The Wolf Den #426 - Crypto Doesn’t Have To Be Confusing
Bitcoin Thoughts And Analysis
MONTHLY CHART
A moment of silence for my favorite idea.
I have shared this monthly ascending channel countless times over the past few years. Until now, every single time that the EQ (dashed center line, equilibrium) of the chart was broken, price visited the top or bottom of the channel. This time it was not to be, as price lost the EQ as support by a bit last month and confirmed on yesterday's monthly close.
Does that mean we have to visit the bottom of the channel? Obviously not, considering we just failed to hit the top.
The immediate idea was wrong, but the channel is still very much valid and shows a long time pattern of higher highs and lows - the never ending bull market for Bitcoin. We will still eventually reach the top, and the longer it takes, the higher the price will be.
DAILY CHART
Cool. As anticipated, price returned to the inside of the Bollinger Bands and to the centerline resistance. I talked about this idea quite a bit over the past couple of weeks.
That said, that's where the idea ends. Now price need to either flip that to support and head to the top of the bands, or this was just a relief rally and we can expect a move further down. The good news is that the bands are tightening and the bottom band is pointing back up. This should mean that news lows are less likely.
$37,300 held as support for now, which was the first key level that we needed to see flip. We also had a nice spike in volume yesterday on the daily, showing some renewed bull strength. MACD has once again flipped bullish with bullish divergence, but this indicator has largely chopped sideways. $39,600 is still the major level to watch for now, with the descending blue line in the distance.
Price his $39,000 this morning, once again acting as a strong resistance.
4-HOUR CHART
Price is forming somewhat of an ascending triangle on lower time frames. We have a horiztonal resistance, shown here has a red box. Price is making higher lows, consolidating up towards that resistance. This "should" break through the top, although it is just an idea and not confirmed until it does.
Either way, this looks more bullish than bearish from this regard, assuming the higher lows are not violated.
Nothing to do with this yet.
Altcoin Charts
MANA/USDT
Altcoins are still very shaky, so I am proceeding with extreme caution and generally avoiding altcoin trades. I looked at MANA yesterday on the livestream and noticed that it looks decent. Metaverse tokens have made nice moves - many of you likely benefited from the SAND breakout that I shared last week before it happened.
MANA had a nice breakout through descending and horizontal resistance. I am most interested in a retest of $2.44 as support, if it happens. That was a key swing high and all time high in the past that has remained a major area of support and resistance. $4.23 would be the first real target of the trade, with expected resistance in the blue supply zone.
Again, this comes with a lot of risk, namely a big Bitcoin move and lack of confidence in the altcoin market for the moment.
Legacy Markets
SPY (SPDR S&P 500 ETF Trust)
It is WAY too early to celebrate the reversal, but yesterday was the exact reaction that I was looking for and that stock bulls wanted to see. While this is a weekly chart, yesterday's candle is comprised of one day - a major step in the right direction for a stock recovery. As you know, I bought stocks heavily last week, not because I was certain the bottom was in, but because I believe that prices will be much higher than today at some point down the road. Still, there were a number of "bottom" signals that I took into account when deciding not to wait longer, like pundits saying that we were entering a depression (possible, but unlikely) and that stocks "needed" to drop 50%.
We need to wait and see how the rest of the week shapes up, but Monday was one of the more convincing buying sessions I have seen in a long time.
Here is what I had to say yesterday.
"Last week was a rollercoaster for all markets and pundits seem to expect the nonsense to continue. There are still question marks surrounding the Fed and macro situation, so the chart should always be taken with a grain of salt.
The SPY is the most popular asset for trading the S&P, and has been the core of my investment portfolio for 15 years. While many still expect downside, the chart certainly is not showing it at the moment. Again, it’s just a chart.
As you can see on the weekly, price just tested the 50 MA successfully as support, the first interaction with this line since June, 2020. Further, we have a massive hammer candle, closing almost at the weekly high. This was the largest weekly volume since March, 2020, when global markets collapsed because of Covid. To top it all off, we have a bullish SFP (swing failure pattern) below the previous swing low, meaning there was a ton of liquidity and buying interest below that black line.
The chart is signaling that the bottom is close, at least for now. Bulls really want to see another green candle this week to confirm."
The Truth Behind Buy And Sell Walls
With every major Bitcoin rise, there are increasing concerns around massive buy and sell walls. Nobody is doubting the significance of psychological levels like 50K, and presumably, 75K and 100K where traders congest the order book with bids and asks, but a lot of the information we hear about buy and sell walls is incorrect.
Most think of sell walls as being bearish and buy walls as being bullish. If you believe this, you are buying into the story that the whales are trying to tell you. It is literally almost always the opposite. A sell wall most often stops price so that someone can BUY. A buy wall holds it up so that they can finish SELLING.
Entering an order that you do not intend to fill in order to manipulate price action is illegal in legacy markets. Since we are trading in the wild west, it’s perfectly acceptable behavior in crypto. It is called “spoofing.”
If you truly are trying to sell a large quantity of an asset, you would never put up a huge sell order. It’s against your own interest because you are stopping price and scaring buyers. Real sellers sell in smaller chunks as the price is rising. They may even use a buy wall to help. This strategy was publicly proven when Michael Saylor explained how he bought hundreds of millions worth of Bitcoin over a few days in tiny increments to avoid moving the price. Imagine if he dropped his full order onto the market - it would never fill at his desired price. As both a trader and investor, watching the order book is more likely to confuse you than to help unless you are a pro. Trade the chart.
Thailand Drops 15% Crypto Tax
After pushback from Thai crypto traders and investors, the country has decided to eliminate the 15% withholding tax on all crypto transactions. The decision was well-received across the board, which should now open new doors for merchants to accept crypto as payments. Thailand has historically been one of South-East Asia’s largest financial markets for digital currencies and will now function like a crypto-friendly nation. With the new rule set, traders can function normally, offsetting annual gains and losses as they please.
Billions In Bitcoin From Bitfinex Hack Are Moving
Bad actors will have a tough time cashing out the stolen bitcoin as most of them are blacklisted.
3.55 B worth of Bitcoin from the infamous 2016 Bitfinex hack were just moved, the first time that these funds have been active since the April 2021 bull run. The news itself is not that important. What is of note is the difficulty that the hackers have had cashing out, because the coins have been identified and blacklisted for years.
One of the greatest arguments against Bitcoin is that it is too private and can be used by criminals. In practice, this is rarely the case. Bitcoin is a public ledger, so tracking the coins is easy. This was seen when the FBI was able to track and return the funds from a major hack last year. Cash is actually easier to hide and use.
India's CBDC Is Coming, Alongside A Crypto Tax
India's Central Bank Digital Currency is coming soon - in the next 12-15 months. The world's second most populous country is entering the digital currency race, following in China's footsteps. As we know CBDCs are not like Bitcoin, even if they are built on the same underlying technology. A Central Bank will use their currency to better control and manipulate the money supply. This is fiat on steroids.
India is further looking to tax all crypto income at 30%, making it one of the highest tax brackets in the country.
Regardless, all of this is better than the outright bans that have been discussed in the past. India is accepting the popularity of digital assets and regulating and taxing it - exactly what we will see from most nations.
The Wolf Of All Streets Podcast Ft. Graham Jenkin
Investing early in the right crypto project and being right has led to generational wealth for countless investors. The hard part is knowing which project to invest in and being able to gain access. Graham Jenkin is the CEO of CoinList, a platform that plays an important role in vetting and incubating projects to ensure fairness and success. Solana, Filecoin, Celo, and Algorand are just a few of the top-tier coins that began their journeys through CoinList. Without Graham, it would be nearly impossible to sift through the endless projects and protocols to find the diamonds in the rough.
In this episode with Graham Jenkin, we discussed:
What Is CoinList?
Sifting Through The Garbage
Billion Dollar Fund Raises
Investing Early
Centralization Vs. Decentralization
Venture Capital Challenges
Gaming Will Be Huge In 2022
Ethereum Is Not The Only Party
Bitcoin Will Remain King
Distribution Strategies
Decentralized Software Eats Software
Bubbles In Crypto
This episode is sponsored by: AMBER GROUP and HORIZEN.
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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.