Weekly Rundown - August 21, 2022
Rising wedges, bear flags, new US regulations, and Mirror
I published my first post on Mirror as a collectible NFT, titled “Hold this thought.” Check it out!
If you’d like to support me, collect the NFT (bottom of the Mirror post) and subscribe to my feed (top of the Mirror post).
Stop Mark. Why should I care about you? Tell me about crypto.
This week, the market went up, then down. Fundstrat chief Thomas Lee and crypto commentator Raoul Pal seem excited about what the prospects hold for the rest of the year.
It’s nice to get excited about crypto, but we still don’t see much new money coming into the market. The buying has mostly come from people who were already in the market (like us).
In 2022, crypto has seen a lot of artificial selling pressure from distressed miners, VCs, bankrupt lending platforms, customers of those lending platforms, and leveraged traders. A lot of people sold crypto they didn’t want to sell.
Soon, a few billion dollars worth of Mt. Gox bitcoins will hit the market, though probably not all at once.
Will that matter? What’s going on beneath the surface? What do you need to pay attention to now?
Check out my update from August 17, 2022.
Please note, in that update, I pointed out a trade setup that played out exactly as I described. If you’d have taken that trade, you would’ve made 15% profit (minus fees and taxes).
Don’t ever trade off of my analysis or anything I say. Never take anything I say as a prediction or “call.”
From time to time, I point out simple trade setups for perspective only, as a reality check. Sometimes they work out, sometimes they don’t.
I only follow my plan, no trading.
I see no reason to risk whatever good things will come in the future to chase a swing trade. My point in mentioning this one:
So you’re aware of the market conditions and cautious about getting bullish when the chart shows a bearish trading pattern.
Remind you that a 15% drop is a trivial amount, not guaranteed, and not worth getting worried about.
I’d be more mindful about the bear flag forming on the weekly trading chart. That’s a topic for a future update for paid subscribers.
Scroll down for a poll and some content you may enjoy.
Poll: Will bitcoin's price ever go lower than $17,600 again?
In last week’s rundown, I mentioned some crypto advocacy groups.
I should’ve included the Global Digital Asset & Cryptocurrency Association. Please visit their website.
Federal Reserve opens up master account access to banks with 'novel charters,' in win for crypto and fintech
Bottom line: US regulators carved out a path for cryptocurrency businesses to join the larger financial system and interface with the liquidity services of the Federal Reserve, for example, programs that support banks during distress or financial crisis.
My take: people can talk about “bad” regulators but the US government is more complicated, professional, and boring than you think. While the headlines may make you think the US government wants to crush crypto, they don’t reflect all of the activities across a huge bureaucracy that generally wants to support new technology and financial innovation.
Why we care: good people can disagree about specific policies and regulatory decisions, but within the US government, there’s a broad consensus that crypto has potential and needs its own framework. We may get outcomes we don’t like, but we may also get outcomes we like. Let’s not get so anti-government that we forget about the many public servants and legislators that want us to succeed.
In the wake of global sanctions on Tornado Cash and addresses that used the protocol, Empire podcast recorded a conversation with Coinfund CEO Jake Brukhman about how Crypto Networks are Public Goods.
Listen to the podcast.
Bottom line: while prices of digital assets and equities still often move in a similar direction, they seem to have lost their correlations.
My take: seems reasonable but I’m no statistician so I’ll wait for a consensus to emerge. Correlations come and go. Nothing lasts forever.
Why we care: if you’re basing your decisions on correlations, consider what might happen when the correlation ends. What about bitcoin’s correlation with corn since the beginning of June? Corn tracks corn? New alpha?
With the market so depressed and prices so low, you may want to buy some altcoins. I’ve been doing this every two weeks since the UST/LUNA crash. I may even publish a new series of articles with my non-altseason approach, to go with my Advice for Altseason.
(We’re a long way from altseason and may never get another one.)
Hedgehog posted a great, short article on its blog, How to research a cryptocurrency: Your DYOR Checklist. Read it whenever you can.
Relax and enjoy the ride!