Bitcoin and Crypto Market Updates (July 17th)

Death by consolidation...

Last week we had some epic news for the crypto markets as XRP won the case against the SEC, still riding the high of ETF approvals and news of major investment in crypto miners from institutional players.

All this great news and we had another ‘’BULLISHHHH!!’’ moment only for the price to reverse and give up all the gains.

ETH – Taking a look over ETH 3Day first – We still haven’t got over the key range high level at 2k, last week's candle rejected off of it. I remain sceptical about ETH until we overcome this level and currently targeting 1450 if this trendline is broken.

Just looking at the ETH hourly chart you can see here we have fallen out of the bearish wedge. Near term target is around 1850.

BTC – A bit more difficult to draw a solid conclusion – while we remain in this consolidation range + in an uptrend I have to lean bullish UNTIL the structure is broken. Pretty clean range… don’t get chopped up and only look to trade the breakout/breakdown with a confirmation.

Finishing up here and looking at legacy we have a big two weeks on our hands, this week we have the below ERs from some big players and this should influence markets greatly.

I have SPX / ES at the key 78 fib retracement levels and IWM at the final ‘’E Leg’’ before a move down so RR-wise it doesn’t pay to be bullish legacy here IMO. Better to wait for the dust to settle over the next two weeks and see what earnings bring.

Judge Rules XRP Not a Security in SEC Case Against Ripple

In a significant victory for Ripple Labs, a federal judge ruled that XRP, the company's cryptocurrency, is not a security. However, the judge deemed XRP a security when sold to institutional investors was deemed a security in these instances due to meeting the conditions of the Howey Test… ok so not that confusing. Following the ruling, XRP's price surged over 70%, pumping from $0.47 to $0.83 in a matter of hours. The decision was met with jubilation in the crypto community. This decision can potentially shape the future regulatory landscape for cryptocurrencies and poses questions for the recently attacked cryptocurrencies like ADA and SOL. We have seen the likes of Coinbase, Kraken and others relist XRP on their exchanges already.

Altcoins Pumping after XRP Decision

Following the ruling on the XRP case, we saw many altcoins pump hard in the days that followed. XRP jumped around 70%, SOL saw a 20%+ increase and other tokens such as AVAX did 10%+ in gains over the same period. The overall market capitalization of cryptocurrencies rose by 2.4% in 24 hours. The ruling emphasised that institutional sales constituted the offer and sale of investment contracts, and the majority of XRP purchasers did not invest in Ripple. The decision was hailed as a significant win for XRP and positive for altcoins overall. Many are hailing this as the start of the bull run, which may be a little early to suggest but undoubtedly this was bullish for the crypto space overall.

Polkadot to abandon parachain auction system

Polkadot founder Gavin Wood proposes a major revamp of how the Polkadot network operates, suggesting a new system known as Polkadot 2.0. The current system of auctioning parachain slots faces challenges, causing project volatility and barriers. The proposed changes include shifting to a marketplace for core time allocation and representing it through fractionalized NFTs. The goal is to enhance agility, and make app deployment seamless across chains… whether the new system will achieve that remains to be seen. Although much of the Polkadot community is excited about the proposed changes, it is undeniable that the blockchain has been stagnating for some time behind competitors. Let's see if this can make a difference in building the ecosystem

Asset Manager Vanguard reportedly owns $560M in Bitcoin mining stocks

Vanguard Group has around $7.7 Trillion in assets under management and reportedly now has a huge position in Bitcoin mining stocks. Vanguard Group has significantly increased its investment in Bitcoin mining companies, owning over half a billion dollars worth of Riot Blockchain and Marathon Digital shares. Vanguard raised its stake in Marathon Digital by 60%, now holding 17.5 million shares valued at $280.5 million. Additionally, it increased its investment in Riot Blockchain by nearly 18%, with holdings of 17.9 million shares worth over $281 million. These moves bring Vanguard's total investment in Bitcoin mining companies to $560 million. This demonstrates growing institutional interest in the cryptocurrency industry, particularly in Bitcoin. This has to be bullish overall for Bitcoin and crypto, right?

Trendlines in Trading

Welcome to the world of trendlines, a powerful tool in technical analysis that can greatly enhance your trading insights. By understanding what trendlines are and how to use them effectively, you can gain a valuable edge in identifying market trends, potential reversal points, and key areas of support and resistance. In this comprehensive guide, we will dive into the definition of trendlines, explore their applications, discuss their limitations, and equip you with the knowledge to incorporate trendlines into your trading strategy successfully.

What is a trendline?

Trendlines are visual representations of trends in price movements. They are drawn on charts by connecting a series of higher lows in an uptrend or lower highs in a downtrend. Trendlines provide a clear depiction of the overall direction of the market, helping you identify bullish or bearish trends. They also act as dynamic levels of support and resistance, guiding your trading decisions.

Using Trendlines to Enhance Your Analysis:

When it comes to incorporating trendlines into your analysis, here are some key steps to follow:

• Identifying Trend Direction:

Drawing trendlines allows you to identify the prevailing trend in the market. By connecting higher lows in an uptrend or lower highs in a downtrend, you can visualize the trend's slope and direction.

• Spotting Potential Support and Resistance Levels:

Trendlines serve as dynamic support and resistance levels. In an uptrend, the upward trendline acts as a support level, while in a downtrend, the downward trendline acts as resistance. Monitoring price reactions near these trendlines can provide valuable insights into potential buying or selling opportunities.

• Validating Breakouts and Reversals:

Trendline breakouts can signal potential trend reversals or continuations. A decisive break above or below a trendline may indicate a significant shift in market sentiment. By combining trendline analysis with other technical indicators, you can validate breakouts and make well-informed trading decisions.

I like to think of trendlines as rough diagonal support and resistance zones as we saw in the previous NL lesson (check it here), but I’m aware of some limitations that every trendline has and in my opinion, you should be aware of it as well.

Cons of Using Trendlines:

• Subjectivity and Interpretation Variations:

Trendlines can be subjective, and different traders may draw them differently. This variability in interpretation can lead to inconsistencies in trendline placement and potential conflicts in signals.

• Lack of Precision and False Breakouts:

Trendlines are not precise indicators, and prices may not always adhere strictly to them. False breakouts, where prices briefly breach a trendline and then reverse, can occur, leading to erroneous trading signals and potential losses.

• Biased Trendlines and Confirmation Bias:

Traders may sometimes be prone to drawing trendlines that fit their pre-existing biases or desired outcomes. This confirmation bias can lead to the forced fitting of trendlines to match personal expectations, potentially distorting the analysis and compromising the effectiveness of trendline-based strategies.

While it is true that trendlines can be subjective to some extent, they are still widely used and valued by traders for their potential insights into market trends. It is essential for you to understand that trendlines should not be viewed as absolute guarantees or precise predictors of price movements. Instead, they serve as visual aids to help traders identify potential areas of support and resistance and assess the overall direction of a trend.

Remember that most trading patterns are composed of trendlines and the strategy behind them is based on price-breaking that trendline or retesting it. Due to the subjectivity inherent to trendlines, you should add some extra confirmation to your strategy to strengthen the results; like using other technical indicators and maintaining objectivity in your approach, just backtest it before going full degen with size!

Now, it's time to put your knowledge into action. Start by incorporating trendlines into your chart analysis. Practice drawing trendlines, identifying key swing points, and observing how price interacts with these lines. As you gain experience, you'll develop a keen eye for trends, potential entry and exit points, and trading opportunities that align with your strategy.

Just like any skill, mastering trendline analysis requires dedication, practice, and continuous learning. Stay curious, explore different trading scenarios, and refine your approach over time. Embrace the dynamic nature of the market and adapt your trendline analysis accordingly.

Remember the words of Leonardo da Vinci: "Learning never exhausts the mind." So, let your journey with trendlines be an exciting adventure filled with growth and discovery. With each trendline you draw, you bring yourself closer to unlocking the potential of the market and achieving your trading goals.

Best of luck on your trendline journey, and may your trading endeavours be guided by precision, discipline, and success! See you next week!