Beginning of Freedom – Issue #84

Once again we’ve had quite the week in terms of headlines, so let’s get the CPI and FOMC out of the way first. YoY inflation came in at 4%, the lowest since March 2021, but this shouldn’t be too surprising given what I wrote about the base effect in issue 82. As for the Fed, they did what pretty much everyone was expecting and paused hiking rates, although they made every effort to sound as hawkish as possible in the press release. On the one hand, some people expect as much as another 50 bps by the end of the year, so maybe their hawkishness isn’t just for show, but on the other hand, every dovish change has to be accompanied with hawkish rhetoric unless they want everyone to start aping into every Ponzi under the sun again.

Moving on to more interesting topics, BlackRock—the world’s largest asset manager—filed for a spot Bitcoin ETF last week. If you’ve been around in the space for a while, then you know just how important a spot Bitcoin ETF would be, but you’re probably also skeptical given that every previous application was denied. This time, however, the situation is vastly different. When the institution with the most capital in the world—and the political connections that come with that—decides to do something like this, you better believe that they know what they’re doing. Sure, the SEC is in the middle of an anti-crypto crusade and there are plenty of people in Washington that aren’t exactly crazy about crypto, but BlackRock manages close to $10 trillion. With that many zeroes, there’s no such thing as political opposition.

Bitcoin

Bitcoin Weekly

Bitcoin Daily

Bitcoin bounces back to the daily level at $26,500, making CT euphoric once again.

Both the weekly and daily structures remain bearish, so let’s take a closer look. The weekly chart is still caught in a downtrend channel, with the channel’s support line retested before bouncing back above the weekly EMA50. Bulls have their work cut out for them as we approach the upper limit of this long-lasting downtrend. If the EMA50 breaks again, we’ll look toward the weekly level at $24,300.

The daily chart shows a clear rejection of the daily EMA 50 and the weekly level at $26,500, which has flipped from support to resistance after it had been defended as support a couple of times. There’s nothing bullish about this bounce; it seems to be only a punishment for late shorts. A succession of lower lows and lower highs points to one thing: a downtrend.

Anyway, there are a bunch of levels to break to the upside. Given the current performance of stocks, it wouldn’t surprise me if we see all these levels shattered this week.

SPX, Gold and DXY

S&P 500

Gold

U.S. Dollar Index

Stocks are on a wild run, confirming a breakout above 4325 on the daily timeframe.

However, for those with a more cautious risk appetite, it might be best to wait for this week’s price action to confirm whether we’re seeing a genuine breakout on the weekly chart or a false alarm, akin to Bitcoin at $30k. The RSI is approaching the overbought zone, typically a sign of slowing momentum and a reset. However, technically speaking, the S&P 500 is in a bull market, which could mean weeks of the RSI trading in the overbought zone.

Gold bulls hold the line at the $1916 level.

A glance at the weekly gold chart brings one pattern to mind: a Double Top. Given the recent price action, I’m not particularly keen on buying into gold as the trend appears bearish. However, with the RSI resetting and the $1916 level holding firm, it could be gearing up for a new rally. Until we see some strength on the charts, I remain uninterested.

The DXY is behaving exactly as it should when stocks are outperforming.

It appears that the breakout above 103.66 was a fakeout and we’re back to the support level of 101.4 – 100.7, which has held twice. This time, however, there’s a confluence of support and the weekly MA100. If this level were to break, I believe we could see stocks soar towards all-time highs. In my view, the timing of new rate hikes is crucial, but I doubt we’ll see any before summer’s end.

Ethereum

Ethereum Daily

Lately, Ethereum has been mirroring Bitcoin’s movements.

It’s trading in a downtrend, charting new lows and lower highs, but this time it’s slipped below the weekly level of $1,665 (Bitcoin’s equivalent is $24,300). The RSI has bounced sharply from the oversold area (30), and the last time this happened, we saw a higher low form and the price surge by over 50%.

So, are we seeing the formation of another higher low, or is there more downside to come?

Blood’s content recap

There is a war on crypto, make the most of it

“War against crypto.

War against the Retail to be Financially Free.

Coordinated fud, attacking main actors

Hedge fund giants accumulate $BTC while the media shows it as dead.

Whales make money when retail sells at a loss.

You’re a sheep or your conviction is high enough?“

A message to everyone that are worried about 2% moves.

“You are here to make money, not prove yourself as a trader.

Is bottom confirmed? I don’t care

Should you buy here? YES

The only goal in crypto is to accumulate when everything looks shit and make sure you always have some capital left to buy lower.

Simple as that. Thank me later.”

Concluding notes

The SEC vs. all of crypto saga had another fascinatingly absurd twist. In order to show that existing regulations are perfectly fine for crypto, Gensler had what he thought was an ace up his sleeve: the highly convenient example of a crypto company that applied and was properly approved by the SEC. Adding to the convenience of this for Gary is the fact that the co-CEO of that company spoke before the House Financial Services Committee, praising the SEC’s tough but supposedly reasonable stance on this new industry.

All that does sound convenient, but it takes two seconds to see that there is something extremely wrong with all this. The company that’s supposed to be a shining example for crypto is called Prometheum. You’ve probably never heard of them, and there’s a reason for that. Prometheum has been around since 2017, when they did a filing to issue a token and stated on their roadmap that their blockchain—which was supposed to offer some kind of a regulated platform for trading crypto—would go live in 2019. And what have they done so far? You guessed it—nothing.

You just couldn’t make this stuff up: Gary’s shining example is a company that’s been around for six years and hasn’t launched a single product. In crypto, that’s what we call a “slow rug.” Oh, and they managed to raise $48 million without a single working line of code. And the SEC gave them the green light.

That, believe it or not, is Gensler’s vision for crypto.