Welcome to this week’s 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.
The BRC20 hype calms down, CPI drops below 5% and more..
The BRC20 hype (which I covered in some depth in the previous newsletter) seems to have calmed down somewhat, but not as much as you’d think if you only saw it as a very brief memecoin fad. While BTC transaction fees are down almost 90% as people are no longer paying insane amounts to mint these Bitcoin-based tokens, the number of BRC20 transactions is holding steady, down only around 10% over the past week. As for where this trend is likely to go, that’s pretty much impossible to predict given how new the market is, but I won’t be surprised if the widespread notion that the Bitcoin network can only be used to send BTC from one wallet to another is gone for good. While the idea of having other tokens on Bitcoin isn’t completely new (“colored coins,” a precursor of NFTs, were already around a literal decade ago), there’s a huge difference between something that’s mostly confined to Bitcoin forums and a global market with hundreds of millions of dollars in daily trading volume.
Moving on to the incomparably slower-moving world of TradFi, the CPI last week was decent, with headline inflation at 4.9% (estimate 5.0%). Not only is that the lowest number since April 2021, it’s also finally below 5%—and if there’s one thing you learn in crypto, it’s that round numbers make for very important psychological levels. In this case, the all-important sub-5% print is the ideal validation for the Fed to pause at the next meeting in June, but that’s still far from certain, which is why keeping an eye on jobs data will be important. Overall, stocks still look very boring, but there’s still a ton of short positioning, even more than over the past few weeks. If you’d like to keep an eye on that data point yourself, just google “CFTC S&P 500 non-commercial net positions.”
Bitcoin is still struggling to push back to the $30k level.
Looking at the monthly timeframe, we could argue that this looks like a clear rejection with a drop to $23k on the horizon, and we would be correct. But, dealing with crypto is never straightforward, so let’s take a look at the daily timeframe.
The daily demonstrates how the $26,500 level was defended by the bulls, which is the last stand before the $24k region comes into play. I’ve highlighted a fractal on the chart, which I think might repeat itself. Keep an eye on the EMAs; if you spot a bullish crossover, it would be a good signal to enter as we could be heading higher.
However, this theory is invalidated if the dashed line ($26,500) is breached. But, if I’m correct here, we could see $35k sooner than you think.
SPX, Gold and DXY
U.S. Dollar Index
The S&P500 is still choppy, going sideways in no man’s land. It tried to form a higher high but failed to break past the previous one, which is a bearish sign. However, as long as the RSI remains above the 50s, we shouldn’t be too concerned.
Gold once again tested the ATH levels and faced rejection at the 2049 level. So far, gold appears to be respecting this range, with the range low at 1981, and the range high at 2049.
The DXY is showing strength at the lows. It appears that the breakdown we witnessed last week was a fakeout, followed by a rally. Anyway, the first level to watch on the upside is 103.66. We don’t want DXY to climb any higher than that if we want risk-on assets to fly.
Ethereum remains inside the range.
We discussed Ethereum’s range low at $1784 and high at $1986 in the previous issue, and it seems the range low is effectively doing its job following an ugly downward wick. As I mentioned last week, I’m currently not trading Ethereum, as there’s no substantial narrative at the moment, and its movements will largely mirror those of Bitcoin.
I also took a glance at the ETH/BTC chart, but it’s still relatively boring, sitting right on our entry point. I’ll provide updates if there are any significant changes.
Blood’s content recap
Want to see me discuss various topics on podcasts?
“My podcasts that were run by interns and guests only reached 10k viewers.
I decided to upgrade it.
This time I will be on podcasts in discussion with interns.
– Life in general
– Hot topics
New Swing exercise
“Swing Exercise #3: Short and long term moving averages
1. Open a Daily chart, choose a high liquid coin (Eg. $ETH)
2. Open 20 EMA and 50 MA
3. If 20EMA crosses above 50MA, buy spot or low leverage long
4. If 20EMA crosses below 50MA, sell spot or low leverage short
See chart examples here.
As I mentioned in the previous newsletter, the reason why BRC20 tokens took off is that they’re simple, rudimentary (hence impossible to rug) and built on Bitcoin. This appeal of maximum decentralization, even for memecoins, is partly related to the regulatory environment in the US, where any kind of centralized control can lead to something being labeled as a security. On that note, I’d like to conclude today’s newsletter with a positive twist: the US Chamber of Commerce (USCC) filed a brief in the Coinbase v SEC case, coming out in support of Coinbase. The USCC is the largest and most influential lobbying organization in the US, founded in 1912, so to have them claim that the SEC’s regulatory unclarity is killing innovation is insanely good news for crypto. What’s more, the USCC even went so far as to claim that the SEC’s actions aren’t just bad policy, but that they’re unlawful, in a completely unprecedented step for an organization at their level.
Overall, this is a huge step forward in several different ways, from the fact that the USCC isn’t some crypto-specific (or even tech-specific) organization—but the biggest lobbying group out there—to the fact that the accusations aimed at the SEC are both clear and serious. Even though the recent memecoin hype wave didn’t exactly help public opinion on crypto, it’s very encouraging to see that, on a higher level (the one that can actually shape policy more directly), things are moving in the right direction.