Cryptonomics — your weekly crypto & blockchain readings 📰
28th May — 4th June
This is Rizvi, entrepreneur and crypto enthusiast based in Zurich, Switzerland. Every week, I’ll share with you some of my weekly readings and thoughts around crypto and blockchain topics, from market insights to trading activities. Feedback is more than welcome!
📈 What happened in the markets this week
Bitcoin price drops after slight recovery induced by another Musk tweet. Bitcoin dipped below $36K and ether fell under $2.6K on Tesla CEO’s bearish tweets, wiping out some leveraged players in the market. He tweeted a perplexing meme suggesting some sort of breakup with the cryptocurrency. 📰 Coindesk
Jack Dorsey says Square is considering developing a Bitcoin Hardware Wallet. Twitter CEO Jack Dorsey tweeted Friday that his other company, the payments firm Square, is considering making a hardware wallet for Bitcoin. He added that bitcoin is for everyone, and it’s important for his team to build an inclusive product that brings a non-custodial solution to the global market. 📰 CoinDesk
Alibaba, Google Among More Than 300 Companies Seeking Singapore Crypto Licenses. Companies apply under the Payment Services Act, a comprehensive regulatory framework for companies handling activities relating to digital assets, including payments and trading. Among them are Alibaba’s various entities and Google’s parent company, Alphabet. 📰 Coindesk
💡 Deep dive into the markets
Nasty triangle pattern evolving. For approximately 20 days we are forming a beautiful symmetrical triangle shape on the BTCUSD chart as I will show you below. To start the deep dive, let’s talk about what a triangle shape is. Triangle shapes are patterns that are used by traders to identify an opportunity for a trade. Triangle shape is one pattern next to many others. Technical analysis is a method to use historical price data to predict the future. The opposite of technical analysis would be to look at the fundamentals. Fundamental analysis formerly entails understanding the financial statements of a company, looking at the overall market where the company operates, investigating the management team and many other factors. So let’s go back to the triangle shape.
As you can see on the illustration below a triangle shape is formed when the price sees continues higher lows and lower highs. The closer it gets to the end of the shape, the more momentum the price sees until it breaks out. A characteristic is also that symmetrical triangle shapes can see a strong break out in both directions as opposed to asymmetrical triangles (more to that another time).
Now, looking at the current 1-day BTCUSD chart, we see this shape forming as I am writing.
We had seen a brief break out of Bitcoin out of the triangle but Elon’s negative tweet towards Bitcoin put the price back into the triangle. Things are getting quite intense now. We should see a breakout in the next 4–5 days latest and as mentioned the breakout could be in either direction. But the direction it takes will be very decisive in how the crypto market will continue to evolve in the upcoming weeks i.e. entering a longer-period bear market versus finding some stability above the critical 200-day moving average (pink line).
Also there is another very critical scenario evolving. You see above the 50-day moving average line (yellow) getting closer to the pink 200-day moving average. We would be in a very bearish position when the yellow lines cross below the pink line. Whether that happens is very depending on the break-out scenario playing out.
At the moment, putting money into lower cap altcoins would be with excessive risk. My strategy at the moment is buying the BTC and ETH dips whenever they occur. Once I see a stronger rally of BTC upwards and staying confidently above the 200-day moving average, I will consider taking positions in Altcoins again.
Also, this week’s post deserves some words of mine to Elon Musk’s tweets.
I have no clue whether he intentionally wanted to stop the recovery of Bitcoin or he just wanted to let the world know his view on Bitcoin once again. But one thing is clear, it’s annoying and it’s annoying to see how a lot of retail traders react to Elon and give him the attention on each of his crypto-related posts. I also feel that the market keeps reacting less and less to his tweets and I am sure that it will become marginal very soon. The only thing that remains is just to stay the course, let him do what he wants to do until it dies out in oblivion. I can tell you that I am just scooping up each BTC and ETH dip which is generated by Elon. Yes, it can be frustrating to see that one person can influence the market so much, but as mentioned, it’s just a matter of time. The worst you can do at the moment is starting to panic trade on Elon’s tweets!
🎯 My top crypto picks for June
1️⃣ Ethereum — ETH
Ethereum has a bright future ahead especially with all the upcoming releases such as EIP 1559 expected in July. It’s a no-brainer that Ethereum has always been and still will be a very strong asset to hold in your portfolio.
2️⃣ Polygon (Matic) — MATIC
Polygon (formerly Matic Network) proofed itself to be a successful layer-2 scaling solution for Ethereum. At the moment it sits at around $1.60 and in my opinion a strong buy as long as below $2.00
3️⃣ Uniswap — UNI
Uniswap just proves its strength by demonstrating how stable it ran during the huge market movements the past two days. While many CEX abandoned ERC20 transactions due to overload Uniswap processed billions of transactions with ease. A great hold in your portfolio.