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.
Fed Hikes rates by 25 bps, Ethereum’s 8th birthday, Base insanity and Curve gor hacked
As expected, the Fed hiked rates by another 25 bps, bringing them to the highest they’ve been in 22 years, while the U.S. economy outperformed most expectations with 2.4% annualized GDP growth in Q2, compared to the estimate of 2%. Other than that, there hasn’t been too much going on in TradFi, but there was quite a bit of madness on-chain.
It shouldn’t be surprising that things tend to move faster and get much more degenerate on-chain, especially when we consider just how new and rapidly-evolving this space is. In fact, yesterday was Ethereum’s 8th birthday—in less than a decade, we went from a time when buying illegal stuff on Silk Road was pretty much the only financial use case for crypto to having billions and billions in the countless DeFi protocols active today. This weekend, the vibrancy and insanity of crypto was on full display: Base, Coinbase’s L2 built on Optimism, had over $60 million worth of ETH deposited from Ethereum mainnet, and all this in spite of there being no bridge website and, most importantly, no way to bridge back to Ethereum or anywhere else.
The only way to bridge to Base was (and still is) by sending ETH to a proxy contract, while a full (two-way) bridge is only planned for next month. And yet, that didn’t stop the massive inflow of capital, which was triggered by a memecoin of all things. Seeing how some wallets managed to make 1000x or more, users started bridging like crazy and aping into anything and everything. There’s nothing wrong with being early to a network—in fact, that’s often when there’s a ton of opportunity—but unfortunately, many got rugged by so-called “honeypots,” i.e. tokens that look like they’re mooning, but that’s only because they’ve been programmed so that no one can sell them.
I’ll say a few words on how to approach this kind of situation as safely as possible in the concluding notes below, but for now, there’s one more piece of breaking news to mention: some Curve pools have been drained, with apparently $70m stolen and a potential cascade of liquidations and systemic risk across DeFi. This is still a developing story, but the key takeaway right now is to derisk any DeFi positions you might have, even if they’re in protocols that seem unrelated. If you see that a protocol is paying out 80+% APY for stablecoin deposits, you better believe there’s a good reason for that—one that far outweighs the potential rewards.
The slow bleed continues.
After a period of relatively boring sideways Bitcoin price action, we’ve seen a breakdown below the $29,500 mark, and now the sideways move continues. The weekly close below the $29,500 breakout area confirms this as a failed breakout. Failed breakouts are typically bearish and often followed by significant drops, but we’ll see what this week brings. As mentioned previously, the low volatility and volume suggest a large move in either direction could happen at any time.
Looking at the weekly structures, to move higher, we need to break $32k. The current weekly support level is $26,500 if $29,500 is not reclaimed soon.
The daily timeframe shows that we’ve dropped out of the accumulation zone and are slowly pushing back towards it. The bulls’ last hope is the trendline; if that’s lost, we could be in for four more months of pain. On the bright side, the short-term MA is still above the long-term MA, which is in confluence with the trendline. If strength is seen at the EMA50 (long-term MA), I’ll consider entering a long position.
SPX, Gold and DXY
Stocks continue to outperform everything.
Looking at the chart, it almost seems impossible. We are less than 5% from all-time highs, while BTC is still ranging below $30,000. It looks like Powell managed to achieve a soft landing after all, but this isn’t over yet. Many traders who faded this pump are warning about a potential failed breakout that could occur at all-time highs, so we’ll have to wait and see.
Gold fights the 1916-1981 range.
After several weeks of strength and defending the 1916 level, gold was rejected at the range high of 1981 and seems to be on a downward path. There are no significant changes here; the levels remain the same.
The U.S. Dollar Index reclaims the breakdown level.
It seems that the Fed’s decision to hike rates by 25 bps last week breathed life into the DXY, pushing it back above the 101 breakdown level. I’ll monitor this chart to see if it gains any momentum and moves higher, or if it’s just printing a new lower high. If it gains momentum, we might see more pain in risk-on assets.
Ethereum remains below its $1930 breakout zone.
Furthermore, ETH is wedged between both MAs, slightly above the trendline and its weekly breakout level at $1784. It’s hard to say which level is crucial for Ethereum at this point, as it’s well-known that it will mirror Bitcoin’s movements.
The first area to break is $1930, followed by the weekly level at $2032. On the downside, we have weekly support at $1784 and $1665.
Blood’s content recap
Talk to People!
“Finding the next 20x Gem, can be just about Chatting with People.
Did you find an interesting coin sub 50 mil Market Cap?
Join the Official Telegram/Discord group, make friends with devs, and ask tons of difficult questions.
Verify answers, if it makes sense, BUY.”
“Trading is confusing for soft people.
They work a 9-5 job, but have max 4 productive hours.
Profitable traders know that if they are not productive, they won’t get paid.
Transition from 9-5 to trading usually ends badly due under-estimation of how many sleepless nights you need to have to make it Big.
Only ful dedication works. Shortcut boys stick to 9-5.”
All the insanity on Base is a good opportunity to revisit some key security tips if you want to explore new chains and live to tell the tale. First of all, and this should go without saying, never bridge more than you can afford to lose onto an experimental new network. If you happen to be lucky enough to pick the next memecoin to moon, you won’t need more than a bit of spare ETH anyway. Of course, this isn’t that likely, but as long as you’re treating it just as an experiment rather than having the mindset of “I’m going to—and I need to—hit the next 100x,” you’ll have much higher chances of actually being profitable. Just like anything else in trading: the more emotional you get—the more you need to win—the more likely it is that you’ll get rekt.
Most importantly, be aware of honeypots and similar scams. Check how the token you’re interested in is trading, i.e. whether there are normal-looking buys and sells coming from different wallets or if it’s just one wallet dumping since no one else can sell. This takes just a few minutes, but it can keep you from getting rugged. Also, even if everything looks good, it’s a good idea to do a test buy and sell, just to make sure. Finally, don’t forget that degen behavior on new chains is mostly gambling; as long as you treat it as such, without risking a lot of capital, you’ll be fine.