The Wolf Den #419 - 6 Stages Of A Trader
Bitcoin Thoughts And Analysis
I have taken another leveraged long position. I am always transparent with you, but do not encourage you to take my trades. In fact, I would encourage you not to, because you will not manage it the same as me and likely have different expectations.
The last position I traded long from $39,800. I closed half at ~$42,000, took a bit more profit higher. The rest closed on the drop, as I had moved my stop losses into profit. A great trade, even though price ultimately dropped.
Right now, we have mass depression, a huge break in market structure and oversold conditions with potential bullish divergences. For me, that's a decent spot to take a position, but NOT BECAUSE I think it's the bottom. Because I think I can catch a nice bounce and make some money.
My current entry is $38,100.
My portfolio, like yours, is heavily in the red over the past few weeks.
WEEKLY CHART
Volatility has returned in spades. Unfortunately price has headed in the wrong direction. The range lows are definitively broken, with price back below 42K and now making a lower low below $39,600. This also represents a break of bullish market structure, with price making a lower low after the rise from $28,000.
That said, bulls would be encouraged by a weekly close above $39,600, which would represent a massive bullish SFP and tons of liquidity found below that level.
That is grasping at straws for the moment, but worth watching. The higher the weekly close the better... the lower, the worse it looks. Pretty obvious.
The black lines can be used as range highs and low. As you can see, lowing the $42,000 area puts us back in the range below, where we spent all of last summer. This squarely puts those $28,000 lows back in play, which I have been mentioning for quite a while.
>53K = all time high in play
<42K = 28K in play.
Does not mean we get there, but that's not the range we are trading in. 42K - 28K.
There were plenty of pundits and investors (Novogratz, 3 arrows etc) who viewed 38K as a likely bottom. Let's see how good they are.
DAILY CHART
Ugly daily chart. Yesterday things were looking good, price was moving up and bulls were already euphoric. What a difference a day makes.
You can see how important the $39,600 area is. A daily close above that would be huge for bulls, weekly even more important.
Daily RSI is currently 26, quite oversold. It reached 23.2 in the May crash. It went to 15 in March, 2020. That was a bit insane.
Price was rejected yesterday right at the centerline of the Bollinger Bands, a key resistance on that indicator.
4-HOUR CHART
We have potential bullish divergence with oversold RSI on the 4-hour chart, my favorite signal. It is already confirmed on the hourly. That said, we actually need to see price close a bit lower than it is now and then a clear elbow up on RSI. That's a lot to ask, so this is far from confirmed. Just an idea.
Either way, RSI on this time frame has now hit oversold a few times without making it to overbought. That will eventually happen, even if just in a relief bounce.
Take Your Coins Off Exchanges
Crypto.com, one of the world’s leading exchanges has reported a recent hack resulting in the loss of $34M in stolen funds. There is no need to panic - all accounts have already been reimbursed That said, this should raise concerns if your assets are sitting on an exchangem, especially if you are not taking aggressive security measures with proper 2FA on your account and emails.
The hack was first noticed when users began to report unauthorized withdrawals from their accounts that circumvented 2FA. 483 users were hacked, totaling 4,836.26 ETH, 443.93 BTC, and approximately US$66,200 in other currencies. Since the hack, Crypto.com has revamped its 2FA infrastructure and added new whitelisting requirements. The major exchanges are well funded, so I’m not surprised the assets were quickly reimbursed, but this does not mean larger hacks could be covered as easily.
The bulk of your coins should be secured off of exchange.
Facebook And Instagram Are Implementing NFTs
According to a Financial Times insider report, Meta and Instagram are exploring and developing ways for their users to buy, sell, display, and mint NFTs through their platforms. If the news does become official, it would be the largest NFT integration to date, simultaneously adding a whole new wave of fresh participants and stealing pre-existent NFT enthusiasts from other platforms. It would be a hugely positive disruption. All this being said, the report acknowledges that the plans are still “at an early stage and could yet change, but expect the Novi wallet to play a role.” It feels like in just a matter of a few days, every big tech company has stepped up to the plate and made serious commitments to the crypto space.
Twitter Adds NFT Avatars
Twitter Blue subscribers can now add authenticated NFTs as their profile photos, a feature that the platform has been hinting at for ages. Users will be able to connect their NFT wallet to twitter.
"While many NFT owners already use the art in their profile photos, the Twitter Blue feature will also add an icon indicating that the NFT has been authenticated and that person behind the account is the official owner of the piece."
I am personally not so sure I would want to connect my wallet to twitter, but this feature is definitely another massive step towards adoption.
Russia Is Cracking Down On Crypto
Russia’s central bank has proposed a full ban on cryptocurrencies, including mining, trading, and spending. The report titled, "Cryptocurrencies: trends, risks, measures," cited threats to the country’s financial stability, purporting the asset class is rife with frauds and scams. Now they are officially added to the list of countries missing out on the greatest opportunity of our century. Something tells me being on the opposite side of Russia and China isn't the worst position to be in.
It is important to note - this is a proposal, not a law. Russian has discussed these ideas before, and this largely still just a concept and not concrete. They hinted at the fact that a CBDC is coming and this could be a threat, which could be a stance taken in many nations. I discussed this at length yesterday on YouTube.
My Recommended Platforms And Tools
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I use RoundlyX to buy small amounts of Bitcoin every single day. They automatically round up my credit card purchases (with 10x multiplier) and invest them in crypto. Absolutely brilliant. Passively invest money you don’t need without a thought. Further, they have integrated with Voyager (see above) to offer commission-free purchases.
Rewards Code: WOLF
Concierge Phone Service for Americans that protects your from SIM Swaps and other phone related hacks. I cannot stress enough how amazing this service is.
Subscribe to my YouTube channel for free daily content.
Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
On-chain and fundamental analysis, research, predictions and indicators, all in one place. Highly recommend.
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.