The Crypto Comms #1
It’s hard to believe it’s already been two and a half years (with over 250 newsletters and thousands of published articles)! Time waits for no one.
Starting today, I’m changing my newsletter provider to Revue as it’s a better fit. The Revue team may sort out an import-scheme to collect all newsletters under one roof, but until then most publications are available on medium. I’ll also be experimenting with content and formats. Please send me your feedback — what you like, dislike, found useful or otherwise.
In any case, I’m glad you’re here and I’ll continue to build, learn and share information as we head into the next phase of bitcoin & crypto mass adoption.
Let’s get after it.
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 or financial advice. While I cannot promise perfection I do my best to be honest and transparent.
Thank you for reading.
Feel free to contact me with feedback on firstname.lastname@example.org.
In this issue:
- Bitcoin analysis
- Legacy market update
- Market psychology
- Current happenings
- Listening material
Bitcoin to $40,000?
Bitcoin/Dollar closed the first green weekly candle after 9 consecutive red weeks, closing 1.6% over the week prior. This officially puts an end to the all-time record selling streak for BTC, which is certainly a step in the right direction.
Often times, simplicity works best. So in an effort to adhere to Occam’s Razor we’ll keep it light.
When it comes to the weekly time-frame, the 50-weekly exponential moving average (EMA) has both acted as a magnet for mean reversion price-action (a.k.a. a bear market rally), and a pivot from which prices spring-board higher (bull market pivot).
If bulls are resolute, steadfast and unrelenting, a weekly close above $40,260 would convince me of the melt-up scenario suggested in this falling wedge structure. On the flipside, a retest of the 200-weekly EMA ($27,000) is a great place to look for exposure.
In the March crash of 2020, Bitcoin found a bottom after dipping below the 200-weekly EMA. This also happened in 2018. It goes without saying that history does not have to repeat itself — the record 9 weeks of selling is a testament to that.
And these are extraordinary times, so it’s only prudent to pay closer attention to tail-end scenarios as we approach the inevitable hyperinflationary event horizon.
That said, I believe the Bitcoin bottom is in for the foreseeable future. I could be wrong, but the prevailing sentiment vastly underestimates upside volatility beyond a simple mean reversion in my view.
Legacy Market Update
The S&P500 index is knocking on the doors of the $4,194 pivot, beyond which an accelerated move to the top of the broadening wedge is likely ($4,400).
At the same time, the US Dollar index (DXY) has been reticent to reclaim 102. A corrective down-move to 97 would be positive situation for risk assets.
Bear in mind, the DXY has been on a tear for over a year (17%) with minimal retracements and is now at macro resistance. The Fed has used hawkish language together with monetary tightening policies that have adversely affected risk-appetite while accelerating a retreat into the USD this year.
But as noted in a previous analysis, rising interest rates do not correlate with S&P500 bear markets. Granted, the Bitcoin-legacy market correlation broke down last week.
The legacy market situation is slightly confounding due to Bitcoin-SPX decoupling witnessed last week. Admittedly, this could just be a matter of BTC lagging behind the SPX.
Regardless, increasing legacy-market prices is definitely not a headwind at this point in time.
Risk-asset investors have been battered to the point of psychological breaking point. If this is true of legacy markets (NDAQ, SPX) then it doesn’t take much imagination to extrapolate that sentiment to Bitcoin investors.
Retail interest in Bitcoin has gone down. There aren’t any mentally challenging explanations as to why this has happened. When prices decrease, investors either realise losses or remain underwater (waiting it out). Given enough time, they’ll eventually lose interest. But as so-called smart money steps in and a floor price becomes evident (with the super power of hindsight), the pendulum — which reached the end of its swing in one direction — halts and gains momentum to the other side.
This is the endless cycle of fear and greed. And indeed, the pieces are now set for a pivot in the opposite direction. It remains to be seen how quickly markets will turn, but in the exponential age, a frenzy-like volatile move would not be out of this world in my view, especially when one takes into consideration the extraordinary circumstances financial markets are in right now.
- Litecoin fundamental data and price witness largest divergence ever.
- Eurozone inflation higher than 1970s; jumps to record 8.1% in May.
- The EU Surveillance state plans to spy on everyone in Europe.
This is my opinion. It is not financial advice.
Join the Telegram channel for live updates.
Follow me on Twitter.
You can also support me with Bitcoin!
BTC address: 3EydsEYpjHn68axKnCUqBB7EbqcxrEjamr