The Wolf Den #443 - You Are Your Own Worst Enemy
Bitcoin Thoughts And Analysis
As you know, I have had two successful long trades this week with leverage, playing bullish divergences on the 4-hour chart. Price went down after I closed in both cases, so it was my trade management and plan that kept me profitable, even though the market went the other way.
It should be VERY CLEAR that these are trades. We are in a bear market, and you should never follow someone else's trades because you will never manage them the same. I cannot update you moment to moment as to what I am doing, but I do feel compelled to share what I am doing for educational purposes and to be transparent.
I am once again long now from $35,000.
WEEKLY CHART
What a difference a couple of days can make.
There is a reason that we wait for candles to close. Just two days ago, the weekly was looking like a bullish hammer, but now has made new lows on macro concerns. The candle is STILL not closed, so it is still too early to judge.
Either way, for now we have a shooting star two weeks ago, followed by a bearish candle that broke two key levels of support at 42K and 39.6K, and this week's candle retesting 39.6K as resistance before falling further. things are looking shaky on the weekly for now, but let's wait until Sunday to judge.
We do currently have a higher low still.
DAILY CHART
TD Sequential, which is not an indicator that I particularly like but is one that many people use, is currently printing a red 8. A red 9 tomorrow would be a reversal signal. Keep an eye on this. The last red 9 marked the recent bottom.
Blue line fail. Descending lines have been difficult to play, and this one looks likely to fail as support barring a really big upside move to end the day. Key levels on the daily are shown. A close today above $36,264 would be a first sign of recovery, with many more needed.
4-HOUR CHART
After another hidden bear div, we once again have bullish divergence with oversold RSI on the 4-hour chart. This is confirmed, and is about to confirm on the 6-hour chart as well. It is also possible on the 12-hour.
I trade the chart, and this is the signal that I like for taking speculative longs. I do not pay attention to the news when making trading decisions based on technical analysis. That is MY SYSTEM. It can become a part of yours with practice.
The last 4 hour volume candle was the largest since the massive dump on December 4th. And it was buying volume in the end. There is demand in this area, we will see if it can hold.
If not, I will hit my stop loss, have a profitable trading week and move on with my life.
Short-Term Speculators Leave, But May Be Dragging the Market - IntoTheBlock
In this report, we bring to you the latest in on-chain cryptocurrency analysis. We look at the blockchain directly and analyze balances, transactions, and the overall activity of market participants. This gives us a unique insight into the future of the market.
This section is written in conjunction with IntoTheBlock (ITB). ITB is an intelligence company that leverages machine learning and advanced statistics to extract intelligent signals tailored to crypto-assets. IntoTheBlock tackles one of the hardest problems in crypto: to provide investors with a view of a crypto asset that goes beyond price and volume data.
The Wolf Den research team uses IntoTheBlock to dig deeper and get the most important insights about the crypto market.
Short-Term Speculators Leave, But May Be Dragging the Market
As on-chain activity continues to slow down and the Russian invasion has materialized, we are observing a rotation in market participants.
With prices dropping, short-term traders are leaving the market, as tends to happen. The number of addresses that have been holding Bitcoin for under one month — labelled as Traders by IntoTheBlock — just set a one-year low.
IntoTheBlock’s Bitcoin Ownership Metrics
The number of and volume of the addresses under the traders category dropped by over 1% in just 10 days. This suggests that, for the most part, it is retail traders that manage small volume that have left the market.
The number of traders had previously a 6 month high of 4.75 million in January. Many have suggested that as macro fears and the potential invasion started to increase, short-term retail interest left the market.
Is Bitcoin A Safe Haven?
The price decline in BTC is also attributed to its growing correlation with Nasdaq and S&P 500, which has reached a two-year high recently and tends to increase in times of market turmoil.
IntoTheBlock’s Capital Markets Insights
Fears exacerbate correlations — As macro concerns regarding the Ukranian crisis have emerged, crypto has begun trading like a leveraged Nasdaq ETF.
Correlations between Bitcoin and the tech-heavy index reached yearly highs of 0.86, indicating a very strong relationship between the two
Meanwhile, gold and silver have rallied 4% and 5% in 2022
IntoTheBlock’s Capital Markets Insights
The never-ending debate on Bitcoin’s value proposition reemerges as short-term volatility takes over. Bitcoin and crypto markets broadly have not been an effective safe haven in the recent crash, as they have moved in tandem and crashed further than stocks
This has led to negative correlations vs. traditional safe haven commodities such as gold and silver.
Altcoin Charts
I do NOT share signals in this section. I share setups and charts that I am watching, in an effort to help show you how I view a chart and what criteria would be necessary for me to consider taking a trade. NEVER blindly buy something because it is listed in a newsletter or posted on twitter. You need to have a plan when you enter a trade. These are just ideas, and are almost always “if, then” scenarios. If a certain set of things happen, then I would consider a trade.
If you are investor looking to buy dips, I cannot blame you for doing so. That said, this is a really sub-optimal market for trading altcoins, unless you are placing stink bids at major support below price. For now, I still feel compelled to wait on sharing altcoin charts.
Legacy Markets
I often share stock charts in this section, but that's nearly impossible in a time when markets are in turmoil. As you can see, future are down big after the Russian invasion, so extreme volatility and panic seems to be on the docket. Charts for stocks can only take us so far.
U.S. stock futures declined early Thursday as Russia attacked Ukraine.
XAG (SILVER)
Precious metals are viewed as safe-havens in times of war. As I pointed out the other day, silver was already rising and was testing the 200 MA, a line that it has been trading below since last summer. As you can see, silver is breaking out massively, smashing the 200 MA and now testing resistance at the EQ (equilibrium, center dashed line) of the green trading range. Flipping the EQ to support should put the range highs in play as a target.
XAU (GOLD
Peter Schiff is popping bottles in his mansion in Puerto Rico right now. Gold looks extremely bullish, having broken through descending blue resistance, the EQ of the blue channel and horizontal resistance. If you believe that things are about to get uglier globally, then buying the dips that may come on gold could be a nice hedge.
Chart Requests
Every Wednesday, I take chart requests from paid subscribers and live stream myself looking at them. This is for educational purposes, hoping to help you learn to look at charts yourself. Most of these are invalid, considering the launch of a war. As you know, I have not been personally looking at altcoins.
Don't Catch A Falling Knife
The phrase “catch a falling knife” describes the attempt by a trader (not investor) to buy a dropping asset at or near its low point of a significant move. This often occurs when someone is trying to make up for a loss caused by a large move, in an effort to average down at the lowest point and ride the asset back up. It is unwise to attempt perfectly timing the bottom and far safer to wait for confirmation in the form of a resistance to support flip or a bullish divergence with an indicator (that is my personal system). Some also use confluence with oversold conditions to help determine a likely bottom.
The point is, simply buying on the way down without a reason or plan and hoping to find the bottom is a losing strategy.
Trading within a movement is far less risky than attempting to buy the bottom and sell the top. The meat of the profit that traders make is simply by selling higher than they buy - whether they buy the bottom or not. This usually happens somewhere in the middle of the entire movement.
Investors can largely ignore this rule. They can dollar cost average and buy dips with a long time horizon.
Cointelegraph Releases Top 100 Influencers
Cointelegraph brings you our hand-picked list of the Top 100 influencers in Crypto and Blockchain
The famous “Cointelegraph Top 100” list is making the rounds with some interesting new additions. The top 20 are yet to be announced, but should be coming within the next 10 days. The list is inspired by Cryptopunks, with each profile picture accompanied by art that represents the NFT collection.
One of the noticeable differences this year was non-human inclusions such as the metaverse (#25), BAYC (#22), DEXs (#86) and crypto miners (#40). There were fewer influencers on the list and more founders, CEOs, regulators, and advocates. If you want to scroll through the list, click the link above.
Grayscale Wants A Spot ETF
Rather than just submitting a Bitcoin Spot ETF and hoping for the best, Grayscale has launched a campaign to “educate and encourage American investors to submit comments on its application with the SEC to convert GBTC to a Spot Bitcoin ETF.” The campaign includes an easy-to-follow, step-by-step guide on how to submit a claim to the SEC on why the vehicle should be approved. Grayscale even provides templates for quick submission if you don’t want to have to figure out the reasoning yourself.
Approval of a Bitcoin spot ETF would be a huge step for the crypto space. Click the link above and take a moment to submit a comment.
Russia To Seize Retail Funds?
This is the clearest case for Bitcoin that I have ever seen.
“If all the foreign funds are blocked, the government will have no other choice but to seize all the deposits of the population, or 60 trillion rubles in order to solve the situation,” the official stated, noting that Russia stores over $640 billion of gold and foreign exchange reserves abroad."
In the past weeks, we have seen Canada freeze the bank accounts of its citizens, with Russia threatening to do the same.
The Wolf Of All Streets Podcast Ft. Ray Youssef
Ray Youssef, CEO of Paxful, believes that Bitcoin can deliver an abundance of wealth to humanity. He is watching it happen in real-time in Africa, South America, and beyond, where Bitcoin is saving the lives of millions on a daily basis. If you believe that Bitcoin is more than just a trade or investment, this episode is for you.
In this episode with Ray, we discussed:
The Unknown Purpose Of Bitcoin
Central Bankers Hold All Of The Power
El Salvador Is Under Fire
Wealth Is Our Default State
Paxful Opens An Education Center
Who Will Adopt Bitcoin Next?
Is Bitcoin For The Millionaires?
Is Bitcoin Inevitable?
How We Can Assist Crypto Adoption?
Ray’s Op-ed In BTC Magazine
This episode is sponsored by: ARCULUS and BULLISH.
My Recommended Platforms And Tools
This is where I trade with leverage and can also trade spot with no fees.
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Rewards Code: WOLF25
Mining for everyone! You can buy an ASIC and have it set up at a destination of your choice by them, and you only pay the electricity cost. Absolutely awesome.
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.