Beginning of Freedom – Issue #95

Crypto might not be the hottest market in the world these days, but over the past week, there have still been some surprisingly positive developments. While we didn’t get any ETF approvals—with the SEC kicking the can down the road as expected—the huge Grayscale vs. SEC case was finally resolved in the best possible way for the industry.

In brief, the SEC had rejected an application to convert the GBTC trust into a spot Bitcoin ETF, and Grayscale appealed the ruling. As discussed in previous newsletters, the main issue here was that the SEC had approved BTC futures ETFs, but it had rejected the spot version on the grounds that it would be liable to price manipulation. Now, a federal court ruled that the SEC’s reasoning was “arbitrary and capricious”—and in legal terms that’s about as strongly-worded as it can be—because there are no material differences between futures and spot ETFs: if one can be sufficiently protected from price manipulation, then so can the other. 

This is absolutely a gigantic loss for Gensler and a win for crypto, but unfortunately it doesn’t mean that Grayscale will get a spot ETF immediately. Instead, the court has simply ordered the SEC to do a full review of Grayscale’s application. It’s possible that the SEC will try to come up with a different reason for rejecting the application, but at this point Gensler is better off cutting his losses and accepting the ETF than costing the Biden administration a lot of political points by looking like an unreasonable and straight-up malicious bureaucrat right as we’re approaching the election year.

Bitcoin

Bitcoin Monthly

Bitcoin Weekly

Bitcoin remains glued to the support, following a test of the midrange level at $28,000.

On the monthly chart, the sideways movement persists, even after the recent liquidation cascade. On a brighter note, the monthly candle hasn’t set a new low. However, considering Bitcoin’s historical performance in September, which typically isn’t that great, there’s a possibility that this higher low might be breached sooner rather than later. The key levels to watch remain unchanged: the monthly range floor sits at $23,231, while the top is around $35,000.

Diving into the weekly chart, we can see the surge that followed Grayscale’s legal victory over the SEC. This rally, however, was a trap for many traders, as it fully retraced, bringing us back to the support, where the battle to defend the higher low resumes.

Should Bitcoin breach the ~$24,800 mark, I expect a swift move towards $21,500 within a week or so. On the other hand, if Bitcoin manages to reclaim the $30,000 threshold, full send towards $35,000 seems plausible. It’s rare to witness fake breakouts in quick succession, especially within such a short timeframe.

SPX, Gold and DXY

S&P 500

Gold

U.S. Dollar Index

Stocks bounce!

The S&P 500 retraced its recent gains, plunging back to the breakout level. However, traders were quick to defend this territory. While it remains to be seen if this bounce will form a lower high, so far the levels are clean and respected—a trader’s ideal scenario. Given the absence of major events this week, the upward momentum might persist.

Gold breaks the $1916 barrier.

Last week, we mentioned that the first green candle following a six-week red streak isn’t that much to be excited about, but gold’s breach of the $1916 mark makes it interesting to monitor. However, a closer look at its structure reveals a series of lower highs and lows, painting a bearish picture. If you’re contemplating adding gold to your portfolio, you’d ideally want to see the current lower high taken out, coupled with a break above the $1981 level.

U.S. Dollar Index pauses for breath.

After a six-week rally, one might expect a bearish turnaround. And indeed, for a brief period, the index dipped below both the trendline and the 103.66 level. However, buyers swiftly stepped in, reinforcing the ongoing uptrend.

Ethereum

Ethereum Weekly

Ethereum remains… well, boring.

Since the trendline was broken, Ethereum’s price action has been largely stagnant, oscillating between $1591 and $1768 for two weeks now. Its future trajectory is hard to predict, primarily because its movements are going to depend on Bitcoin. However, a decisive breach of either the $1591 or $1768 level will provide a clearer directional cue.

A dip below $1591 could lead towards the $1400 mark, the 2018 all-time high. On the other hand, breaking $1768 might usher us into the familiar sub-$2000 territory. With the anticipated Ethereum ETF news in October, we can expect an increase in trading volume soon.

Blood’s content recap

How to Become a Master Scalper: Beginner Guide

“1. Study the Basics; Price Action, S/R and Moving Averages

2. Deposit $100

3. Trade 2 hours max

4. Ignore Twitter calls, find your own ideas

5. Test different strategies

6. Trade small size; result isn’t important now

7. After 100 trades, DM if you still have questions

Tip 3 is the Best tip i can give you.”

Free Tip if you’re Failing in Trading Breakouts.

“You just need to:

1. Look at the initial Range Breakout

2. See if Volume increased

3. If “2.” Is YES, enter on test of MA20

4. Take profit at 3 RR

5. Repeat

Works on all Timeframes.

Like more of these?”

Concluding notes

You might get the impression that there’s not much going on lately apart from SEC-related news, and, for the most part, you’d be right. Overall, both total trading volume and retail interest in crypto are at historic lows, as the media spotlight could hardly be any further away from the space. That means that price action tends to be predatory while the few people left are all obsessing over the same headlines. This shouldn’t sound gloomy—if you’re still here, then you’re probably giving yourself the best possible chance for when the tides turn, and turn they will. 

In this climate, one thing to mention apart from the Grayscale case is that a class action lawsuit against Uniswap Labs and some prominent funds was recently dismissed. The lawsuit was essentially attempting to hold Uniswap liable for “scam tokens” that were sold on the decentralized exchange. Now, if you know anything at all about how decentralized protocols work, you’ll immediately see why that’s a ridiculous accusation, but the good thing is that the court saw that as well. In the Gensler era, it’s refreshing—and encouraging—to see some common sense in the US on the regulatory front.