Bitcoin and Crypto Market Updates (Nov 20th)

I hope you had a great weekend. The market continued consolidating with a nice shakeout recovery just Yesterday. Bitcoin got closer to the main resistance on the $38,000 once again liquidating some greedy late shorts.

But let's focus on the Mid Caps Index which is looking more interesting. As you know after testing the $12 resistance the last week, got rejected and went for a dive for few days. But Yesterdays bounce over the $10 support gave an extra boost and is now pushing over the local downtrend resistance looking for the breakout.

New reversal attempt on the making. The $12 range remains the level to beat:

📍 Coins Indexed: ATOM, LINK, NEAR, ALGO, HBAR, ICP, EOS, AAVE, FLOW and EGLD

The DeFi Index in the meantime looking really really strong, continues consolidating straight over the main resistance. Loading a really nice volume range. And most importantly, respecting the main uptrend support at all times. Looking primed.

📍 Coins Indexed: AVAX, UNI, LINK, XTZ, FTM and CRV

The AI Index triggering the bullish reversal we mentioned last week, after few weeks of consolidation is now pushing for it. Great breakout backed by really nice levels of volume accumulation. In my opinion just the beginning. $2,4 and $3,2 are the next targets, but it will be one of the primed industries for the upcoming bull run:

Microsoft's AI Power Play: Sam Altman and Greg Brockman Join to Lead New Advanced AI Research Team

In a rapid turnaround from his dismissal at OpenAI, Sam Altman, alongside Greg Brockman and their teams, is set to spearhead a new advanced AI research initiative at Microsoft. Microsoft Satya Nadella announced the high-profile hirings on X, emphasizing the company's commitment to cutting-edge AI development. This strategic move follows Altman's abrupt departure from OpenAI on November 17, citing concerns about communication transparency with the board.

Nadella expressed his enthusiasm about the collaboration, stating, "I am extremely excited to share the news that Sam Altman and Greg Brockman, together with colleagues, will be joining Microsoft to lead a new advanced AI research team." The move not only reaffirms Microsoft's dedication to the AI frontier but also underlines its ongoing partnership with OpenAI, despite the recent leadership changes.

In response to the announcement, Altman echoed on X, "the mission continues," indicating a seamless transition into Microsoft's AI endeavors. Meanwhile, OpenAI, in the wake of Altman's departure, appointed Mira Murati as interim CEO, signaling a period of organizational recalibration.

This unexpected turn of events comes just days after Altman's dismissal from OpenAI, which cited a lack of consistent transparency in communication as the primary reason. The fallout from Altman's exit has seen other high-profile resignations within OpenAI, including board president Greg Brockman. Microsoft's strategic move to absorb Altman and Brockman into its AI research team adds a new chapter to the evolving landscape of AI development, with potential implications for industry dynamics and technological advancements.

Bitcoin-Friendly Javier Milei Emerges Victorious in Argentina's Presidential Election, Paving the Way for Crypto Evolution

In a seismic political shift, Javier Milei has secured victory in Argentina's presidential election, ushering in a potentially transformative era for the nation's economic policies and its stance on cryptocurrency. Milei's opponent, Sergio Massa, conceded defeat as 87% of the votes were counted, marking a turning point in Argentine politics. Milei, known for his Bitcoin-friendly views, garnered 56% of the votes, positioning himself as the next leader set to take office on December 10.

Milei's pro-Bitcoin stance has resonated amid Argentina's economic turmoil, where hyperinflation has wreaked havoc on the Argentine Peso, registering a staggering 143% increase last Monday. While Milei hasn't explicitly advocated for Bitcoin as legal tender, his plans to replace the Argentine Peso with the US Dollar suggest a potential shift toward more crypto-friendly policies.

The victory has ignited hope among Bitcoin enthusiasts, prompting a nearly 3% surge in Bitcoin's price to $37,350 within 24 hours of Massa's concession. Milei's criticism of central banking aligns with his call to eliminate Argentina's central bank, emphasizing the need for a revamped economic strategy.

As Argentina grapples with economic challenges, Milei's triumph introduces a crypto-sympathetic leader who could pave the way for policy reforms akin to El Salvador's adoption of Bitcoin. Milei's victory opens a window of possibilities for the crypto community, hinting at potential regulatory changes and greater acceptance of cryptocurrencies in a nation that faces both economic and inflationary crises.

After FTX's Collapse, The Bahamas Faces an Economic and Regulatory Reckoning

The fallout from FTX's rapid and dramatic collapse is still reverberating through The Bahamas, leaving the island nation grappling with both economic and regulatory challenges. FTX, once hailed as a potential economic boon, set up shop in The Bahamas in 2021, bringing with it a wave of enthusiasm for cryptocurrency and blockchain technology.

As the aftermath of FTX's downfall unfolded, The Bahamas found itself entangled in the aftermath of what has been labeled "one of the biggest financial frauds in American history." The impact on the local economy and reputation was significant, and the nation is still navigating the consequences.

The Bahamas, heavily dependent on tourism and facing economic challenges exacerbated by Hurricane Dorian and the COVID-19 pandemic, initially saw hope in FTX's presence. However, the collapse of the cryptocurrency exchange sent shockwaves through the local economy, raising questions about oversight, government involvement, and the perceived red-carpet treatment FTX received.

While some locals invested in cryptocurrency with enthusiasm, others expressed skepticism and a lack of knowledge about the crypto space. The abrupt closure of FTX operations and subsequent regulatory actions further fueled uncertainty and distrust.

The Bahamian government, seemingly trying to distance itself from the FTX scandal, is now facing a crisis of confidence. The aftermath has prompted regulatory introspection, with proposed amendments to the Digital Assets and Registered Exchanges Act (DARE Act) aiming to enhance investor protection and clarify stablecoin regulations.

As The Bahamas navigates its economic and regulatory challenges, there is a palpable sense of caution and the realization that the fallout from FTX's collapse will have lasting implications. The nation, once hopeful about becoming a hub for financial services and digital assets, must now rebuild its credibility in the aftermath of a crypto experiment gone awry.

Leverage - Double-edged knife

Today, let's delve into a controversial aspect of trading that can significantly amplify both gains and losses - leverage. Whether you're a seasoned trader or just getting started, understanding the pros and cons of leverage is crucial.

Pros of Leverage

1. Magnified Profits:

Leverage allows you to control a larger position with a smaller amount of capital. When the market moves in your favor, the gains are magnified, potentially leading to substantial profits.

2. Portfolio Diversification:

By using leverage, you can diversify your portfolio more efficiently. Instead of allocating a significant amount of capital to one asset, you can spread it across various positions.

3. Shorting Opportunities:

Leverage enables you to take short positions, profiting from a decline in asset prices. This is particularly useful in bear markets or when you anticipate a specific asset to decrease in value.

4. Asset Security:

Utilizing leverage allows you to trade full size while keeping the majority of your funds safe in self-custodian wallets. This aligns with the principle of "not your key, not your coins," ensuring the security of the bulk of your holdings. This is my favorite feature!

Cons of Leverage

1. Increased Risk of Losses:

While leverage amplifies gains, it does the same for losses. If the market moves against you, the potential for significant financial losses is heightened. It's crucial to carefully manage risk.

2. Margin Calls:

Using leverage involves borrowing funds. If your losses approach the borrowed amount, you might face a margin call, requiring you to deposit additional funds to maintain your position. Make sure to have the liquidation price of your position below your stop loss price!

3. Amplified Emotional Stress:

Trading with leverage can be emotionally taxing. The magnification of both gains and losses can lead to impulsive decision-making. It's vital to keep emotions in check and stick to a well-defined strategy.

4. Micro-Managing Temptation:

Leverage trading, especially futures, often displays unrealized profits and losses (PNL). This can tempt traders to overlook your positions, resulting in deviating from the original trading plan.

5. Higher Maintenance Fees:

Compared to spot trading, maintaining open positions in leverage trading usually involves higher fees. Traders need to consider these costs, which can impact overall profitability.

How to use Leverage Safely?

Many will say that high leverage is not recommended to inexperienced traders, tell you things like “use 5-10x max”, “using 100x lev. is just for degens”, etc. But I strongly disagree about that, whoever is behind such statements should get a better understanding of risk management and proper position sizing.

Let’s see an example: Any trading setup (leveraged or not) should always have entry, target and invalidation prices, and the size of the position should be always calculated according to the risk taken that is dependent on the networth value. 

If you are not familiar with any of those terms, I recommend you to stop any trading (even spot) until you have that figured out.
If that’s your case, no worries, come to our DISCORD server (it’s free) and ask us about Risk Management or Leverage use.

With that being said, this would be the practices to safely use leverage while trading:

1. Risk Management:

Establish clear risk parameters before using leverage. Determine the percentage of your capital you're willing to risk on a single trade and stick to it.

2. Education:

Educate yourself thoroughly on the assets you're trading and the intricacies of leverage. Understand the market conditions and factors that can impact your positions. Volatility measurement is very useful.

3. Mindset:

If you're new to leveraging, you should resist the temptation to go all-in after a winning streak. Don’t forget that the market can humble you in a single candle, be always prepared for the worst. Controlling your ego and increasing both your patience and discipline is crucial for handling leverage the right way.

Remember, leverage is a powerful tool that demands respect. While it can enhance your trading strategy, it requires careful navigation. Stay informed, manage risk diligently, and let your strategy be your guide through the exciting world of leveraged trading.

Happy trading, and see you next week with more insights!