The Wolf Den #460 - Byzantine Generals
Bitcoin Thoughts And Analysis
WEEKLY CHART
There's a lot to like about the weekly close. We wanted to avoid a candle with yet another wick to the upside, which we largely did. Bitcoin almost "filled the wick" of the previous candle, and much of the candle from two weeks ago as well. The fact that we saw a large grey candle without too much of a wick at the top means that sellers started to lose strength and were unable to push back below $39,600.
The close above that level is also encouraging, although we would have liked to see $42,000 flipped to support as well. For now, we are trading between those two levels and can take it line by line.
The weekly 50 MA is now sloping down and hanging out right around the key blue level, $45,500. That area is going to be a tough nut to crack, if we get a chance to test it.
4-HOUR CHART
We had a crystal clear signal that Bitcoin was topping around 42K - a bearish divergence with RSI on the 4-hour chart, shown in red. The good news? We now have confirmed hidden bullish divergence, a signal of continuation to the upside and that the bear div is canceled. If this sounds like a foreign language to you, I wrote a primer on how to spot and trade these.
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. Further, I DO NOT TRADE most of these setups. This is simply analysis.
We may finally have a reason to look at altcoins again. Bitcoin Dominance is dropping, Bitcoin is ranging temporarily and a few major coins are showing signs of strength. Quite a few coins are breaking resistance and retesting it as support, which was indicated by the Ethereum chart that I shared at the end of last week. Here are some examples.
AVAX/USDT
Descending lines have been difficult to trade of late, but this is about as clean as it gets. Break of the blue line, retest as support, move up. At this point, I would honestly prefer to buy above resistance at $97, with a target of the next level around $127. This would give added confirmation, since $97 is such a key resistance.
BNB/USDT
I shared this chart at the end of last week. We now have a breakout through the descending blue resistance and the 50 MA, and a retest of both as support. Nothing is for sure, but from a chart perspective this is exactly what you are looking for to indicate likely price appreciation. The target would technically be the range highs, near the all time high. Price is also flipping the EQ of the range (that dashed centerline) to support.
The one thing I don't love? The lack of volume. You generally want to see a volume spike on any breakout.
ETH/BTC
This played out as anticipated, with ETH holding the 50 MA and ascending blue line as support. The last 2 weekly candles indicate a likely reversal - a small long legged doji and then confirmation in the form of a larger bullish candle with a down wick.
This should be a healthy sign for altcoins across the board, but nothing is certain when Bitcoin decides to move.
Remember, the main reason to trade is to earn more Bitcoin, meaning that your alt should outperform the king. That's why we check the ETH/BTC chart.
ETH/USD
Ethereum has been trading in a perfect symmetrical triangle on the USD pair. This triangle was confirmed with alternating touches to the top and bottom - 2 up and 2 down. While many would view this as a bearish pattern because it happened in a down trend, it is actually quite neutral because of the size and structure. Either way, it is now bullish, because price broke resistance and retested it as support. This should be heading up based on the chart.
FTX Launches In Australia
FTX is taking over the world, one continent at a time. Their strategy seems clear - acquire a major financial license or buy a company that has one, then launch services in the relevant jurisdiction.
FTX Australia will offer both derivatives and spot trading, hopefully a preview into what is to come for FTX.US in years to come.
Australians have had access to the main FTX platform, but SBF stated that the company is looking to get ahead of the regulatory curve by being proactive.
“We’d love to work with regulators and lawmakers on understanding the crypto ecosystem and build out regulatory frameworks for analyzing them,” said Bankman-Fried.
FTX is doing it right.
India To Tax Crypto Like The Lottery
Indian tax officials are doubling down on their plan to tax crypto heavily, comparing it to wins in the national lottery. Indian traders are unhappy that they will be taxed a flat rate of 30%, regardless of their wealth or tax status, which is exactly how the gains from the lottery, casinos, gambling and betting are handled. The rate of taxation on stocks is on a sliding scale from 0-15%.
Either way, this is better than an outright ban on crypto in India!
Burn Baby Burn, Ethereum Inferno
Yes, the headline is a disco reference. And yes, over 2 million ETH have been burned since the implementation of EIP-1559 last August, only 7 months ago. That is $5.7B worth at current prices.
That is a lot of ETH.
As ETH continues to become more deflationary and moves towards Ethereum 2.0. price should continue to rise.
Coinbase Pay Launch
Welcome to 2022, Coinbase. As previously assumed, Coinbase is launching Coinbase Pay, which sounds like their own version of MetaMask.
From the article above.
Coinbase says that until the introduction of Coinbase Pay, “users who wanted to add funds to their Coinbase Wallet from the browser extension needed to navigate to Coinbase.com, sign in to their account, copy-paste their wallet address, and manually transfer funds from their Coinbase account.” Of course, this process was “not only cumbersome, but also left the user vulnerable to user error.”
Coinbase Pay “makes the process faster, easier, and more secure than ever before” since “all you need to do is select ‘Add crypto with Coinbase Pay’ when you want to add crypto to your Coinbase Wallet extension”, “select the currency you want to add to your wallet”, “specify the amount”, and “confirm the transaction”. In other words, “no more switching between apps, copy-pasting addresses, and manually transferring funds.”
US and Canada based users of Coinbase can “currently use their debit cards and bank accounts for transfers, with more payment options enabled globally soon.” It is worth pointing out that “first-time users of Coinbase Wallet will need to link their self-custody wallet to their Coinbase account before being able to use Coinbase Pay.”
Tom Brady Is The GOAT
I was never a fan of Tom Brady. In fact, I was often a hater, ascribing his success to Bill Bellichick and making every excuse in the book for why he was not the greatest.
I was wrong, and have come to love him, like many others that downplayed his success.
Aside from being the best QB of all time, he's also a great person.
Vitalik Buterin graced the cover of Time Magazine, only to be relentlessly ridiculed and trolled for his appearance. Seeing this, Tom Brady sent the above tweet, a true message of respect and kindness.
We can learn a lot from Tom Brady.
Here was the Vitalik tweet that he was responding to.
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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.