Welcome to the fifty-sixth 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.
US job data came in stronger than expected last week, a development that was widely seen as bearish since it leaves more room for the Fed to keep tightening rates—and this was echoed by Fed members acting quite confident in their hawkishness. As I mentioned a few times before, the pivot will happen when something breaks, but so far—in spite of bonds looking like they were about to force the Fed’s hand for a while—everything is surprisingly resilient. If I had to guess what it will be, though, I’d say the housing market is a good candidate, but I’ll probably write more on why in one of the next newsletters.
Moving back to crypto, Genesis looks to be in more trouble than it seemed at first. Crucially, not much data on where specific assets are has been made public, and that means that any estimate of how DCG (Digital Currency Group, the parent company of Genesis and Grayscale) could be recapitalized hinges on very uncertain assumptions. Depending on how that turns out, it might well be the case that Genesis will be forced to dump millions of GBTC shares, along with any incentive for Grayscale to pursue an ETF being completely eliminated. That would be very bad for crypto, but, again, there’s not too much to go on in terms of public data for now.
Bitcoin, S&P 500 & DXY
Bitcoin/Dollar Weekly chart
SPX Daily chart
DXY Daily chart
After a few weeks of little to no movement on Bitcoin we finally have a move towards the 2017 ATH zone, breaking above $17,000. The move is supported by an increase in volume and we can also see that the On Balance Volume indicator has formed a higher low which is a good sign for bulls. If the strength continues, the first area of resistance is an area from $18,100-$18,500 which lies right below the trendline that connects a high and a higher low. Nonetheless, it’s still a long way till we reach it, however if inflation numbers are good and the Fed hikes rates by 50 bps I expect that level to be tagged.
The S&P 500 is respecting the trendline for now as it bounced right off, and pumped right back to it again. Similar to Bitcoin’s movement I expect this to change as Dec 13th approaches (CPI+Fed) or it could happen earlier, depends on whether the market expects good or bad results.
Our Bitcoin and DXY indicator still works. U.S. Dollar Index down, Bitcoin up. Breaking below the 105 level is big, giving DXY a lot of downside potential. As discussed the previous week, when DXY showed some strength, there was no reason why it would break higher. A week later, with DXY making new lows, I’m expecting the downtrend to continue unless Powell decides to surprise us.
Ethereum/Dollar Weekly chart
Ethereum/Bitcoin Weekly chart
Well, it seems that the FTX “hacker” has stopped selling his Ether as bulls managed to push it to the $1350-$1400 zone which we have been monitoring since the summer. The $1000 level stays untouched this time, and our bids left unfilled, but maybe we’ll get another chance, in any case our eyes are glued to the resistance for now. Contrary to Bitcoin, Ethereum’s OBV is in a downtrend without any real strength. If we see a break above the resistance, we will want to see the break of the OBV trendline as well, if not, I will consider this a fakeout and will not enter into a new position.
If ETH/BTC looked like it’s forming a perfect downtrend on the daily timeframe last week, we were now proven wrong. The 0.077 BTC level was already tested during the weekend, only to get rejected, but ETH bulls don’t seem to be giving up just yet. A breakout on the BTC pair supported by volume will lead to a break on USD pair. If all these conditions are met I will enter into a giga ETH position.
Blood’s content recap
Think about this
“Would you rather have 1 million or 10k/month?
Even if you take 1M, you better buy smth that makes u passive income.
Eg. Buying 1M worth of real estate will make u passive income.
Inflation will eat 1M to 600k in 10y, and rents will x2 easily, meaning, its a 600k – 20k decision.”
New trading exercise
“Price Action exercise – Breakouts & Rejections
- Open a high-liquid coin (Eg. BTC)
- Choose a small TF (Eg. M5)
- Mark swing highs and lows
- Monitor volume as price approaches previous highs & lows (explanation in TG)
Do this daily for 1 hour, you’ll be a BEAST in no time.”
As you might expect, there are more rumors circulating about the FTX drama on Crypto Twitter. It looks like Caroline was spotted in New York, leading to speculation as to why she’d go there at this point (rather than, say, some country with no extradition treaties with the US). Some were even speculating that she might be collaborating with prosecutors to form a case and testify against SBF—a turn of events that would make the inevitable movie about the collapse all the more interesting. Also, it’s hard not to see an interesting form of karma in this, if SBF turns out to have been betrayed by none other than Caroline herself.
A final thing worth mentioning is that Bybit announced a 30% cut to their workforce, which is why some have started to worry about how solvent the exchange is. On the one hand, this is understandable and caution is always advised, but on the other hand, this strikes me as not what a secretly insolvent exchange would do. Think about it: if you’ve got a giant hole in your balance sheet and your survival depends on no one finding out, you’ll probably be acting like you’ve got boatloads of money while frantically trying to make it back by trading or getting an investment before the panic and mass withdrawals start (just think back to FTX flexing with their new office space right before the meltdown). Again, I can’t stress enough how important it is to minimize any and all forms of counterparty risk, but layoffs tend to mean problems with profitability rather than solvency (or straight-up fraud).