The Wolf Den #470 - 19 Million
Bitcoin Thoughts And Analysis
Cheer up, buttercup. Things are looking decent in the world of Bitcoin once again. Key levels are being flipped on high time frames, sentiment is improving and people are seemingly forgetting about all of the bad things that are happening in the world.
Evergrande. War. Fed Tightening. Regulation. Legislation. Covid.
All of the narratives (some valid) that we heard about constantly while price was dropping have magically disappeared because "number go up."
Nothing has changed except the chart and price.
Humans are funny, but no surprises here. This is the very reason that I choose to always start with the chart, because it tells the best story of human behavior.
The good news? Greed hasn't even kicked in. While the Fear & Greed index is merely one small tool for confluence in seeking market sentiment, it does give us a general idea of where we are at. And we are neutral. Dead neutral. Like, right in the middle.
The market was fearful for ages and traders are finally coming out of their stupor. More importantly, we have reached key levels WITHOUT greed kicking in. This indicates that there's a lot more room to run if FOMO begins.
Let's dig into the charts.
WEEKLY CHART
The weekly chart has flipped two extremely key levels to support - at least for now. What are those levels? The 50 MA (blue meandering line) and the area around $45,500, which I have been discussing ad nauseum for months. This "should" signal that Bitcoin has exited accumulation and is completing the bottoming process. But Bitcoin has a way of defying technical analysis and logic, so nothing is certain. We really want to see these support levels hold in the coming days and weeks.
DAILY CHART
Once price convincingly broke through $45,500 and raced up to $48,000, the entire trading community had the same idea. A retest of that area as support.
Price completed a beautiful ascending triangle that we were watching for, with consistent higher lows pushing into resistance.
At this moment, the idea I drew is playing out perfectly, but it's waaaaaay too early to celebrate. Assuming this level holds as support, I am looking for a move to 52K - 53K.
If you draw it, they will come.
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.
Bitcoin Dominance has been going cliff diving, in the rare situation where alts have been outperforming when Bitcoin rises, falls and goes sideways. It rarely lasts long, so I hope you have been enjoying it.
ETH/USD
The first target after the symmetrical triangle breakout hit at $3,420. Nice, nice.
Looks like that is being flipped to support which means... up. Nothing is certain, but it's hard not to like this setup for Ethereum. The immediate target is $4,157.
LTC/USD
For those of you who have been around a while, the last trade was ~$130 to ~$300, slamming right into a huge supply zone and macro resistance.
Not greedy this time, looking for ~$124 to ~$166, the next level resistance.
Then maybe higher if this bull season is real.
As you can see, we now have a clean breakout through descending blue resistance and retest as support. Simple.
Legacy Markets - Yield Curves
The yield curve has officially inverted. Of course, it depends which yields you are looking at, but this is often considered a harbinger of an incoming recession. It's also a great excuse to share one of my favorite movie clips of all time.
The expectation that the Fed will be more aggressive with interest rate hikes at coming meetings has sent bond yields higher.
Bond investors can be heard cheering in their retirement homes across the country.
When shorter term yields (interest rates) rise above longer term yields, you have what is known as an inverted curve. Last week, the 5 year and 30 year yields inverted - the first time that this has happened since 2006, many months before the Great Recession. The 10 year and 2 year also inverted, a signal that many view as the nail in the coffin for hopes of avoiding a coming recession. The inverted yield curve and it's potential relationship to recessions was discovered by Campbell Harvey, who I have had on my podcast and live streams.
Here's a great video that explains the phenomenon. Watch it, really.
It's not all bad news. The yield curve inversion often occurs 6-24 months before the recession, a period when assets do quite well. As I said, the last time the 5 and 30 inverted was 2006, before the major boom that ran into the Great Recession. Also, these recessions tend to be... short.
There are also no guarantees that a recession will come at all.
Beyond making sure you have a bit more cash on hand, there's little that investors need to consider with a yield curve inversion. If the recession does come, it will likely be the best opportunity to buy the dip and the the time period when your dollar cost averaging truly shines.
Outside of investing in crypto, the best financial decision I ever made was continuing to DCA into SPY throughout the entire last recession. It was scary and I was down, but when the market ripped up again I had bought every dip.
Was Trezor Breached?
Panic broke out over the weekend when Trezor users found themselves the target of a complex large-scale phishing attack. It all started when a seemingly genuine email was sent to Trezor users, warning of an immediate security breach.
The email read, “we regret to inform you that Trezor has experienced a security incident involving data… and your wallet has been breached. In order to protect your assets, please download the latest version of Trezor Suite and follow the instructions to set up a new PIN for your wallet.”
Trezor was not breached. It was actually the emailing service, MailChimp that was exploited. As a result, a bad URL with malicious code was blasted out in an attempt to dupe crypto holders.
See if you can spot the issue with the URL below.
“https://suite.trẹzor.com”
There is a tiny dot under the “e,” which doesn’t exist in the real Trezor URL.
Phishing attacks are often well disguised, and they are becoming more sophisticated with time. You have to have your guard up at all times and take responsibility for your actions. Stay vigilant.
Did Vitalik Defend Bitcoin Maximalism?
We've been hearing for years that the future is blockchain, not Bitcoin....
In the spirit of April Fools' Day, Vitalik Butterin put on his sarcastic hat (it is a Tampa Bay Buccaneers cap) and crafted a long-form argument in defense of Bitcoin Maximalism. Titled “In Defense of Bitcoin Maximalism,” the piece makes an honest attempt to see the other side by asking the question, “what if this narrative is all wrong, and the ideas, habits, and practices of Bitcoin maximalism are in fact pretty close to correct?”
It was clear that Vitalik was not being entirely sarcastic and believes quite a bit of the maximalist rhetoric, as we all do. If you enjoy high-level persuasion and camouflaged sarcasm, you will love this blog.
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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.