Welcome to the fifty-first 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.
Now it’s finally official: Elon Musk owns Twitter, as the deal (which saw Binance co-invest $500 million) has been finalized. Whatever happens next, we can be sure it will be fun: if anyone can get rid of the flood of bots and overall issues with content moderation, it’s probably him. Not to mention that this could be great for crypto: apart from Musk’s own obsession with Dogecoin (and his love-hate relationship with Bitcoin), there’s probably something on the table in terms of crypto features for Binance as well.
Moving on to less exciting, but even more impactful things: there’s a Fed meeting coming up on November 2, with most expecting a fourth consecutive massive hike of 75 basis points. Unemployment is still low—and inflation is still high—so that’s not exactly a surprise. Luckily, I don’t expect 75 bps to have much of a negative impact on the markets, as that’s what everyone and their grandma is already expecting. Besides: have you noticed that bad news headlines don’t really nuke crypto any more as much as they used to? This could be a sign of a more important shift—one that would be confirmed by the Fed pivoting after the November midterms—so there’s reason to be (cautiously) optimistic.
Bitcoin/Dollar Daily chart
U.S. Dollar Index
Bitcoin breaks a pattern of lower highs formed on the daily timeframe and breaks above $20,000, even touching $21k. Although this move upwards was favored by lots of people, we should still keep an eye on the volume as it is still decreasing and forming lower highs. The daily stoch RSI is just about to exit the overbought area which could result in a short term retrace, before a move higher.
The important earnings report week is over and S&P 500 has reacted positively to it as at the time of writing it is trading over 3900. We were worried about SPX making a lower high the previous week, but it was actually the opposite. It has made 2 new higher highs and the formation looks like a clear uptrend. As long as we are in such a formation, every dip should be a buy. Keep in mind that we are trading right under the resistance and we should stay patient until we see the reaction. In case we break above this level, the next level to look at would be around 4100.
The U.S. Dollar index continues its downtrend formation as it drops below the 110 mark for a day, creating a new low which technically puts it in a downtrend. We argued on Twitter that as November 8 approaches and the midterm elections are over, we could see a change in monetary policy and see risk on assets rise and the dollar fall. So far this is playing out perfectly, but let’s observe this DXY pump and see if we get another lower high.
Ethereum/Dollar Daily chart
Ethereum/Bitcoin Weekly chart
Ethereum overperforms Bitcoin in the recent push.
Even though we are still in the range which ETH has been in since July, we’re finally seeing some action. In contrast to Bitcoin, ETH’s push is supported by rising volume and the Stoch RSI is heavily to the overbought area. In my opinion the $1350-$1400 area, also known as the 2018 ATH, was a key area to hold and break. I think we could see higher levels really soon on Ethereum and if SPX holds, ETH could outperform Bitcoin in the short term.
And this brings us to ETH/BTC weekly chart, where we can see Ethereum’s performance over Bitcoin. Our plan from a few letters ago, to buy 0.065 BTC, was perfect, yet I did not scoop up enough ETH to be honest, as I was not confident due to decreasing volume, hopefully some of you readers jumped in and got yourself some nice profits. Anyway, price is now trading right under resistance, and if you bought the lows here, I suggest derisking some of it and taking profit. What we really want to see here is break above the 0.085 BTC level and then we can go for 0.1 BTC.
Blood’s content recap
Bitcoin has been in my accumulation zone for a while, why?
“Accumulate as much as you can because:
- Pointed lvls will be historically best buys
- When fed stops hiking rates, dxy will fall, BTC will start a new cycle
- Nigeria, brazil, turkey will adopt crypto
Place buy orders 10-15% lower in any case
This is how you build your future”
Bitcoin macro chart
See the original Tweet:
Crypto may be getting a bit more resistant to bad news, but the same can’t be said for stocks: Amazon gapped 12% down after the earnings report on Thursday—a report which only saw a -0.22% surprise in revenue, alongside +28% in earnings. Some were probably expecting performance to be ridiculously higher than the forecast, but there’s no real reason to expect such huge surprises to the upside at this point.
Overall, it’s hard to say anything with any degree of certainty until the midterms are over: for now, it’s pretty much anyone’s guess. The only thing that’s clear is that the overall political environment—and this includes the Fed too—will be different than the pre-election period, so if you’re betting on a pivot happening soon, that would make sense as a timeframe to have in mind. Until then, let’s just sit back and watch what Elon will do with Twitter and how much of an impact that will have on crypto.