Concerning Events in Canada Highlight The Absolute Necessity for BTC & LTC
In this edition, we discuss the necessity for Bitcoin and Litecoin in light of concerning events in Canada. Specifically, Prime Minister Trudeau’s decision to potentially freeze cashflows of his political opponents.
As usual, we also discuss the technical picture of several altcoins, namely ETH/USD, LTC/USD and COMP/USD.
Let’s dig in.
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Trudeau Invokes Emergency Powers in a Bid to Crack down on Freedom Protests
The Canadian government has widened the scope of Terrorist Funding rules to include innocuous activities including cryptocurrencies and crowdfunding, giving Trudeau the power to arbitrarily freeze bank accounts in response to freedom protests.
The unprecedented and chilling announcement highlights not only the importance for Bitcoin and Litecoin, but for financial privacy as well.
Read the full article here.
The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Monday and Wednesday. I am not perfect and this is not a science — nor is this newsletter a signals service. While I cannot promise perfection I do my best to be honest and transparent.
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ETH Hovers below resistance
Ethereum/Dollar exchanges hands at $3,060, down 4.7% since last Wednesday.
Similar to Bitcoin/Dollar, the pair is technically beneath resistance and is not in an optimal buy zone (in that buying at resistance is riskier than buying support).
However, the resistance is worth paying attention to since the first rejection did not result in a deep pull back. The second test we’re witnessing now could end up in another rejection, but it’s not obvious that bears are in control. In fact, you could say that the current trend is neutral.
The daily Super-Trend (ST) flipped bullish on the first attempt at resistance too, indicating a longer trend reversal is on the table and this might not be just another dead cat bounce.
In essence, strength it likely to materialise above $3,300 to $4,000, or at support above $2,500. The former entry would require you to be comfortable with a momentum trade, while the latter means you’re comfortable buying the blood.
There’s always a scenario where this is just mindless fantasy of course, given that majors are still technically under resistance. Still, the bullish case is worth considering given relative weakness of resistance and a flip of the ST.
On the flip side, closing below the daily ST is a red flag for any bullish argument(s) in my view.
Litecoin Held Down by Resistance
Litecoin/Dollar followed Bitcoin/Dollar in price-action to the letter in the last few days. The coin exchanges hands at $127, down 8.3% since last Wednesday at the time of writing.
LTC/USD is following the path of majors and it’s only prudent to expect this trend to continue until the entire market witnesses an explosive rally which triggers capital rotation. In this event, I’d expect Litecoin to outperform Bitcoin given its generational lows vs the top dog crypto.
If $138 is reclaimed, one can expect an explosive rally to the 200-EMA ($158). This moving average has historically been the harbinger of significant follow-through for Litecoin/Dollar.
If the market chooses violence, then one can look for support between $117-$110.
Beyond that, it’s worth noting that Litecoin fundamentals have been accelerating relative to Bitcoin, with address creation going parabolic through 2021 and beyond. In fact, when it comes to Litecoin, the real interesting data is its fundamental development, which could eventually give rise to Litecoin/Dollar holding on its own narrative. The focus on privacy-centric developments ( MWEB) is one (among many) deviations from Bitcoin that could make this happen in time.
In all likelihood, capital inflows into crypto would enable this narrative divergence regardless. We’re still early. For now, we’re stuck with trailing majors.
Compound Verges on a breakout?
Meanwhile, Compound/Dollar trades at $130 at the time of writing, down 15% since last week.
The pair is wedged between monthly support and a long-term downtrend which first began in September 2021.
Comp/Dollar is above monthly-super-trend support, and is poised to follow ETH/USD whichever way it ends up trending. Given that COMP/USD is an altcoin, extensions to moving averages will be more pronounced so volatility should be expected.
As it stands, the pair is over-extended when seen in context of the 200-day exponential moving average. Typically, mean reversions occur at the extremes, and COMP/USD is currently sitting close to monthly support.
There’s not much more to be said technically, only that the coin could see a strong reversal in the event that majors trend higher.
Catch you later.
p.s. This is my opinion. It is not financial advice.
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