The Wolf Den #450 - Andre Cronje Calls It Quits
Bitcoin Thoughts And Analysis
WEEKLY CHART
Bitcoin has continued to drop over the weekend, with downward pressure from, well, everything.
This chart is a real head scratcher, with one of the more questionable weekly candle closings that I can recall. After a nice move up to $45,000, Bitcoin was rejected massively, closing almost all of the way back down at the open. This looks like a gravestone doji, but technically it is not as bad as it seems. Remember, context and candle placement matters. A gravestone can only come at the top, indicating exhaustion by bulls and a likely reversal. This candle is actually considered bullish at the bottom of a downtrend, At the moment, price is sideways, so I am not willing to assign much meaning, except to say that this price action is a disaster and likely to chop up even the most seasoned trader. The spread and wicks on almost every weekly candle right now are impossible to interpret.
DAILY CHART
Breaking 39.6K, the 50 MA and 42K, only to lose them all as support in a single daily candle was disheartening. This area should offer some support based on the cluster of price action to the left, but this chart is also hard to read. As you can see, price has somewhat irrationally pumped and dumped back and forth for weeks.
As you can price, held 42K as support for one day, then dropped right through the 50 MA and 39.6K Price then retested 39.6K twice as resistance before dropping. Clean price action.
The daily chart is a very tough read.
4-HOUR CHART
Price is on the verge of confirming a very small bullish divergence with oversold RSI on the 4-hour chart. As you know, this is my favorite reversal signal, and is the reason that I am still hanging around in my long position. The 6 hour is also likely to confirm the same divergence, but not oversold.
Very important to remember. These divs often build. You can look just to the left at the last one, and see that there were a number of small divs, and price still managed to drop dramatically before confirming the larger one.
For context, this chart is zoomed out to December. You can see that almost every top and bottom was preceded by divergence, either overbought or oversold. You can zoom out for YEARS and see the same thing.
There are two examples (x's) where there was no div when price hit overbought or oversold. The first one saw price continue to dump. The overbought one was the recent top.
Also important to note - hidden bearish divergence looks likely, even if this confirms unless we see a major move up above $39,600 or so. That would probably mean we drop and form a bigger div at some point.
Legacy Markets
CL1! (LIGHT CRUDE OIL FUTURES)
When critics tell you that Bitcoin is too volatile, remind them that the price of a barrel of oil went negative less than 2 years ago, and now has topped $130 before a slight pullback.
The interplay between the price and production of oil and the global economy is way above my pay grade, and even the most seasoned experts disagree on what the current price action will mean for the globe. Looking at the chart, one would assume that the top could be in - there's a huge gap and potential shooting star candle (weekly shown, but it is there on the daily as well). That said, all bets are off on charts in the middle of a global crisis.
The major concern at the moment is that the rising price of oil could cause a global recession. There's an old rule that used to be pushed by the big car companies in the 1970s that states if oil prices go up 100% in a one-year period, expect a recession.
Price was around $65 a year ago and just tapped $130 here. The caveat is that price has to reach a 2x and stay above it, which is not the case for now.
Bottom line: the price of oil has skyrocketed, putting pressure on almost every industry and asset in the world. A sustained crisis in Ukraine would likely exacerbate it, while a quick end could bring things back to normal.
Markets are insane right now, be careful.
XAU (GOLD)
I recently shared the gold and silver charts, right before the war broke out and prices pumped and then dropped. We were looking for a pullback and dip to buy and got it.
Now we are seeing the sustained price action that I was looking for, as global uncertainty surrounding markets increases. Gold is still the main flight to safety for many people, and this is being reflected in the price, which currently looks ready to target the all time high.
Fantom Responds To Andre Cronje News
Fantom bag holders feared the worst when prolific coder Andre Cronje departed from DeFi. In a response to his exit, the Fantom Foundation softened the blow with their own statement.
"We're extremely grateful to Andre for all he did for crypto as a whole. However, Fantom isn't and never was a one-man team. There are 40+ people working at Fantom. The team effort is what allowed Fantom to become one of the most utilized and loved decentralized networks in world. Hundreds of developers build on Fantom daily and 100k+ unique addresses use Fantom every day. Contrary to some popular belief, Andre wasn't a core dev at Fantom. Therefore, the development of Fantom won't be impacted by Andre's decision."
There is no good time for this news to come, but unfortunately it came at a time when the market is already shaky, compounding the negative effects. As I said in the intro, it's my belief that DeFi will move on. It's important to remember that no industry, project, or sector should rely heavily on one person. That is the exact ethos we are trying to escape.
Interest In The Metaverse Slows
Hopefully this segment doesn't come as surprise. Considering the amount of retail interest that NFTs and the metaverse had late last year, you would have to have expected some sort of pullback. The music hasn't stopped, but it certainly has slowed. According to the article, Google searches are plummeting and trading volume is sharply on the decline. I'm not an NFT expert, but if I was looking to buy for value, now may be the time to start shopping around.
FTX EUROPE
The new division is based in Switzerland, with an additional base in Cyprus.
"Two years after the launch of FTX.US, cryptocurrency exchange FTX has established a European equivalent licensed in Cyprus.
The European domain of FTX's platform (ftx.com/eu) has won approval from the Cyprus financial market regulator, CySEC, the exchange announced Monday.
FTX Europe will offer products and services across the European Economic Area through an unidentified investment firm licensed to operate across the region.
The division is headquartered in Switzerland, with an additional base in Cyprus.
FTX Europe will seemingly be the crypto exchange's European equivalent of FTX.US, which was launched to American users in 2020 and now boasts an $8 billion valuation following a $400 million fundraise in January."
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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.