The Wolf Den #440 - Light At The End Of The Tunnel
Bitcoin Thoughts And Analysis
WEEKLY CHART
Not much to cheer about on the weekly chart for the moment. After a reversal candle a few weeks ago and strong bullish follow through the following week, we had an ugly shooting star and then a large down candle to follow. While this is technically bearish, it's important to remember that the 2 grey candles we just saw were supposed to lead to continuation up. That means the 2 ugly candles we just saw are no sure thing - because technical analysis is an educated guess. Nothing is set in stone.
For now, Bitcoin has lost 42K as support, as well as 39.6K, which was already tested as resistance to start the week. We have 6 days left, let's see what happens.
DAILY CHART
Ugly. The 50 MA failed to hold as support, which is somewhat rare. Further, price broke down below 39.6K yesterday and has already tested it today as resistance.
Shown above are the key levels on the daily chart to watch. We do still have the breakout through the blue descending resistance, so maybe a retest as support is on order. To be honest, this price action is unpredictable and disgusting. We effectively had a "bart" up from the lows and now a "bart" back down from the highs. All with 39.6K at the center.
I have often mocked the CME gap in the past, but when price is trading close, I have noticed that each week the gap fills within the first hours of trading. I was a bit too dismissive on short time frames. This coincided with the 39.6K retest as resistance. The CME is closed all weekend, which creates an inevitable gap on the chart as Bitcoin continues to trade elsewhere. "Nature abhors a vacuum," so price tends to quickly fill these gaps before going about it's merry way.
4-HOUR CHART
Pay attention - this is where things get interesting. We have potential bullish divergence with oversold RSI on the 4-hour chart, which is my favorite reversal signal. To confirmed we need RSI to make a higher low, price to make a lower low, and then for both to make a clear "elbow" up. This is usually where I even consider a leverage trade, if the criteria above are filled.
You will notice that the entire "bounce" over the past few days had consistent hidden bearish divergence, shown in red. It was very weak.
Legacy Markets
SPY (SPDR S&P 500 ETF TRUST)
The SPY closed the week below the 50 MA for the first time since the covid crash in 2020. The Dow did the same, although it was trading below the 50 MA a few weeks ago before rallying back above.
This is an important moment for the stock market, with the world on the brink of war, inflation running hot and central banks scrambling for answers.
I will be watching the weekly candle this week. If we see further downside, then it becomes a bit less likely that things will turn around in the immediate future.
Important to remember - charts are not particularly useful when macro narrative are dominating. It's a good time to take a deep breath, put on your investor hat and start looking for discounts.
Navigating The Metaverse
Binance recently released a blog titled, “Metaverse Tokens: What, Why and How To Buy Them” that explains exactly what the title says. The metaverse is attracting a lot of newcomers into crypto, most of whom have absolutely no idea what they are doing. We already have home-field advantage. We know how to navigate new sectors and sift through the garbage. I like this article because it actually names specific tokens instead of beating around the bush with general advice. And it offers additional articles at the bottom to continue exploring the metaverse if you wish to do so.
Did Open Sea Get Hacked?
Fear and panic broke out over the weekend on the news that OpenSea had been compromised and that NFTs were up for grabs. The rumors got so bad that many people were afraid to move their NFTs because they would be "intercepted." It was also reported that over $200M in NFTs were stolen.
None of this turned out to be true.
What actually seemingly happened was that a phishing email targeted some OpenSea users. The platform itself was not actually the attack vector. 32 users were affected, all of whom clicked unofficial links and signed transactions that should not have been signed. These users essentially signed blank checks for hackers, offering up full access to entire collections. The damage wasn't that bad. About $1.7M worth of Ethereum has been accumulated in the hacker's wallet from stolen NFT sales.
As much as these attacks suck, they can be avoided. Even if you trust a particular platform and are very familiar with it, you can't let your guard down. Check and verify if the links appear the same, make sure the signatures are representing the transaction you intend, ask yourself whether the platform should be emailing you at all, and be sure that the public and private keys are correct. To be your own bank requires vigilance. These questions should routinely go through your head, even on the most monotonous tasks. This is the best way to be safe in crypto.
Intel Unveils Mining Chip
Intel recently announced the development of the Bonanza Mine, a one-of-a-kind Bitcoin ASIC processor and notably the company’s first venture into the cryptocurrency mining industry. They are focused on sustainability and environmental friendliness.
This is a huge move by a tech giant into the crypto space. The chip is reportedly half as powerful as Bitmain's which is a bit of a head scratcher, but there is still wide optimism that Intel's entry to the space will be huge for adoption.
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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.