Bloodgood's Notes #121
Sam goes away for 25 years, Kucoin charged with violating ALM laws, Bitcoin fights the $70k level and more
Fundamental Overview
Last week, Sam Bankman-Fried was sentenced to 25 years in prison, finally putting an end to the long legal process and giving some closure to the people whose money he stole. There’s been a lot of speculation on how long he will actually serve, with some saying that his sentence might even be reduced by half, but that remains to be seen. In any case, many are (rightfully) outraged that the other set of charges related to campaign financing was dropped, as well as the fact that his sentence—even if served in full—is still tiny compared to that of Ross Ulbricht, who was sentenced to life in 2015 for creating Silk Road.
Speaking of lawsuits and exchanges, KuCoin was also charged with violating anti-money laundering laws and unlawfully allowing U.S. residents to use its services. While this caused a lot of panic, overall the situation isn’t that different from that of Binance, which managed to get through the ordeal in a way that didn’t substantially harm its users—or the industry, for that matter.
Meanwhile in TradFi, things are largely moving on as usual. Stocks are still cruising along just fine, although the indices seem to be losing some momentum. Overall though, there’s not too much volatility either on the charts or in the monetary policy expectations. Crypto is a different story, as BTC just had its highest monthly close ever, with the March candle closing 10k higher than the previous highest close in October 2021.
Bitcoin
Another fakeout for Bitcoin on the horizon?
Bulls were disappointed after a bullish end to the previous week. BTC dropped almost 10% in the first two days of this week, but more importantly, a higher low was printed on the daily timeframe. However, there was also a lower high printed which suggests that a symmetrical triangle has formed, so that a break of either of these two trendlines will show us where we’re going, although it’s a good idea to wait for this weekly candle to close before jumping to any conclusions.
The Bitcoin halving is in roughly 16 days, so a lot of volatility is expected, and technical levels might not matter here. We discussed last week that the $68k level is a must-hold for continuation, so I expect bulls to fight for it.
SPX, Gold, and DXY
Stocks move further in the staircase pattern.
Although the trendline was tested, stocks bounced and went right back to the highs.
Gold takes off and a new all time high is formed at 2304!
Strong bullish momentum continues after a few weeks of consolidation at the previous highs.
DXY reached a high slightly above 105 and dropped back down towards the support level at 103.5.
The macro formation still looks bullish as there was a higher low formed, so I will keep my eyes on it for now in case it moves and impacts risk-on markets.
Ethereum
Ethereum fights to stay above the $3300 level.
While Bitcoin will have its halving in just over two weeks, it looks like Ethereum decided to front run it by halving its trading volume last week, right when a bounce was supposed to happen, but the lack of trading activity didn't help when BTC started dropping. Looking at the daily timeframe you can see small candle bodies, which basically indicates that ETH will most likely just follow Bitcoin’s lead.
For now though, it seems that a bottom was formed on the daily timeframe and with it, a higher low similarly to BTC. Meanwhile, ETH/BTC is showing no sign of strength and continuing to drop further down.
Good luck out there.
Blood’s content recap
Thoughts on recent dip
“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 “
Concluding notes
As we all know, dips can be incredible opportunities to get the good entries that you’ve been waiting for, but only if you’re not too scared to execute, which is why now is a good time to think about the importance of conviction. An excellent example of that mindset is the recent annual investor letter by Multicoin Capital, where the firm revealed that their crypto hedge fund has returned over 9,000% since its inception in 2017, while the return for 2023 alone was over 500%. That sounds great, of course, but we can only really appreciate what it means when we consider their drawdown in 2022, which was 91.4%.
Few things better encapsulate the reality of crypto than those few simple PnL figures. How many people would have what it takes to survive a 90%+ drawdown? Not many, but those that can are also the only ones that can make close to 100x in a couple of cycles.