“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” (<-- click the link to read the full article). The self-written piece, which was posted on his LinkedIn, was quickly echoed by financial leaders and media outlets as praiseworthy. As it should be for all intents and 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. This is the highest level we have seen it since World War II. Is this sustainable? Something eventually is going to give.
To segue into Bitcoin, we just don’t know where the price is going to go. We believe that there is a little 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.
“An MFI reading above 80 is considered overbought and an MFI reading below 20 is considered oversold.” (Investopedia)
Our analysts say that Bitcoin is looking to be 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, the 100D SMA is slowly but surely coming. We already saw BTC taking an 8% dip on the 8th and closing the week down 5%. In addition, the weekly Fib level is at 9350/9400 (more in the chart below). If prices 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. And finally, BTC’s hash rate has also taken a slide down 30%. Whether or not 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, who are clearly expecting sunny days ahead <-- why? click here to find out).
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. Is Alt season here?????
Three Things to Know
- Hong Kong’s financial regulatory watchdog has recently 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 businesses in HK has been increasing with BitMEX and OKEx already restricting their products in HK.
- A lot of blockchain news coming out of China recently has been nothing but bullish. And this past week continued that trend with the China National Development and Reform Commission coming out and saying that it will no longer consider banning bitcoin mining and instead will recognize it as a legitimate industry in the country. Unfortunately, BTC was numb to this announcement.
- Canaan Creative, the world’s second largest bitcoin miner maker, has updated its filings for an IPO in the US. Also trying to IPO in the US is Bitmain who previously failed to IPO in China/HK. But this begs the questions, why IPO in the traditional markets if crypto was, for all intends and purposes, supposed 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, and as a level of support on a total of 4 separate occasions from June to September. Most recently, it acted as a level of resistance for 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. However, if the 100D SMA crosses under the 200D SMA, our experts say to look for a bottom at 7450.