The Doldrums
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Cheat Sheet -
Support and resistance levels and our daily, weekly and monthly bias on BTC, ETH, OIL, ES, and NQ as well as our favorite altcoins.
What We Are Watching
We further breakdown our case for these cryptos here : What We Are Watching
Luna’s out! It was a wild ride, but the damage is to severe for a comeback. We’ll bring you another lovely crypto soon. Before we do, please respond or comment with any tokens you’d like to see us tracking.
Crypto News
Coinbase Will Lay Off Around 1,100 Employees (CoinDesk)
Over $1B in Liquidations as Bitcoin, Ether Lose Major Support Levels (CoinDesk)
JPM Wants to Bring Trillions of Dollars of Tokenized Assets to DeFi (CoinDesk)
Scientists claim to have designed a fully decentralized stablecoin pegged to electricity (CoinTelegraph)
Tether: Celsius crisis has no impact on USDT reserves (CoinTelegraph)
Celsius adds more collateral to protect their Bitcoin from liquidation (Finbold)
Celsius Withdrawal Halt Reveals Run Risks on Other Crypto Banks (Blockworks)
Nexo Knew Celsius Was in Trouble Before the Withdrawal Freeze (Blockworks)
NYC Mayor Wants NY Governor to Veto State’s Bitcoin Mining Ban (Decrypt)
Jim Cramer Turns Bearish on Crypto. Is That Bullish? (Decrypt)
BTC Outlook
Today we’ll have a look at the macro picture of where Bitcoin is now that it is down -69.69% from the ATH. This is a chart of BTC CME futures forward contract. The reason we are looking at this is smart traders use the CME and big price movements leave gaps in the daily candles, especially when BTCs price changes drastically over the weekend. There is a high probability these gaps fill just by studying chart history a high percentage of them are eventually filled by the price retracing where the gap was created. This has happened several times over the last few years for BTC.
The key things to notice. This past weekend Bitcoin has filled the huge gap left in Dec 2020 when BTC first ran up to $60k. The two gaps under the price are at $18,500, $11000 and $9600. The two gaps over the price are at $37k and $28.5k. These will be key levels to watch in the coming year. We would expect the lower gaps to act as support and the higher gaps to act as resistance.
Back to classic charting. Bitcoin has confirmed a head and shoulders top and broken out of a bear flag. The target for this would be around $12.5k. Now do note that we did wick up this morning. There could easily be a dead cat bounce or consolidation before the price goes any lower. I personally caught some nice shorts over the weekend and now just sitting in cash and spot long. These targets are pretty far below the price so shorts could work especially shorting a rally. The less risky thing would be to sit in cash and pick up spot longs near these 3 downside targets.
Please join us in our discord where we discuss active and potential trades.
Possible Course of Action
Long spot here or at these lower targets
Do nothing and wait for current breakdown to consolidate
Short here looking for one or multiple targets to hit
The Bulls’ Defense:
Bitcoin network still works? lol
The Bears’ Prosecution:
Global macro uncertainty
Tech stock correlation
Unable to hold two breakout rallies
Header shoulders top
Bear flag
Yeah the bears are winning right now.
ETH Outlook
You may be surprised by the ETH USD price today, but you shouldn’t be surprised that the ETH/BTC ratio is just below 0.055. We have been pointing this level out to you for some time. We suspect that if this level cannot hold over the summer ETH/BTC will retrace all the way to 0.04 as target 1 and 0.03. These are the levels it first broke out from during 2021. ETH’s high valuation was based on the fees generated by the network which are reflexive. Because the global macro picture is now creating pressure on consumers there is less room for NFTs and NFTs were the largest source of ETH gas fee generation. It would not surprise us if the ETH/BTC ratio retested pre-NFT-Mania levels.
Possible Course of Action
Caution here as ETH is highly correlated with the tech stock sell off
Wait for 0.055 to hold as support
Short ETH/ long BTC might work
The Bulls’ Defense:
EIP-1559 has burned $2,955,842,987 (2,448,735 ETH) so far. Supply constraints should continue to have a positive impact on price. Note this was over $4billion last week!
The Bears’ Prosecution:
Global macro uncertainty
Nasdaq correlation and sell off
ETH/BTC pair continues to be weak
Network fee generation down
This week we're offering you the chance to learn DeFi without buying any crypto. Access the DeFi Starter Pack now when you sign up for our free 7-Day Trial. We'll send you 0.1 Matic and 30FGNews Tokens.