Bitcoin and Crypto Market Updates (Aug 14th)

Historic levels of boredom

Bitcoin and crypto have generally been the most boring place to be the last few weeks as price remains flat and on-chain data remains relatively unchanged.

Looking back at previous cycles we seem to be in this ‘’Post bear market recovery’’ phase where price can trade sideways for a number of months before grinding up higher.

I’ve highlighted already the strength of a couple of on-chain Bitcoin metrics, the most notable being new address momentum. This continues to show signs of strength and the only key thing really missing is the evidence of big money flows. Due to this + where we are in the cycle, I do expect we could see moves back down to 25k but equally, we could see a push to the yearly highs.

Not very helpful I know but my point is we're in ‘’no man's land’’ with all the data pointing towards a large consolidation range for a few more months at least.

Looking at Legacy markets – We’ve been expecting a pullback and last week we had a continuation of that, particularly in the overheated tech sector.

Although the move has been painful for late bulls the pullback thus far is very much garden variety… with the QQQ index only down around 5.5%

My major stock names (large caps) had a rough week last week but did manage to hold above this key support.

So for legacy, I would summarise by saying all we’ve seen so far is a cool off in overbought conditions… key levels continue to hold on the major names BUT that could change this week / next. My main focus continues to be the ‘’Magnificent 7’’ and the USD for signs of a deeper, more meaningful correction.

Paypal launches own stablecoin PYUSD

PayPal has introduced its own stablecoin, PayPalUSD (PYUSD), which is fully backed by U.S. dollar deposits. PYUSD can be easily bought or sold on PayPal's app or website at a fixed rate of $1.00 per PYUSD. Paypal’s new stablecoin allows for seamless transfer between PayPal and external wallets in a bid to compete with major stablecoins like USDT and USDC. PYUSD is built on Ethereum and issued by the Paxos Trust Company. It will initially be available to customers in the US with PayPal Balance accounts, as well as on the Venmo app. PayPal services over 450 million customers and could be a significant onramp for news users into crypto and web3 in the future!

SEI Blockchain launches… and possible airdrop

Binance has announced that it will be listing the native token of SEI Network on August 15. With SEI positioned as the first sector-specific Layer 1 blockchain specializing in trading, this listing on Binance marks an exciting milestone for the crypto world. Early indications suggest that SEI's value could start at 26 cents following its debut although this is entirely speculative. SEI also recently announced their tokenomics, indicating an airdrop for early participants, although criteria are yet to be announced. Speculation around early testers for the Atlantic-1 and Atlantic-2 testnets are speculated to be airdropped.

Aptos to release Microsoft-powered AI chatbot

Microsoft is making moves in the blockchain space! Aptos Labs and Microsoft have joined forces to develop an AI chatbot that aims to assist developers in the Aptos blockchain ecosystem. This collaboration also explores asset tokenization, payments, and the integration of Web3 within financial services enterprises. Additionally, Microsoft has announced three collaborations this summer focused on blockchain technology, partnering with Axelar, Ankr, and Matter Labs. These partnerships emphasize how web3 adoption and integration are upon us.

Judge revokes SBF bail

Disgraced former CEO of FTX, Sam Bankman-Fried's bail has been revoked, and he will be held in custody until his trial in October. This decision was made after the Department of Justice successfully argued that Bankman-Fried had attempted to tamper with witnesses, violating his bail conditions. Additionally, other new charges include campaign finance charges, alleging the use of customer deposits for a political influence campaign and concealing the source of fraudulent proceeds through political straw donations. SBF is back in cuffs so will he actually get some jail time? Let's see…

Donald Trump owns $500k of crypto

Former U.S. President Donald Trump has a disclosed Ethereum wallet containing up to $500,000. This revelation comes from a recent filing with the U.S. Office of Government Ethics. Despite his past scepticism towards cryptocurrencies, Trump launched his own NFT collection, showcasing images of himself back in 2022. The initial release quickly sold out, and a subsequent series also enjoyed success, adding between $500,000 and $1 million to Trump's wallet. As he gears up for a potential 2024 presidential run, Trump's unexpected crypto involvement adds an interesting layer to his next campaign and potential outlook towards crypto going forward

Inner Circle Trader Methodology

Nowadays the ICT methodology is well known in the trading spectrum, especially in forex but the concepts already have reached all kinds of tradable assets. Short for Inner Circle Trader also known as the Smart Money Concepts (SMC), this style of trading is purely based on price action and incorporates little to no use of trend following or momentum indicators. If you have been involved for a while in the trading journey I’m sure you might have encountered a few of his terms and abbreviations already, let’s have a look at some of the foundations of this particular method:

Key Concepts

The ICT trading methodology resides in the base of a few key concepts that every trader must know in order to take advantage of trading in this style. All of them are based on smart money (market makers for example) constantly manipulating prices to run stops and liquidation levels of retail traders to engineer liquidity. This brings us up to the first key concept:

• Liquidity

Liquidity serves as the foundational cornerstone within the ICT trading methodology, arguably holding the utmost significance. This pivotal concept delineates into two distinct facets: Buy-side and Sell-side liquidity. Buy-side liquidity delineates levels on the chart where short sellers strategically position their stops, while Sell-side liquidity functions conversely. In essence, it designates chart levels where traders with a long-biased inclination decide to place their stops. In both scenarios, these levels predominantly emerge at or in proximity to market extremes, primarily because the peaks and troughs of trading ranges are often regarded as zones where traders’ positions might be disproven. Subsequently, traders may feel compelled to exit such positions.

Seasoned market participants, colloquially known as "smart money," aptly comprehend the underlying dynamics of this concept. They frequently engage in accumulating or distributing their holdings at levels abundant with stop orders. This practice is intrinsically tied to the substantial cluster of stop orders located at pivotal levels, offering these experienced traders the opportunity to capitalize on their trading positions fully. Once the level swarming with stop orders has been effectively breached, price dynamics often take a reverse trajectory, seeking to access liquidity on the opposite end of the spectrum. You might have heard of a long/short squeeze, that’s a liquidity run usually.

• Displacement

Displacement, in succinct terms, signifies a highly impactful price action surge that generates considerable buying or selling momentum. Broadly speaking, displacement manifests as either an individual candle or a cluster of candles, all aligned in a unified direction. These candles usually possess substantial real bodies and notably short wicks, indicating minimal disparity between buyers and sellers.

Frequently, displacement materializes shortly after a liquidity level has been surmounted, frequently triggering the formation of two concurrent phenomena: a Fair Value Gap and a Market Structure Shift. In short, strong sell or buy moves could be known as displacements.

• Market Structure Shift (MSS)

As a familiar notion among traders, the fundamental principles of a trend dictate that during an uptrend, the price charts a trajectory marked by successive higher highs and higher lows. Conversely, in a downtrend, the price exhibits a pattern of decreasing highs and lows. The emergence of a market structure shift becomes apparent when a particular chart level signifies a break in the prevailing trend. When the price is experiencing an uptrend, the market structure shift level corresponds to the point where a lower low materializes. Conversely, in the context of a downtrend, the market structure shift level generally coincides with a juncture where a higher high takes form. In both scenarios, the occurrence of market structure shifts is frequently aligned with the aftermath of a displacement.

Once the price successfully navigates a market structure shift level, astute traders embark on the quest for supplementary indicators that substantiate the actual transformation of the trend. This involves utilizing the market structure shift level as a pivotal reference point for shaping their trading decisions.

• Inducement

The trajectory of price movement rarely adheres to a linear course. In the context of a broader trend, instances of counter-trend fluctuations are commonplace. These counter-trend oscillations materialize as a consequence of delving into lower time frames to seek out liquidity. During these episodes, the price will either experience a rebound or face rejection, subsequently zeroing in on a preceding short-term high or low before persisting in alignment with the overarching trend. The concept of inducement pertains precisely to the strategic identification of these transient high or low points as potential sites for placing stops.

As we are aware, liquidity clusters are where an influx of stops are strategically positioned, and once these stops are effectively triggered, the price can smoothly continue along its previously established trajectory. For traders adept at incorporating chart patterns, the phenomenon of inducement becomes evident through the emergence of bull and bear flags.
You probably know very well a kind of inducement under the term “fakeout”.

• Fair Value Gap (FVG)

After the price reaches a liquidity level and then reverses, often what will come next is Displacement. Within this shift, Fair Value Gaps emerge, characterized as situations where market inefficiencies or imbalances manifest. These discrepancies are depicted on the chart through a three-candle pattern encompassing a central candle of substantial size flanked by adjacent candles whose upper and lower wicks do not intersect.

A considerable number of traders display a keen interest in Fair Value Gaps due to their potential to exert an attracting force on price movements in forthcoming market activity.

• Optimal Trade Entry (OTE)

A self-explanatory name for the term. OTE signify the most favourable junctures to engage in a trade, and their identification is facilitated through the utilization of the Fibonacci retracement tool. Typically, the placement of an optimal trade entry will find its position within the range of 61.8% and 78.6% retracement of an expansion range.

Upon the occurrence of a Market Structure Shift, triggering the emergence of a fresh phase of price movement, the subsequent bounce often presents an occasion to establish a position aligned with the trajectory of this new phase. These instances of Fibonacci retracement levels within this context offer a valuable means of determining where such positions should be initiated.

• Balanced Price Range

A Balanced Price Range ensues from a forceful upward shift promptly succeeded by a vehement downward movement, or conversely, from a robust downward shift immediately succeeded by a vigorous upward thrust. The outcome in both scenarios is essentially akin to a dual Fair Value Gap, which possesses the capacity to draw the price like a magnet before an ongoing movement either upwards or downwards.

On occasion, Balanced Price Ranges might serve as an indicator heralding the initiation of a Market Structure Shift, and quite frequently, the price tends to revisit and then deflect from these zones.

There is a long journey ahead if you want to dive down to the ICT universe, I just hope this short article can serve as an introduction to it and might help you understand some of the analysis and charts that many are sharing in social media nowadays!

If you are curious about this I invite you to join our free discord community and ask around our staff and wonderful members.

Save trades, and see you in the next one!