IN THIS ISSUE
- The NFT hype train explodes
- Bitcoin drops back into range after trading at $42k+
- Ethereum looks to breakout vs. BTC
- DeFi perp confirms weekly bullish market structure
After spending a week in the mountains out west with limited internet, I returned to the trade desk to see NFT trade volumes absolutely exploding while I was away! If you’ve spent any time on socials in the last week, you’ve no doubt caught wind of the mania that is taking place on brands like CryptoPunks and Parallel.life etc.
Up to this point, I haven’t done any speculating on actual NFT’s as much as taking some trades on NFT related projects like SHROOM, NFTX, AXS etc. over the past month or so. Most of these ideas have come from the Hxro Labs community during livestreams or in our free discord, so for those of you who have been sharing ideas, thank you! I think my NFTX and SHROOM bags are up like 3x since I aped in last month.
TA is my bread and butter as a trader, so transitioning into buying the NFT’s themselves has been a slow process, but I finally got around to minting some new ones this week. Starting off with a 3/0/0 draw on the parallel pack drops (lowest possible outcome, womp womp, slow internet). But now I’ve caught the bug. I feel the excitement when I open a new pack, or mint a new character on something like pepperattack.com, which I did earlier today.
Of course, I have no idea if the games/projects behind these NFT’s will gain any traction but what I can see objectively in the market is that there is a fever right now for NFT’s. I’m not one to chase a trade, so I’ve started researching some new projects, listening to what the market is telling me, and taking a stab at some new names as they appear. As with any of my speculative investments (especially the illiquid ones), I start off with an expectation of complete loss.
I’m not putting in amounts that will cripple me if the idea never takes off. Just having fun learning about this stuff on sites like https://opensea.io/ & https://rarity.tools/ and going from there. I’ll continue to share what I’m learning about in the NFT space through this newsletter and on our Hxro Labs livestreams in the coming weeks. For now, I still feel like a complete noobie, but its refreshing to try something new, and I think this sector will remain hot and continue to grow through the 2020’s.
The probability here is that we’ve yet to see the biggest NFT project launch so far. New ideas, developments and concepts will be introduced, so while I feel late in some ways, with proper due diligence and a patient hand, I’m fairly confident that we can find a tonne of value as things progress. I’m done sitting on the sideline and mocking the multi-million dollar valuations for these JPEG’s. It’s time to listen to the market, learn and hunt for opportunity!
The Crypto Fear & Greed Index is still hovering around neutral while things shake out from the recent blast off the lows for Bitcoin, Ethereum and some other majors. Buying up the fear while the index was down below 15 turned out to be a great mid-term strategy. It’s never easy to take risk in that kind of environment, but as we’ve discussed ad-nauseum, it’s during peak fear/greed that looking for trades in the other direction can provide the best opportunities.
Gary Gensler, chairman of the Commodity Futures Trading Commission shared his thoughts during a Senate Banking Committee hearing today in Washington DC. To no one’s surprise, he’s pushing for a much greater degree of regulatory oversight in Crypto and continually refers to “investor protection” as his motivation.
There is a lot of buzz on this topic, so I’ll share a few links here to help you catch up –
Great thread of Jake Chervinsky (@jchervinsky on Twitter):
Interesting comment from SEC Commissioner Hester Peirce (@HesterPeirce on Twitter):
Watching crypto move in the direction of regulatory oversight will be scary to watch at times, but as mentioned here previously, I don’t think it’s probable that it will lead to the demise of crypto. If it can be done sensibly, and with the right language, the “regulated crypto” space could prove to be the opening of the biggest capital floodgate we’ve ever seen.
I am confident that people like Jake Chervinsky will continue to push the envelope when it comes to sensible discourse and appropriate language use in official documentation to help us avoid overly vague definitions that would put broker/dealers, miners & other participants at risk.
It’s going to be a rocky path, and I’m sure we’ll see volatile moves up (and down) in response to the latest developments. But there is nothing here that tells me the HTF trend of up and to the right will change for the price of Bitcoin, Ethereum, and other majors in the coming years.
Bitcoin has re-entered the 4hr range after trading above for a couple days over the weekend. Losing those range highs should take us down to at least the range EQ that is hovering around $36,000 right now. The volume on the move up still appears to be higher than the top-selling volume from this move which means the bulls are still in control.
I’m eyeing the .5 fib that marks the bottom of the Pump Chaser Zone and aligns almost perfectly with the range EQ as my next area of interest for a long. If we trade back up towards the range highs, there will be some short setups coming in around $40k-$41k. I have been pretty steadfast in holding the spot Bitcoin that I accumulated through the dip, but am not opposed to taking on short hedge positions on the perps to capture some of the range-bound volatility without having to sell my Bitcoin.
Zooming out to the daily line chart, you can see that price did not tag the 200-day moving average (MA) yet and could be coming into test the 50-day MA sometime this week. For anyone who was feeling the FOMO on the move up from $29,500 to $42,000+ through the end of July, this dip is the patient entry that should stand out to you. There will be a lot of bear posting during the pullback, and it could play out, but given what we saw off the lows, I’m in patient buy the dip mode for the foreseeable future.
Losing the 34-35k level or new developments in the regulatory FUD that’s swirling around right now would perhaps change my tune. Otherwise, I think there is a good chance that the dip we’re seeing right now could develop into one of the best buying opportunities of the year. Key word, could. Managing Risk. Always.
The USD Index has arrived at the retest of the High Timeframe (HTF) trendline. This is the next area of interest from a TA perspective and should play an important role in the next mid-term swing in Bitcoin. If we break below this level, I’d expect to see “price” trend all the way down to the bullish throwback around 90.5-91 and that would be a breath of fresh air for the bulls.
A strong bounce and continuation up to break the recent highs would surely do us in for the remainder of the year, so this is a chart I’ll continue to watch closely in August.
The Ethereum bulls are back in control this month, putting in a burst of volume to close out July and push price up as high as ~$2,600 this week. We’re still not in a rip-roaring bull and the F&G Index has not entered the “greed” phase so attacking this chart from the Pump Chaser Zone could be a bit overzealous. I’ve included this level in the chart this week because it aligns nicely with the 50 and 200-day MA’s (that actually just cross bearish, meaning “death cross” lol), but you all know how I feel about that indicator. I’m currently underexposed to Ethereum from a relative perspective and am liking what I see on the ETH/BTC cross to warrant a more aggressive approach with this one.
I’ll be eyeing more long exposure anywhere between $2,000-$2,300 with invalidation below the recent lows. That’s a big window of risk so on this timeframe, there is no room for leverage. Mid-Long term, however, I think a pullback into these areas could age very well for speculators through the end of the year and beyond.
There are two ETH/BTC charts in this edition of the Weekly, both offering a unique perspective. The weekly chart below is the one we’ve been tracking throughout the year and still points to a bearish trend. Price has failed to reverse the weekly M top that was put in earlier this quarter.
However, zooming into the daily, there is an interesting battle taking place this week up against trendline resistance after a bullish S/R flip of the 0.064 level. It’s going to be interesting to see who wins the battle here and should the bulls prevail, we can count on the breakout being fairly aggressive and should take us up to the short squeeze objective from the weekly chart above (0.072).
A break down from this level will likely take us to the local RLZ around 0.06 BTC (not shown on the chart). What we’re seeing in the NFT, Gaming, and DeFi sectors right now should bode well for Ethereum vs. Bitcoin so I’m beginning to lean bullish again down here from an FA perspective. It will be interesting to see how the EIP-1559 implementation plays out on August 5th in 2 days. Will it be sell the news? Did price even rally hard enough into the event to look for that? Or will this truly be a game-changer that takes Ethereum closer to becoming a deflationary asset? Either way, this is a big week! And it’s going to be exciting to watch the price action unfold.
The DeFi perp confirmed bullish market structure on the weekly last week. That could mark an ending to the recent downtrend and marks the first major step towards a recovery. As with all fresh market structure, buying the high is not the play. I’ll be hunting the local Pump Chaser Zone (PCZ) and Reload Zone (RLZ) on this index and some other high cap names in the coming weeks.
This could be the beginning of the next leg of the DeFi hype train that could extend for months and take us to new all-time highs so this is the time to be paying close attention. As with all of these charts, invalidation of the idea would be new local lows.
I’ll continue to keep you updated on the state of the market each week! Until next time, have a great week, and whatever you do, always play from a position of strength!
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The following commentary is provided for informational purposes only and may not represent the views of Hxro Games Ltd. or its affiliates, and should not be viewed as legal, tax, investment, financial or other advice. Digital asset transactions are inherently risky, and you are fully and solely responsible for evaluating your purchasing decisions at your own risk. Past performance is not indicative of future results.
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