Welcome to the fifth issue of Bloodgood’s notes. The idea of this newsletter is to give you an overview of the previous week’s fundamentals and what happened on charts as well as to remind you of this week’s articles, secret TA tips, and trading calls. Basically, it’s about giving you all the key info in one place.
Table of contents
⦁ Fundamental overview
⦁ Bitcoin and Ethereum chart
⦁ Blood’s content recap
⦁ Concluding notes
As this community grows, I have a duty to give back to all of you that helped me and supported me to become what I am. This free newsletter is just another way to share my experiences and prepare you for the journey that’s ahead of you.
Out of all the news this week, three headlines in particular stand out: the US Congress hearing on crypto, the Evergrande default and inflation in the US hitting a 4-decade high. Starting out with the hearing, executives from six crypto companies testified in Congress for almost five hours, which led to much more than just some meme-worthy snippets. The discussion was full of everything from some really uninformed criticisms – with one representative showing a complete lack of understanding by saying that memecoins could replace Bitcoin and Ethereum – to some very positive input from representatives that are in favor of innovation. Overall, I’d say the event was a net positive for crypto: regulation is going to be a thing no matter what, but there’s nothing bad about this if it’s done properly rather than making innovation and DeFi impossible.
On another note, it looks like Evergrande finally defaulted. No one is particularly surprised about this since the firm – more than $300 billion in debt – was on the edge of a default for months, and the market pretty much priced this in a while ago. What will be important, though, is how the Chinese government will handle this situation. If things get out of hand, we could see more panic in US and European markets, which could spill over to crypto, but it’s really anyone’s guess as to how orderly the restructuring of the firm will be.
Finally, inflation hit 6.8% in the US according to the Consumer Price Index for November. This is the highest level since May 1982, and by this point it’s no longer possible to write inflation off as something minor. It’s no surprise that this will be good for Bitcoin and crypto in general.
At the time of writing, Bitcoin is trading just below $49k, just above the support level that sits right below the 200 daily EMA. The EMA that lies around $50k was too strong to break above since the strong weekend selling that occurred the previous weekend. The reason for the selloff was a series of liquidation events that pushed Bitcoin to the low 40s, however in my opinion this will have a good effect on Bitcoin in the longer term. Funding rates are reset, stochs are reset and open interest fell.
There are two strong levels that Bitcoin needs to break in order to break this short term bearish trend. First is reclaiming the EMA200 and the second is breaking above the daily EMA21 which has acted as strong resistance since $63k. On the bright side, on-chain activity shows that Bitcoin is moving off exchanges and reserves are hitting an all time low. Supply shock soon?
Ethereum is trading around the key support level at the time of writing. If we compare it to Bitcoin it has performed much better after the series of liquidation events and it has reclaimed the support level quickly after the crash. The $4k level is discussed a lot because this is a must hold level for ETH to remain bullish. We cannot ignore the $4k-$4475 range as it has been holding since Nov16th, including 1 fakeout. Losing this level would mean that we would be looking to bid the $3600 zone.
To sum up, the ETH/USD pair breaking below the $4k support level indicates bearish movement, in order to continue the bullish trend, ETH needs to reclaim the range high at $4475.
Ethereum/Bitcoin looks stronger than ever, breaking above the 0.08 key level, also breaking above the key weekly level. At the time of writing, eth/btc is retesting the weekly breakout which is in confluence with the daily EMA21. So far, ETH is primed for continuation, however if Bitcoin loses the support level and heads towards $40k, something similar will happen with ETH, so all eyes are on Bitcoin at the moment.
Blood’s content recap
“Look for coins that wicked down to HTF support and demand levels and then bounced.
In huge crashes, take a breather and don’t look at portfolio value.
When you get back, evaluate losses and mistakes quickly before moving on and editing your watchlists.”
“1. Basic support resistance
- Simple volume confirmations
Would you have traded this like a true God?
This is the biggest mistake new traders make, get depressed with complicated strategies”
“Many have turned 5K into a Million in Crypto.
But remember to protect that hard-earned capital through:
Read now. Implement forever.”
With the recent sell-off, a lot of people got extremely depressed, but this isn’t the right way to look at things. Of course, there might be some short-term uncertainty, but even if you lost some capital – a lot of people did, including very good traders – just keep in mind that giving up or revenge trading are by far the worst things you can do at this moment. No matter what happened, make sure that this is an experience that you can learn from in order to improve. Take it level by level, and trade whatever setup you find rather than your emotional bias. In the long run, that’s the best road to success.