Welcome to the first 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 articles, and trading tips of the week
- Concluding notes
This week has been an interesting one for the markets, and crypto in particular. In crypto, we’ve seen the SQUID debacle, with the token that took its name from the popular Netflix show rallying 35,000% and then crashing to zero as the developers left. If you’ve been in crypto for a while, you’ve probably seen that SQUID raised every single red flag in the book: a trendy, hyped theme, weird transaction rules that prevent users from selling the token, and a whitepaper that reads like shredded newspaper. Unfortunately, many people that are new to crypto weren’t able to see why something like this is extremely likely to be a scam, and the devs (or scammers, to be more accurate) disappeared with their funds. This is the kind of thing that gives crypto a bad reputation among people in traditional finance, and one reason why I’m so passionate about education is so that I can help newbies stay away from stuff like that.
Moving on from that, this week the Fed announced the start of their taper. In layman’s terms: the Federal Reserve puts more money into the economy with asset purchases funded by freshly created money (this is called quantitative easing or QE) to try and prop the economy up in times of crisis. This QE really took off lately, with fears of the Covid epidemic driving the Fed to double its balance sheet (to about $8.6 trillion) since March 2020. But now, they’ve started tapering, meaning that asset purchases will drop by $15 billion per month, and this will probably reduce fears of inflation, at least a bit. Still, the impact on Bitcoin has been negligible compared to expectations – since BTC is an inflation hedge, people expect more buying when inflation threatens to run out of control, and vice versa – and we’ll soon see how this will play out in the stock market. Despite the taper, though, a lot of people still see inflation as a very real danger, so I personally don’t expect this by itself to be too much of an obstacle in the big picture.
Bitcoin has been trading in a range since the 21st October and has respected its levels so far, except for the fakeout we had on 27th. So far this range was quite easy to trade, giving us a lot of opportunities as we had multiple touches of support as well as resistance.
As Bitcoin approaches a key support here (or range low) we could see some buyers stepping here and we could potentially look for a long setup.
Keep in mind that the volume is falling and RSI is in the oversold zone for quite some time. If you are looking to long here, the perfect scenario would be to wait for the reversal and RSI breakout above the 20.
Ethereum performed really well against Bitcoin in the last week and it broke above a key level which could trigger a rally towards the 0.08 level. It’s crucial that we get a confirmation of this in order to continue as this could once again be a fakeout.
The successful Altair upgrade could be one of the reasons ETH broke above the key level and made a new all time high on the USD pair. At any rate, ETH is performing better than I would expect based on previous bull runs. It should be BTC season by most metrics, but ETH is showing us that it can really be full of surprises, especially to the upside.
Blood’s articles and trading tips of the week
Secret tip #12
Learn to see the difference between bullish and bearish Price Action at resistance.
If it looks good, buying resistance is the smart move.
Otherwise you’ll be left waiting for a support retest that will never come.
“Crypto is a very cyclical market, but it’s not just the (roughly) 4-year Bitcoin cycles that you need to keep in mind. In fact, the way that money moves within crypto is much more important, and I’d say that it’s even easier to time and use in your trading. Bitcoin’s cycles are very long-term, and they can definitely be useful for your investment strategy, but they don’t tell you that much about what positions to take on a time horizon of days or even weeks.”
Overall, you probably won’t be surprised to read that I’m still as macro bullish as before. There might be some setbacks along the way (the Fed still hasn’t announced a rate hike, and this might come relatively soon), but nothing has changed in the bigger picture. Given how loose monetary policy has been, it’s not like inflation fears will be completely swept away with a few moves by the Fed. Looking at the shorter-term situation, things aren’t that clear as long as BTC is still in this range, but we’re seeing ETH and some DeFi blue chips starting to break out. If BTC stays range-bound, that is precisely what you should be focusing on: solid DeFi projects that are breaking important levels and MAs or coiling under resistance and ready to take off. You can read my article on Money Flows that I linked above to learn more, and as money is clearly rotating right now, this is the perfect time to do so and prepare to take advantage of the upcoming pumps!