Bloodgood's Notes #119

Bitcoin and Ethereum both reject major levels, FOMC meeting on Wednesday, Craig Wright is not Satoshi and more

Mar 19, 2024

Fundamental Overview

As mentioned last time, bull markets tend to give a few deeper corrections—deep enough to cleanse some of the overleveraged euphoria, rather than just 5% wicks that get bought up immediately—and we’re seeing one of those now. Not that this should be too surprising: since the previous newsletter, various memecoin presales on Solana have raised more than $120m, which is a decent signal of a frothy market if there ever was one. We’ve got a month to go until the Bitcoin halving, so a pre-halving dip would be far from unexpected given how BTC performed recently.

Meanwhile, all eyes are on the FOMC meeting tomorrow, especially as the market seems to be reducing its expectations for rate cuts this year. While the consensus for the current Fed rate decision is essentially unanimous—namely that rates will remain unchanged—any comments regarding the future course of monetary policy will send shockwaves through the markets. This of course means that taking leveraged positions around the time of the press conference would be even riskier than usual.

Bitcoin

Bitcoin rejected at the 2021 All-Time-High and prints an 8% red candle.

Maybe this was predictable since memecoins were taking off and many started positioning heavily in alts. This euphoria didn’t last long, alts started bleeding as soon as Bitcoin closed below the 2021 ATH.

However, I remain optimistic in spite of the dip. This was the first test of the ATH which is an obvious level to take some profits, especially if you were buying in 2022 and early 2023. Moreover, something similar happened in November of 2020, when Bitcoin tested the 2017 ATH for the first time. First a rejection, a few weeks later the breakout.

So nothing is lost yet, however the $60k level must hold if we want to see BTC push into new highs any time soon.

SPX, Gold, and DXY

Stocks are not that bothered by the recent crypto correction.

Even though CPI data came in a bit higher, as mentioned previously, stocks managed to keep up the pace and as long as the trendline is intact, I will not worry too much.

Gold fights to stay above the breakout area.

A strong breakout was expected to lead gold further into price discovery, but that didn’t turn out to be the case. At the time of writing it’s trading barely above the breakout level, so keep your eyes on the level if you are trading it.

You know how it goes, crypto down, DXY up.

After printing a higher low, it managed to once again break above the 103.5 level, looking to go for a high at 105. Further continuation here would negatively impact crypto in the near future, as well as potentially other risk-on assets.

Ethereum

Ethereum rejected at its major $4000 level, following Bitcoin’s ATH rejection.

As expected, Ethereum crashed harder than Bitcoin, as we can see on the ETH/BTC chart. On the USD pair we can see that it dropped straight to support (previous breakout area), which is a must hold zone if we want to see continuation.

I think the drop should slow down now, and by the end of the week we should have a clearer picture of where we go next.

For now, stay patient and don’t try to knife catch, as we could go lower if these levels don’t hold.

Blood’s content recap

Thoughts on recent correction

“A correction is a bliss.

Gives you time to evaluate your positions & to find best entries.

When market goes Up there's too much adrenaline and hype for a non professional trader. And that's where mistakes happens. Fomo buys & panic sells.

Just relax and prepare for next leg up? “

Free Alpha

“Free trading Alpha tip:

1. Open chart, select 15 min

2. Turn on fib 0.618 and 0.66

3. Pull fib down to up - long touches on golden pocket

4. Pull fib up to down - short touches on golden pocket

5. Use conformation as rsi divergence

Try on a randoom chart, then trade it.”

Concluding notes

In a decision that was hardly surprising in terms of its content—although it was even more strongly worded than most expected—a UK court ruled last week that Craig Wright is not Satoshi Nakamoto. Some readers, particularly those relatively new to the space, might be hearing about Craig Wright for the first time, but long story short, he’s been claiming to be Satoshi for almost a decade now, though there was never any concrete proof for that claim. The reason he attracted so much attention was that he had a habit of getting into long legal battles, which is why most people in the space are happy to see that episode of Bitcoin’s history is finally over.

Bloodgood's Notes