The Crypto Comms #22
The world is in flux. Energy has fast become a focal point unearthing decades of bad management, and markets are in utter disarray. But despite the prevalence of doom narratives, volatility goes both ways in a macro hyperinflationary environment.
Indeed, Bitcoin and cryptocurrencies are the only things standing between the machinations of mad scientists and the ordinary citizen.
This is it.
Let’s dig in.
In this issue:
- Bitcoin analysis
- Dollar index
- SPX eyes 4,900
- Latest happenings
- Listening material
Bitcoin Strength reappears
A lot can happen in a week — so much so that Bitcoin pulled the breaks on Eth strength in a relatively significant way. The ETH/BTC pair retraced back into the range after confirming a price divergence on Monday.
So far, Bitcoin has regained the lead, facing resistance at $23,000. But Bitcoin’s persistent relative low-time-frame strength (as seen on the H4 RSI) indicates that bigger plays are underway.
Big players are making their moves.
Specifically the $25,000, $30,000 and $35,000 levels are notable, especially when considering that BVOL rests at historic lows.
On closer inspection, Bitcoin/Dollar faces immediate H4 resistance at $23,000. A successful bounce and retest of $20,800-$20,600 opens the door to more upside. Losing the 2017 all-time-high on a daily closing basis opens the door to new lows.
In other words, failure is not an option for bulls. It’s all hands on deck to prove this reversal has legs.
One bullish tailwind is order flow (Coinbase), which has officially broken the vicious downtrend that began in May. Overall, on balance volumes indicate that the bear market has ended, and that Bitcoin’s bottoming structure is unfolding before our eyes.
This is not to say that Bitcoin will move straight up from here. But the crypto’s underlying relative strength, order flows and various other data points all indicate these prices are a once-in-a-lifetime buying opportunity.
Notably, while Ethereum/Dollar has already taken out its June highs, neither Bitcoin/Dollar nor Litecoin/Dollar have done so yet. This could sufficiently explain the turnaround in relative strength among the three cryptocurrencies as it exacerbates liquidity draws.
DXY at a cross roads
The dollar index (DXY) has showed signs that it is losing steam both on the weekly and daily time-frames. The relative strength index (RSI) indicates a bearish divergence that cannot be taken for granted.
In fact, upside for Dollar Strength (mostly versus the Euro) is probably limited. The vertical ascent of the Dollar is technically primed for a period of consolidation. Structurally, a larger trend reversal would likely coincide with the end of hostilities in Ukraine.
While I’m no geopolitical expert, the US may opt to devalue the Dollar to help its European allies pay for soaring energy bills, (DXY down, EUR/USD up). And Europe has indicated it might take the route of ‘liquidity buffers’ and energy rationing — a politically untenable idea which will cost countless lives (especially the elderly) come Winter due to a lack of heating.
SPX eyes 4,900 points
Meanwhile, the SPX is at the end of a long-term descending broadening wedge. This bullish reversal pattern need only close a weekly candle above 4,200 to confirm a breakout move of around 15%. An S&P500 rally would buoy risk assets more broadly.
All in all, an impulsive move is around the corner, and my money is on a crack-up boom scenario. Either that or we’re going down with the ship once again.
My friends, a time may come for valour without renown. This is that time. Do not expect rewards or recognition beyond what the market might provide. We will tear down these sell walls or prepare for a glorious death.
There is no turning back.
Check out the telegram channel for more crypto setups.
- Europe May Open Liquidity Taps as Energy Sector Faces $1.5 Trillion in Margin Calls.
- Bitcoin Hits $21,000 as Macro Data Suggests Market-Wide Reversal.
- Bitcoin Hash Rate Hits Fresh Highs Ahead of ETH Merge Week.
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.
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