The Crypto Comms #10
Today’s FOMC meeting might set the tone for the rest of the week as appeal for risk assets lingers around rock bottom. Volatility tends to accompany such meetings, but given the overall context investors might be surprised by the price-action resolution following the meeting.
In this issue:
- Market context
- Ethereum short term analysis
- Latest happenings
- Listening material
Crypto is going through a great cleansing. Bitcoin registered its second worst quarter in 11 years, registering a 56% drawdown by the end of Q2.
The macroeconomic situation of increasing (US) interest rates exacerbated the liquidity crunch. Besides that, Russia now seems to be facing a default on its loans due to sanctions. It all seems very strange considering that funds made it to Europe (and are simply being withheld).
Meanwhile, crypto firms which were once regarded as ‘too-big-to-fail’ ended up biting the dust. 3AC filed for bankruptcy, Voyager followed suit this morning, and Celsius appears to be one of the last few firms in distress that might make it out alive. And those are the ones we know of — the extent of the contagion effect is unknown.
Besides that, both Grayscale and Bitwise ETFs were denied by the SEC, which begs the question; does anyone really believe the SEC is acting on behalf of your average Joe when it denies the least-risky investment products on the waiting list?
This is a rhetorical question.
Investor sentiment has stepped up somewhat this week, but remains suppressed as asset valuations prepare for the next big move. Notably, inflows into institutional funds are in line with negative sentiment, with the ProShares short BTC fund raking in $51 million since launching in late June.
It’s not a pretty picture, clearly. But if there’s any consolation, let it be known that Jim Cramer is calling for the entire asset class to go to zero.
Mind you, his stance is not based on new information. Who’s into evidence-based decision making these days anyway?
Ethereum short term analysis
Ethereum/Dollar is up 4.7% since last week’s close. The pair fell to $1,000 before recovering and closing 19.8% higher at $1,197.
Currently exchanging hands at $1,125, ETH/USD is in a similar situation as BTC/USD on lower-time-frames.
ETH/USD low time-frame levels of interest
Locally, Ethereum’s price-action is compressing between ever-tighter volume profiles. This is evidenced by a series of higher lows and lower highs (H4).
Per the chart, general areas of interest that could be consequential pivot points are as such:
- $1,183 daily pivot
- $1,090 local support
- $1,146 local resistance
If the market is on the verge of a high-time-frame breakout, it follows that a breakout move to sweep last-week’s high could cascade into the well-overdue relief rally as shorts scramble to cover underwater positions. On the flipside, losing the local uptrend opens the door for another retest of the critical $1,000 support zone. It remains to be seen whether the psychological support will hold for a 4th retest.
As mentioned in Telegram, the FOMC minutes session later today (8PM CEST) will likely bring with it a bout of volatility. But the overall context favours the contrarian viewpoint in my estimation. A resolution higher out of the range may spiral into a market-wide relief rally for the month of July.
Check out last week’s analysis for high-time-frame mean reversion targets.
This is the ‘not-great-not-terrible’ stage of the market. Let’s make prices great again.
- CoinShares Report: Institutional Inflows Highlight Interest in Shorting Bitcoin.
- Celsius Layoffs Increase as Industry Leaders Scramble to Rescue the Embattled Lender.
- ProShares Short BTC ETF Breaks Records As SEC Denies Another Spot ETF.
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.
Join the Telegram channel for live updates.
Follow me on Twitter.
You can also support me with Bitcoin!
BTC address: 3EydsEYpjHn68axKnCUqBB7EbqcxrEjamr