The Crypto Comms #26
In times of uncertainty, we crave security. And yet, human nature is a string of contradictions. It takes a lot of convincing to realise what’s standing before your eyes.
Let’s dig in.
In this issue:
- Bitcoin analysis
- Confluent charts
- Latest happenings
- Listening material
At some point, the endless side-ways price action starts to get to you. Boredom sets in, you begin to deliberate whether this asset is a failed experiment, your decision making comes into question. ‘Did I back the wrong horse?’ You ponder your existence, life itself, the cosmos, the origins of the universe. Math.
At this moment, you get the bright idea of venturing beyond the comforts of home. You climb a mountain because ‘why not?’. Atop the mountain you notice immense beauty, the experience of which cannot be fully captured in a photograph. It’s all there if you would but look.
Nature is beautiful, and that which emboldens its evolution, mediated by our insatiable curiosity, is also beautiful by extension. Bitcoin is such a technology. But sometimes a change in perspective is necessary to realise this beauty standing before our eyes.
Bitcoin ranged between $19,950 — $18,150 for the better part of a week. This is nothing new. In fact, Bitcoin has been in a perpetual state of ‘chop’ for the past few month(s).
Locally, $20,500 remains a liquidity area of interest that’s likely to be tapped before any major moves ($5k-$10k daily swing) take place. Realistically, losing $19,000 again opens the door to $17,600.
Something has to give.
As noted in the past few newsletters, the next time bitcoin hits $22,000 is unlikely to be a fake-out, as such a move will have changed market structure. It’s arguable that the downtrend present since June has already been eviscerated. But this is not a science. More confirmation is needed.
Regardless, this is the value area for bitcoin. It won’t matter whether you bought at $19,000 or $16,000 when Bitcoin trades at $50,000 and beyond again.
The dollar index has rejected off 113.2, forming a tentative double-top. Barring a daily reclaim of this level, a move to 108 is on the table. Dollar weakness is generally good for asset prices.
The SPX has bounced and created a ‘W’ pattern and a daily RSI divergence. Unless price revisit 3,590, follow-through to 4,000 would be commensurate with DXY weakness.
Gold has yet to reclaim its former range ($1,700 — $2,000), and further rejection poses a risk for the ‘sound money’ narrative. Gold, Bitcoin, silver and Litecoin all fall in this narrative basket. On H4, a double-RSI divergence suggests prices below $1,690 could turn into a deviation, i.e. a failed bear breakout. This is good.
Meanwhile, LEO/BTC (Bitfinex token) has broken its bear market uptrend. Price back-tested and rejected off the trendline, adding confluence to a potential mammoth rally in bitcoin, and crypto.
The VIX has printed a bearish divergence on the daily time-frame, creating an opening for risk-assets to rally (incidentally just before the mid-term US elections — just a coincidence of course).
Naturally, the market can reverse and get sent to Hades. Nobody knows the future, but confluence among core indicators is a tailwind for bitcoin at the time of writing. As mentioned in the Telegram channel, US10-yr & 20-yr bond yields are overbought on every time-frame.
The overarching macro theme is especially simple — the Fed has lost control. Unless you’re expecting the US treasury to bankrupt itself by increasing rates unsustainably with a 137% dept-to-GDP ratio and induce a deflationary bust, CPI will never go back to 2%. This is reality.
The monetary regime is changed and there is no going back.
There is no solution, but there is natural evolution. Bitcoin is a bet on security, technology and a part of human nature which has been trampled on for a 100 years (which is coming back with a vengeance).
- Fund Manager Lawrence Lepard Says Fiat Money Doom Loop Will Send Bitcoin to $2 Million.
- US Federal Reserve Governor Says a CBDC Would Not Enhance USD Status.
- Survey Finds High Net Worth Investors Consistently Prefer Direct Crypto Investments over ETFs.
The purpose of this newsletter analysis is to provide context to current events and cryptocurrency markets. It is released every Tuesday. 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 email@example.com.
Join the Telegram channel for live updates.
Follow me on Twitter.
You can also support me with Bitcoin!
BTC address: 3EydsEYpjHn68axKnCUqBB7EbqcxrEjamr