Bitcoin - 4500 Sardine Suckers and 3500 Dusty Moth Balls
Just seems like yesterday everyone was posting 30% retrace, the big dip, bearish reversal the great Ponzi scam. Over the past week we have heard nothing but fear from the boom doom and gloomers. Boy they got silent quick some have even flopped to going long now. As an investor you are either long in the long term, or short in the long term. If you are long in the long term, you should be looking to buy into lows.
If you believe that Bitcoin will hit 20k or even higher, over the next couple years, you should be looking to add, not attempt to time markets. Again this is different than the pure trader who is all in all out and is just looking to make a few bucks in the short term.
Currently there is nothing bearish about this chart pattern. Some may be pointing to a potential head and shoulders pattern, which we will go over later, but we are still a long ways from seeing this evolve.
The 5340 level was key to take out and close above. Now that this happens it has put more weight for a bullish move higher, than a capitulation back to 4500. Actually the limit orders at 4500 are getting dusty and the ones at 3500 are are growing cobwebs. These levels are becoming less probable in the near term and 6k+ is becoming more probable.
Bitfinex Fud:
With all the news and Fud surrounding Tether and Bitfinex, the Doom and Gloom weather forecasters were calling for an Apocalypse. This is it, this is the end, look for a retest of the lows or lower. "Ponzi Scam", "The Top is In", yet we continue to grind higher. They were screaming Manipulation but failed to realize they were the tool of the manipulators and they fell right into the trap. In short the whales were looking for Sardine Suckers, and boy there were schools of them all around.
See during the same time that the NY AG petitioned the court with a filing vs Bitfinex and Tether, in the background E-Trade and Ameritrade announced they were going to be offering Bitcoin trading in the near future. Ameritrade even has "crypto currencies" listed on its product page, right above bonds. Nice! In addition Paxos came out immediately to claim they are the only true stable coin and they new this would happen with Tether.
Well what we actually found out was that the US DOJ and Polish authorities had already seized the money that was allegedly stolen. Wait isn't this the same money that was never there 7 months ago? It is like GS and JPM are using the DOJ and the AG to do their dirty work targeting Tether and Bitfinex. So why would JPM and GS care about some crypto geeks? Ahhhhh that is the right question and it has to do with the future of micro-payments.
The future of micro payments is stable coins. These are no different than early bank notes, or as us collectors refer to them, "obsolete bank notes". These paper notes were issued by banks in the 1700's and 1800's. Stable coins are not new, or at least the theory behind them. Banks were chartered by the US Treasury to issue paper notes that were backed by gold and silver in the bank's safe. Stable coins are are simply a modern day digital bank note.
Now it was important for the bank to be the "note" of choice as this meant depositors were depositing gold and silver in the bank. They could therefore loan out to farmers or others via loans. By law they were not allowed to mint coinage, and paper notes were to be no less than $1 denominations to prevent the banks from printing notes they did not have gold and silver for.
Obviously there was no way to track notes back in the day, so by making bank notes in larger denominations they were redeemed more often for coinage, hence it served as a protective measure from banks from printing more currency then they had gold and silver to back. Yes $1 and $5 was a lot of money back then.
Anyways this has everything to do with beating Tether. Banks want to be the processor for micropayments using stable coin, they surely are not going to sit back and watch Bitfinex and Tether move in on their territory. If you need to load up with stable coins to pay for your autonomous car, or other automated micro payments the banks will make money on the deposit or float. They will also make money on processing the micro payments, and in a world of 5G and the IoT, this could be billions a year.
Enough of the stable coins, and the Sardine Suckers that spooked many off their inventory and onto the charts.
There has been much talk of a H&S pattern forming so lets address the issues with this pattern that has not even formed yet.
Many are pointing to a "possible" formation and ignoring all the other information on the charts. We have a defined series of higher highs and higher lows as labeled in green. We also have an interim higher low similar to the one in mid April in purple. The other note about this pattern is the strength of the right shoulder. H&S patterns have a higher probability of completing IF the right shoulder is the weakest. I do not see this here, the right shoulder looks quite strong.
Really it is not the pattern that is important, it is the order flow that we are looking for. We are not seeing weakness in order flow to the buy side we are actually seeing strength. Most importantly many are assuming the right shoulder will from, it hasn't. Even if it does, these are often areas where we see fake-outs. If we do pullback, the two areas where fake-outs are likely is 5150 and 4875.
Lets take a look at another H&S pattern that formed at an ATH.
Wow the perfect H&S pattern. Signs of buyer exhaustion with the right shoulder much weaker than the left. Strong move toward the neckline, exactly what we want to see for a market short.
Well it looked good, but ended up printing a bullish trend line and continued to take out the previous high. Notice at the actual top there was no H&S pattern. The market simply started taking out lows. Again this is all about order flow, not some random pattern that one can use crayons to connect the dots with. Thinking patterns are the tell all story is like judging a book by its cover. Also for those thinking they are simply going to buy the dip and sell the high, look what happened to the Q's. There was no dip. Now this is a little different as Bitcoin is not near a high, but to think you are going to buy, sell, rewash is naive. I remember doing that myself with both Amazon and NVDA. Well yeah I missed the big move.
Lets look at some other evidence.
Short interest continues to pile into an already overly crowded short trade, yet price has simply continued to move higher. I have no idea what shorts are thinking here, as the structure is still bullish and the market is simply absorbing the short orders. This is really setting up for a short squeeze. These mullets are simply the main course for the whales. You get stopped out here, don't bitch about the manipulators. It is like passing 20 "danger broken bridge ahead" signs and blaming someone else because you drove your car into the river.
Summary:
Within days of the Bitfinex news, both E-trade and Ameritrade quietly announced their platforms. You really think the "manipulators" are selling ahead of Bitcoin trading on a real exchange or platform that reaches 10's of millions of traders?
Again we do not discount that we can pullback here. I am not a fortune teller and only the market beholds the future. All we can do is manage risk, and there are numerous ways to benefit from either direction. Like I mentioned over a week ago, "What If That Guy Is Wrong". I was implying do you have a plan or strategy where the direction of the market does not matter, or are you just listening to a bunch of sardines.
That limit order sitting at 4500 it is likely collecting dust and will continue to do so. That limit order at 3500, it will probably have cob webs covering it a year from now, because that is a slim chance to none at this point. Can it happen? Sure, but the probability is becoming less and less each day we grind higher.
In short all the blah blah blah about Bitfinex simply provided a buying opportunity if you had the balls to buy. Monday afternoon I mentioned openly on the air, that I was a buyer of Bitcoin here, and I did just that. Anywhere under the 5k level I am a buyer and have added fresh money to my account in order to take advantage in the event we do push lower.
Hey I don't mind having a limit order down around 4500 collecting dust, but I am positioned in the event it does not. I definitely do not want to see a move to 6500 and open up my chest of Bitcoin and see nothing but moth balls.
If you believe that Bitcoin will hit 20k or even higher, over the next couple years, you should be looking to add, not attempt to time markets. Again this is different than the pure trader who is all in all out and is just looking to make a few bucks in the short term.
Currently there is nothing bearish about this chart pattern. Some may be pointing to a potential head and shoulders pattern, which we will go over later, but we are still a long ways from seeing this evolve.
The 5340 level was key to take out and close above. Now that this happens it has put more weight for a bullish move higher, than a capitulation back to 4500. Actually the limit orders at 4500 are getting dusty and the ones at 3500 are are growing cobwebs. These levels are becoming less probable in the near term and 6k+ is becoming more probable.
Bitfinex Fud:
With all the news and Fud surrounding Tether and Bitfinex, the Doom and Gloom weather forecasters were calling for an Apocalypse. This is it, this is the end, look for a retest of the lows or lower. "Ponzi Scam", "The Top is In", yet we continue to grind higher. They were screaming Manipulation but failed to realize they were the tool of the manipulators and they fell right into the trap. In short the whales were looking for Sardine Suckers, and boy there were schools of them all around.
See during the same time that the NY AG petitioned the court with a filing vs Bitfinex and Tether, in the background E-Trade and Ameritrade announced they were going to be offering Bitcoin trading in the near future. Ameritrade even has "crypto currencies" listed on its product page, right above bonds. Nice! In addition Paxos came out immediately to claim they are the only true stable coin and they new this would happen with Tether.
Well what we actually found out was that the US DOJ and Polish authorities had already seized the money that was allegedly stolen. Wait isn't this the same money that was never there 7 months ago? It is like GS and JPM are using the DOJ and the AG to do their dirty work targeting Tether and Bitfinex. So why would JPM and GS care about some crypto geeks? Ahhhhh that is the right question and it has to do with the future of micro-payments.
The future of micro payments is stable coins. These are no different than early bank notes, or as us collectors refer to them, "obsolete bank notes". These paper notes were issued by banks in the 1700's and 1800's. Stable coins are not new, or at least the theory behind them. Banks were chartered by the US Treasury to issue paper notes that were backed by gold and silver in the bank's safe. Stable coins are are simply a modern day digital bank note.
Now it was important for the bank to be the "note" of choice as this meant depositors were depositing gold and silver in the bank. They could therefore loan out to farmers or others via loans. By law they were not allowed to mint coinage, and paper notes were to be no less than $1 denominations to prevent the banks from printing notes they did not have gold and silver for.
Obviously there was no way to track notes back in the day, so by making bank notes in larger denominations they were redeemed more often for coinage, hence it served as a protective measure from banks from printing more currency then they had gold and silver to back. Yes $1 and $5 was a lot of money back then.
Anyways this has everything to do with beating Tether. Banks want to be the processor for micropayments using stable coin, they surely are not going to sit back and watch Bitfinex and Tether move in on their territory. If you need to load up with stable coins to pay for your autonomous car, or other automated micro payments the banks will make money on the deposit or float. They will also make money on processing the micro payments, and in a world of 5G and the IoT, this could be billions a year.
Enough of the stable coins, and the Sardine Suckers that spooked many off their inventory and onto the charts.
There has been much talk of a H&S pattern forming so lets address the issues with this pattern that has not even formed yet.
Many are pointing to a "possible" formation and ignoring all the other information on the charts. We have a defined series of higher highs and higher lows as labeled in green. We also have an interim higher low similar to the one in mid April in purple. The other note about this pattern is the strength of the right shoulder. H&S patterns have a higher probability of completing IF the right shoulder is the weakest. I do not see this here, the right shoulder looks quite strong.
Really it is not the pattern that is important, it is the order flow that we are looking for. We are not seeing weakness in order flow to the buy side we are actually seeing strength. Most importantly many are assuming the right shoulder will from, it hasn't. Even if it does, these are often areas where we see fake-outs. If we do pullback, the two areas where fake-outs are likely is 5150 and 4875.
Lets take a look at another H&S pattern that formed at an ATH.
Wow the perfect H&S pattern. Signs of buyer exhaustion with the right shoulder much weaker than the left. Strong move toward the neckline, exactly what we want to see for a market short.
Well it looked good, but ended up printing a bullish trend line and continued to take out the previous high. Notice at the actual top there was no H&S pattern. The market simply started taking out lows. Again this is all about order flow, not some random pattern that one can use crayons to connect the dots with. Thinking patterns are the tell all story is like judging a book by its cover. Also for those thinking they are simply going to buy the dip and sell the high, look what happened to the Q's. There was no dip. Now this is a little different as Bitcoin is not near a high, but to think you are going to buy, sell, rewash is naive. I remember doing that myself with both Amazon and NVDA. Well yeah I missed the big move.
Lets look at some other evidence.
Short interest continues to pile into an already overly crowded short trade, yet price has simply continued to move higher. I have no idea what shorts are thinking here, as the structure is still bullish and the market is simply absorbing the short orders. This is really setting up for a short squeeze. These mullets are simply the main course for the whales. You get stopped out here, don't bitch about the manipulators. It is like passing 20 "danger broken bridge ahead" signs and blaming someone else because you drove your car into the river.
Summary:
Within days of the Bitfinex news, both E-trade and Ameritrade quietly announced their platforms. You really think the "manipulators" are selling ahead of Bitcoin trading on a real exchange or platform that reaches 10's of millions of traders?
Again we do not discount that we can pullback here. I am not a fortune teller and only the market beholds the future. All we can do is manage risk, and there are numerous ways to benefit from either direction. Like I mentioned over a week ago, "What If That Guy Is Wrong". I was implying do you have a plan or strategy where the direction of the market does not matter, or are you just listening to a bunch of sardines.
That limit order sitting at 4500 it is likely collecting dust and will continue to do so. That limit order at 3500, it will probably have cob webs covering it a year from now, because that is a slim chance to none at this point. Can it happen? Sure, but the probability is becoming less and less each day we grind higher.
In short all the blah blah blah about Bitfinex simply provided a buying opportunity if you had the balls to buy. Monday afternoon I mentioned openly on the air, that I was a buyer of Bitcoin here, and I did just that. Anywhere under the 5k level I am a buyer and have added fresh money to my account in order to take advantage in the event we do push lower.
Hey I don't mind having a limit order down around 4500 collecting dust, but I am positioned in the event it does not. I definitely do not want to see a move to 6500 and open up my chest of Bitcoin and see nothing but moth balls.
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