Monday Crypto Market Update
November 11, 2019
The Rundown
“At the same time as money is essentially free for those who have money and creditworthiness, it is essentially unavailable to those who don’t have money and creditworthiness, which contributes to the rising wealth, opportunity, and political gaps”
The above aforementioned quote was beautifully crafted by billionaire hedge fund founder, Ray Dalio, this past week in an article titled, “THE WORLD HAS GONE MAD AND THE SYSTEM IS BROKEN”. The self-written piece, which was posted on his LinkedIn, was quickly echoed by financial voice leaders and media outlets as praiseworthy. As it should be for all intended purposes. If you take a step back to look at the forest for the trees, we are living in times where technology has propelled us to an elevated state of living and convenience, albeit while the global debt is now 230% of world output. The highest level we have seen since World War II (by the way, if you haven’t seen the new war movie, Midway, go check it out). Is this sustainable? Something eventually is going to give.
Another great line from Dalio’s piece:
“This whole dynamic in which sound finance is being thrown out the window will continue and probably accelerate, especially in the reserve currency countries and their currencies.”
That sounds just about right. No wonder I have always questioned the financial concepts and theories that I have accumulated throughout my career. And I am glad I’m not the only one who thinks this way, but rather it’s the “narrative economics” that takes the driver seat. We don’t know what we don’t know. As is when it comes to the Epstein debacle. And when it comes to crypto, according to the Burniske-Tatar Law, STAY CLEAR!
To segue into Bitcoin, we also don’t know where the hell price is going to go. What I am looking at right now is a bit of seller exhaustion. The MFI is on the tip of cutting through the 20 level, which was last seen on September 23rd, including the MACD already crossing under the signal line. I am still bearish in the short term for a few reasons. Despite BTC making a false breakout on the day of the death cross and recently seeing the 21D SMA crossing over the 50D SMA last week, that 100D SMA is slowly but surely coming. We already saw BTC taking an 8% dip on the 8th and closing the week down 5%. Furthermore, as I have pointed out the weekly Fib level of 9350/9400 (more in the chart below), if prices look to make a swing trade bull run but get stuck at this level, look to sell because this level has been a key level of support and resistance for the past few months. To double down on my view, BTC’s hash rate has also took a slide down 30%. Regardless if hash rates are a function of price or vice versa, this is clearly a bearish sign for traders and miners (probably more so for one of the biggest miners in Bitmain whom are clearly having sunny days ahead).
But in the grand scheme of things, the 200-week MA is still going to be my bottom at 4798 if we see this bearish trend continue notwithstanding of these false outbreaks.
In terms of winners and losers this past week for the major alts, LTC came out on top with a rough 6% gain with BTC being the loser for the second consecutive week. Alt season? I’d say that still too early to tell with BTC’s dominance up 30% but it has been falling from its peak in September.
Three things to know
1. Hong Kong’s financial regulatory watchdog has recent put out guidance on how they will treat crypto exchanges operating in their jurisdiction. From now on, if an exchange offers security tokens, they will treat that exchange the same way they treat traditional brokers. P2P exchanges and DEX are clear but the trend of crypto exchanges slowly blocking their business in HK has been increasing with BitMEX and OKEx already restricting their products in HK.
2. A lot of blockchain news coming out of China recently has been nothing but bullish. And this past week continued that beat with the China National Development and Reform Commission coming out and saying that it will no longer consider banning bitcoin mining and will recognize it as a legitimate industry in the country. But unfortunately, BTC was numb to this announcement.
3. Canaan Creative, the world’s second largest bitcoin miner maker, has updated its filings for an IPO in the US. This joins them with Bitmain who is also trying to IPO in the US after both failing to IPO in China/HK. But this begs the questions, why IPO in the traditional markets if crypto was, for all intended purposes, suppose to undermine the traditional markets?
Chart of the week
As mentioned above, the weekly Fib level of 0.382 (traced from the Dec. 2017 high to the Dec. 2018 low has been a critical level for BTC this year. It has acted as a level of support back from Jun 16–19, a level of support on 4 separate occasions from June to September, and recently back as a level of resistance from the Oct. 26 false breakout. If BTC is able to close 2 daily candles above this level, look for it as confirmation of a bullish run. But when the 100D SMA crosses under the 200D SMA soon, I’d look for a bottom at 7450.
