Beginning of Freedom – Issue #94

Last week we had the big Jackson Hole conference, which pummeled risk-on markets last year due to the extremely hawkish tone, but those anticipating a similar outcome this year were largely disappointed. Overall, Powell’s speech wasn’t anything excessively hawkish—or dovish, for that matter—instead just reiterating that the Fed might raise rates again “if appropriate” depending on economic data and inflation. Long story short: if you missed his speech, then, chances are, whatever you were doing was a better use of your time anyway.

Moving on to more important developments, BRICS, the bloc consisting of Brazil, Russia, India, China and South Africa, added six new members in its first expansion in 13 years, while leaving open the possibility of expanding even more in the future. The new members are Saudi Arabia, Iran, Ethiopia, Egypt, Argentina and the United Arab Emirates; countries that are far from irrelevant on the global macro stage, especially with regard to commodities (i.e., oil). While some of the countries in the bloc don’t want to directly compete with the US-led West, that’s certainly always been a key ambition for China and Russia, and this competition could become much more tangible as the bloc moves away from the US dollar. We’re far from a multi-polar world right now—the dollar’s dominance isn’t in question just yet—but if these countries succeed in creating an alternative that gains adoption, that would be bad for the USD but extremely bullish for gold and crypto.

Bitcoin

Bitcoin Monthly

Bitcoin Weekly

Bitcoin continues to range as traders are indecisive after a liquidation cascade.

Starting with the broader monthly perspective: after Bitcoin’s ascent beyond the summer range, a significant upward gap emerged, with the resistance zone between $35,300 and $37,249, in confluence with the CME gap. On the flip side, the monthly support is around $23,200. This is the logical target on this timeframe, and it’s crucial that it holds. If it breaks, Bitcoin could tumble back into the summer range, potentially all the way to the lows at $15k.

Switching to the weekly chart paints a slightly different picture. Bulls are still guarding the higher low at $24,800, established in mid-June. The Swing Failure pattern has played out impeccably on this larger scale, and if a bounce is on the cards, it’s likely to start here, given we’re currently probing the 2022 summer range high.

A drop back into this range would mean a few more months of pain and slow bleed.

In a nutshell: If the $24,800 higher low breaks, we’re in for further drops. The last bastion for the bulls would be the monthly support at $23,200. Should that too give way, $17,000 becomes a plausible scenario.

SPX, Gold and DXY

S&P 500

Gold

U.S. Dollar Index

S&P 500 bulls are fighting hard.

As stocks have fully retraced the breakout above $4325, there seems to be an interest to defend the level. It’s going to be an interesting week as we will see whether this holds or if it was just a complacency bounce at the crucial level. Losing this would make $4096 possible and, with it, more downside for cryptocurrencies as well.

Gold prints a green candle

It has printed a green weekly candle after four consecutive red candles. Unfortunately for bulls it hasn’t managed to break above the $1916 level which we have been talking about for months now. A new low was made which makes this structure bearish and we will be looking for a lower high to be printed. To break this bearish structure gold needs to break above the $1981 level.

U.S. Dollar Index is slowly killing bulls’ dreams

It has printed the 6th consecutive weekly green candle since it bottomed slightly below 100, breaking the downtrend and breaking the strong level at 103.66. DXY’s good performance has left consequences in risk-on assets and will continue to do so if this uptrend keeps up. The next resistance for DXY to break lies at 105, so let’s see what this week brings us.

Ethereum

Ethereum Weekly

Ethereum/BTC

Ethereum is in a completely different situation than Bitcoin, at least structurally.

It has never broken out of the summer range as there was no real narrative to drive ETH higher. The only thing in common with BTC is the swing failure pattern and how it played out. At the time of writing Ethereum bulls are trying to defend the $1559 level which was the last higher high before the bottom was formed. 

Losing $1559 could result in the 2018 ATH being tested, which is the last resort before three-digit Ethereum becomes a possibility. Looking at the bigger picture, the structure is bearish and longs for me aren’t an option here as a lower low was printed, breaking the mid-June higher low and with it breaking the uptrend.

I’m sharing ETH/BTC for the last time here until anything major happens. ETH is still stuck below the 0.065 BTC level without any clear narrative. Until we see what happens with the ETF applications in October I don’t expect any sudden movements.

Blood’s content recap

It’s not all about the Money

“The longer the Bear market lasts, the more larpers pretending to be Rich you will see here.

They will try to sell you courses & invite you into paid groups, and offer paid Mentorships just to get more ammo to buy dips.

There are some people on Twitter who deserve My respect, but there are too many pretenders lately.

Stop praising people who are only in it for the Money.

Free time and passive Income is what will bring you Freedom and happiness.”

Concluding notes

In the latest court proceedings in the FTX case, Sam Bankman-Fried pleaded not guilty to charges of fraud and money laundering. He’s also trying to get a temporary release until the trial on October 3; ostensibly this is so that he can more effectively prepare his defense, but in reality it probably has something to do with the fact that Adderall and vegan food aren’t easy to get in prison. 

As for the strategy of his defense, it seems likely that he’ll try desperately hard to blame those around him, especially his lawyers at the time. While no one really thinks that he has any chance of success, it will be interesting to see what new information comes to light during the trial. If one thing is for certain (apart from the fact that he won’t be having parties in the Bahamas anymore), it’s that we’re in for one hell of a show.

Meanwhile, a bunch of FTX customer data got leaked because an employee at Kroll (the claims administration company) got SIM-swapped. If you don’t know what that means, I highly suggest looking it up and—unlike an agency that’s getting paid millions to secure data—not using your phone number as a 2FA method for anything sensitive.