1-year dormant bitcoin reaches all time high
Hi everyone,
I’d like to let you all know in advance that this newsletter began as an update and turned into a semi-rant quite quickly, even though that was not the original intention.
In this issue, we’ll talk about US-markets falling apart before covid-19, Wirecard’s miraculous 150% rally after declaring insolvency, bitcoin’s fundamental data, and last but not least, the bitcoin technicals!
Let’s dive right in.
US markets began falling apart before Covid-19
Something that is never mentioned in mainstream financial outlets is that US interest rates began plummeting before the pandemic risks became widely known. In fact, rates topped out at barely 2.5% in May and began sliding as early as September 2019 towards zero. The expectation now is that rates will go negative, which is to say that lenders will be paying money for borrowers to continue borrowing, despite taking on the ‘risk’.
Needless to say, a government-backed ‘risk’ is no risk at all and is just another example of infinite moral hazards in today’s diametrically opposed economy and financial markets.
Shortly after rates began plummeting, the pandemic hit and provided the perfect setup for central banks to shift repo operations into overdrive as they bought everything under the sun.
All the while the narrative is that the Fed (and central bankers in general) are trying to help main street and your average Joe. Of course, nothing could be further from the truth, as per this chart which shows increasing purchases of the worst garbage on the market — mortgage-backed securities. To be clear, these junks securities were the same things that were a problem over a decade ago during the 2008 financial crisis, and they’re still being bailed out.
Over the weekend, a Bloomberg article revealed the extent to which the Fed is buying up corporate bonds — and it’s amazing to see companies that ought to be rock solid being part of this bailout frenzy.
Briefly, the Fed bought individual bonds issued by companies including AT&T Inc., UnitedHealth Group Inc. and Walmart Inc. as part of its emergency lending program. Of course, given what has transpired, investors are pouring money into these stocks believing that the Fed has set a floor and that you effectively cannot lose and there is no risk if the Fed is there.
This means that there is no proper pricing today, and while I can only salute those who are able to take advantage and profit from the situation, it really does not look good for the medium to long term on multiple levels (not just the financial markets).
Indeed, for all intents and purposes, today’s corporate bond market is a fugazi and all the central banks around the world are in on it. The best part is that the party is probably just getting started and I suspect that such operations will not stop at least until after the 2020 US presidential elections in November.
All I can say is that the separation of money and state could not have come at a more important time in history.
Wirecard saved in the nick of time!
Nothing really surprises me in traditional markets at this point, as everything that happens only reinforces the narrative that financial markets (from finance 1.0) are fundamentally broken.
In any case, it seems that after the €2 billion black hole in Wirecard’s finances and its subsequent insolvency, the company has now surged nearly 150% since Friday trading — go figure. This came just after the German scandal-hit payments company said it would proceed with business activities after filing for insolvency.
Nothing to see here — just keep calm and market buy.
1-year dormant bitcoin reaches all time high
Meanwhile, there is clearly a growing number of people who understand bitcoin’s asymmetric bet properties given the backdrop of today’s fake financial markets. Of course, this only partly explains why more investors are flocking to bitcoin, but it’s arguably one of the strongest factors irrespective of how prevalent this knowledge is.
To put it into perspective, the last time this amount of bitcoin hadn’t moved in over a year was in early 2016, when bitcoin was trading at $600 before it made a move to $20,000. Currently, 61% of the total bitcoin supply has not moved in over a year, which is a new all-time high.This suggests that if there is a consolidation period before $10,000 is finally broken, it might very well be the last one where bitcoin is still under 5-digits.
Evidently though, hodlers are not selling. The time to prepare for new all time highs is now.
US BTC mining farm buys 17,600 miners
Core Scientific has revealed that it bought a substantial amount of bitcoin miners about a month after the bitcoin halving. Companies like Core Scientific have to keep up with the latest industry mining hardware in order to stay competitive.
Interestingly enough, the move comes just after bitcoin’s hash ribbon flashed a green ‘buy’ signal on both the daily and weekly time-frames. Whether this indicator will be meaningful is another question though, given that the last sell (red cloud) signal was followed by decreasing bitcoin volatility as it fluctuated above $9,000 dollars.
Technically speaking
Daily HTF shows hidden bullish divergence
As bitcoin continues to consolidate above $9,000 (dipping to $8,800 briefly), a hidden bullish divergence has developed on the daily time-frame.
Indeed, a series of higher lows in price action have been clearly accompanied by a series of lower lows on the daily relative strength index (RSI), suggesting bullish momentum is still present and is not to be written off just yet. This picture is clearer on the volume-weighted Money Flow Index (MFI), which has been setting more notable lower lows amidst higher low price action (PA).
Bitcoin is trending between the 50 and 200 EMAs on the daily time-frame, with the $8,600 region being a crucial support area for the bulls to hold. Should price close below this area, then a further slide to the $7,500 pre-breakout area is in the cards.
On the flip side, if bitcoin is able to print a strong bounce and reclaim the $9,300 pivot point, then a re-test of $10,000 is on the table. A break above this level will send the price to $11,000 and beyond in what would be a confirmed breakout from an accumulation phase. Obviously, this will be crystal clear in hindsight.
Notably, most trading volume has occurred around the $9,500 and $8,800 areas, indicating that buyers and sellers are keen to engage with these two levels.
All in all, bitcoin is technically still in a bullish range, even though it has been sliding for 27 days. Having said that, if bears aren’t able to break $8,600 and close below this region, then bullish momentum could takeover in what is setting up to be a decisive $1,000 plus move.
Lower Time Frame 4-hour in a bullish setup?
While the possibility for bitcoin to slide to $8,600 is still wide open, bitcoin seems to be setting up for yet another bullish break to the upside. Whether this move would be sufficient to break the $10,000 or remain within the eternal range is another question though.
As per previous falling wedge patterns in this range, bitcoin is currently trading within a descending RSI channel as it prints modest lower lows on the 4-hour chart. In prior falling wedge formations (which is a bullish setup) bitcoin tested the 50-EMA before finally breaking above the moving average.
However, this time the bulls face an uphill struggle as the set of circumstances are not the same as with prior wedges. The 4-hour death cross and lower low set on the RSI signal that this time, selling pressure might be too strong for buyers.
Still, price-action is similar to prior patterns, which is characterised by a slow sell-off with a bottom trendline and intermittent bounces.
At the time of writing, bitcoin might have already broken out from the falling wedge and could be in the midst of re-testing support before a fresh move to the upside (see dotted line).
All in all, the bias is marginally bullish, but a strong break below $8,600 would invalidate the setup on multiple time-frames, putting bears in the driver’s seat once again.
Time will tell. But in any case, any sell-off is just noise at this point. The case for bitcoin has never been stronger, and no amount of stop-hunting and fake-outs will stop what’s to come.
Don’t let your memes be dreams — follow me on Instagram for more lighthearted content.
As always, thanks for reading and have an excellent day!
Read More: US BTC mining farm buys 17,600 miners as global hash war looms
If you’d like to support this newsletter, feel free to send BTC to this address:
3EydsEYpjHn68axKnCUqBB7EbqcxrEjamr
Not sure how? Check out my CoinTr.ee profile here!
Cheers!
Best regards,
Christopher Attard
Founder of Chris on Crypto
Contributor to www.cryptoglobe.com
Insight. Content. Consultancy.
Connect directly on: Telegram
Subscribe to this newsletter at chrisoncrypto.com
Check out our content and business services suite here
Originally posted: https://mailchi.mp/b3f53142c19d/hodl-1-year-dormant-bitcoin-reaches-new-all-time-high?e=[UNIQID]
