Crypto is DeFinitely catching on as several stories, timelines, and developments approach a history-making moment that you don’t want to miss.
In this edition, we’ll take a look at what a Visa-executive had to say about bitcoin after FED chairman Jerome Powell delivered his speech on Thursday, as well as DeFi usage and interest, which continues to snowball — outpacing even Coinbase Pro volumes on a 24-hour basis. The question is: will increasing systemic risks within the Ethereum ecosystem cut the party short?
Finally, we’ll take a look at bitcoin’s price action and technical data on several time frames, as always!
Let’s dig in.
Visa Executive: Opt-out with bitcoin
An ongoing theme in the bitcoin and cryptocurrency space is the frequency with which previously anti-bitcoin firms and corporations are changing their tune on bitcoin.
Over the weekend, a major long-term bullish trigger for bitcoin emerged, with a Visa executive holding little back in criticising the Federal Reserve’s plans to target an “average inflation” figure with no formula, as he told consumers to “opt-out with bitcoin.”
“Jerome Powell’s speech today will be for the history books,” Andy Yee, senior director of public policy at Visa tweeted.
“Never in the history of mankind was so much stolen from so many by so few. Opt-out with Bitcoin.”
As this sentiment continues to proliferate, one ought to pay attention to bitcoin’s price — which is the barometer for how widespread this thinking really is.
I’m not one for sensational quotes, but here’s a fitting one nonetheless.
“First they ignore you, then they laugh at you, then they fight you, then you win.”
This is bitcoin’s past, present, and future in a nutshell. Anyone who says otherwise is most likely just plain wrong.
Check out the full story here.
Uniswap trading volumes overtake Coinbase Pro
For the first time ever, more money has been traded on decentralised exchange (DEX) Uniswap than on Coinbase Pro. At the time of writing, Uniswap’s trading volume hit new highs as the Dex and liquidity provider’s trading volume stands at over $470 million, according to Uniswap stats. That’s upwards of a 70% increase in trading volume within 24 hours.
Meanwhile, Coinbase Pro shows 24-hour trading volumes of just under $400 million across its selection of coins and trading pairs according to CoinGecko data.
Having said that, both were dwarfed by Binance volumes which topped $3.6 billion — questionable as these figures might be.
That being said, it’s more than likely that this DeFi growth will eventually experience a downturn of sorts as the moral hazards explode and greed takes over. While L1 and L2 solutions like the OMG network (and now EOS) have eased USDT overload on Ethereum for now, the fact is that Ethereum is increasingly becoming exposed to various systemic risks that could send the price to Hades, and then some.
Mind you, DeFi will probably be a prominent driver in the budding bitcoin and crypto bull market, partly because of its complete circumvention of AML and KYC procedures and therefore ease of access, but the risks will probably make for a bumpy ride. Of course, if you’ve been in crypto for a while, you’re used to 40%-50% corrections.
Bitcoin (HTF) enters a trading range
The most notable change since last Wednesday’s newsletter was bitcoin’s bounce from $11,100, which has since given the bulls a chance to regain their footing in another attempt to capture $12,000.
Those of you who follow my Twitter and Instagram feed would be aware of the lower-timeframe probabilistic outcomes as the levels played out, but this is more for trading than investing.
In any case, on the daily time-frame, bitcoin has clearly defined $11,100 as a support area after having held the floor for 3 consecutive days before bouncing on the 28th of August. As price attempts a recovery to the swing highs at $12,000, the ball is now in the bull’s court to follow through.
Technically, the local swing low just above $11,000 is still a higher low on the macrostructure, though admittedly not by much.
If bulls maintain the momentum, a clean and sustained break above $12,000 on the daily would be needed for higher targets to become a distinct possibility within the coming days to weeks ($13,800). Since the bearish scenario has effectively turned into a failed attempt to drop bitcoin lower, then one is forced to assume bullish continuation until proven otherwise.
On the flip side, given that the $11,400 pivot point has been breached, it’s still within the realm of possibility for bitcoin to drop to the broader swing low of $10,500.
Interestingly enough, the daily RSI’s bearish divergence has arguably played out at this point given the 9-day-long consolidation that just ensued. However, the bullish RSI divergence — which appears to be much stronger given the repeated lower lows (RSI) and higher lows in the price — might still have to take effect.
From a technical perspective, bitcoin could be on the verge of surprising many onlookers suspecting a more drawn-out consolidation to lower levels before fresh local highs are reached.
Ultimately though, provided bitcoin does not close several consecutive days above $12,000, it’s reasonable to assume a comfortable trading range above $11,100 and below $12,000. Should, price break through the floor, the next level to watch would be $10,500.
From a more speculative perspective and bull-biased approach, the similarities with the previous trading range remain uncanny, with both the Moving Average Convergence Divergence (MACD) and Stochastic RSI seemingly repeating past behaviours on the daily time-frame. If you missed the last newsletter, check out the Technically Speaking section where I delineated this fractal scenario.
4-hour (LTF) double bottom in the making?
On the 4-hour timeframe, Bitcoin has formed a “rising wedge” structure after having briefly traded above the previous upwards-trending support. This is a bearish structure for all intents and purposes, so a move back down to $11,340 could play out. This would also fit within a possible bottoming structure that would precede further upside provided the $11,100 level holds.
Of course, it’s entirely possible for bitcoin to continue higher without retracing. However, the probabilities on this time-frame appear stronger with the bearish case, at least in the immediate short term.
Having said that, if one zooms out and ignores fluctuations in the RSI, a clear downwards channel can be observed. As with all RSI downward (or upward) channels, these eventually make a move to the opposite side, in which case a trend reversal can be expected on that particular time-frame.
Will bitcoin range, form a double-bottom structure above the $11,100 (HTF) level and continue onward? Time will tell.
External risk factors to sustained bitcoin upside remain
Presently, the S&P is continuing to grind higher ($3,520), which is an increasing external risk factor for global markets and bitcoin. While it’s true that the US Federal Reserve is flooding the system with liquidity, it would be plain hubris to assume that stocks will continue trending up without any correction indefinitely. Continuing this train of thought, stocks are probably higher to the local top now than a month ago, and given that November 3rd is 2 months away, there’s more than enough time to correct before resuming the trend closer to the election date.
On a longer-term trajectory, bitcoin will inevitably decouple from stocks, and that might come sooner than one might think. As such, paying attention to gold, silver, and bitcoin correlations — particularly in relation to stocks is the way to play this. Until that happens, however, one has to assume that a stock market correction will bring everything down with it — at least until the multitudes of freshly printed cash begin to have a meaningful inflationary effect on the real economy. This probably won’t happen until US unemployment figures are brought down, at which point the credit cycle can resume as if nothing ever happened.
Additionally, now that Covid-19 death rates are increasingly being challenged as ongoing data scandals emerge, the risk for “lock-down 2.0” is much lower now than before and markets probably know this. Between that and the imminent vaccine, COVID is increasingly a non-issue, and will probably continue to fade (although the political and economic implications are extraordinary).
Bear in mind that I have no political affiliation and these are just my thoughts based on various timelines and data points.
May your gains be high and your losses low.
Catch you next time.