardware wallet users worldwide who did not generate their seed phrase separately.”
“US federal authorities force USDC and USDT to only be transferrable between KYC'd addresses, crippling DeFi as we know it.”
“The Federal Reserve will engage in surprise shock rate hikes as inflation data forces Powell's hands -- together with US fed govt spending cuts, will cause a massive repricing of asset markets (including crypto).”
Vitalik Butterin Talks Success And Failure
This thread offers a brief glimpse into the mind of a genius. Vitalik covers his current and past thoughts on the ETH 2.0 roadmap, Bitcoin’s purpose, high gas fees, his stance on altcoins, POW energy consumption, and a number of other controversial and interesting topics. Vitalik even points out where he was wrong along the way, making it hard to believe accusations that the man has ever had bad intentions. Ethereum holders should take a look. You won't be disappointed.
Bitcoin Is The New Gold
Wharton Professor Jeremy Siegel had strong words to say about Bitcoin replacing gold.
“Let’s face the fact, I think Bitcoin as an inflation hedge in the minds of many of the younger investors has replaced gold. Digital coins are the new gold for the Millennials. I think that the story of gold is a fact that the young generation is regarding Bitcoin as the substitute.”
He was also quick to point out that gold has not performed as a hedge in this round of money printing and inflation, seeing meager gains at the time it is supposed to perform the best.
I think we all agree with his assessment.
Bitcoin Turns 13
Bitcoin is finally a teenager! Today marks 13 years since the first BTC block was released in 2009 - "Genesis Day." To celebrate, I will be playing Phil Collins records and buying BTC.
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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.