Methodical Trading - Volume 17 - "In Elon Musk We Trust!"🔥
Bitcoin, Ethereum, DeFi Alts, Stock Mania, Institutions, & Stimulus
This volume of Methodical Trading is free for everyone! Please show us your Support and remember to Subscribe for free via our e-mail list. 2021 is off to an amazing start in the markets so hats off to an absolutely amazing bull run!
Bitcoin finally begins to give signs that it is breaking out of consolidation.
Ethereum continues to tap away at the new ATH it set in January.
Altcoins and more specifically, DeFi Alts have continued their amazing runs as they begin to decouple even more from Bitcoin’s price action.
The Stock market appears to have gone mad with $GME and $AMC pumping hundreds of percent in a short period of time. The actions taken by the exchanges such as Robinhood stir up controversy and are creating a “movement” of investors looking to strike back at Wall Street and the 1%.
Institutional Money appears to continue flowing in during this Bitcoin consolidation period and the evidence is pointing to one huge player so far…
This Volume of Methodical Trading is sponsored by Sifchain, a cryptocurrency exchange protocol built on Cosmos SDK. It is an omni-chain solution for DEXes. It adds more robust crypto economics for trading and security, allowing for more flexible trading capabilities. Sifchain is another part of crypto that is contributing and pushing the DeFi narrative by allowing capabilities such as cross-chain transactions for 20-25 of the biggest blockchains. The CLP is the primary financial primitive which allow liquidity providers to earn income based on the liquidity they supply in pools. I highly recommend giving Sifchain a follow and keeping up to date with them as the bull market continues on throughout 2021!
Talking Points
Bitcoin Beginning To Breakout?
Ethereum Clear Skies Ahead!
DeFi Printing
Robinhood Mania & “The Anomaly”
Institutional Money Flowing
The Biden Package
Bitcoin Beginning To Breakout?
BTC/USD on the Daily has consolidated for most of January. At the moment, price appears to be breaking out of this consolidation and is looking for further upside. The first level to look out for is the “Elon Pump” candle that occurred a few days ago when Elon Musk added #Bitcoin to his Twitter bio along with this Tweet:
Now, zooming into the 4 hour, Elon’s Tweet came in at the Blue arrow, which created an immediate pump. Coincidentally (or not), price also retested the 4 hour 200 EMA (Green) as well at this time. Over the following days, price nearly retraced the entire initial pump. However, price did not close below the initial low created at the time and successfully held the 200 EMA. This price action gave us a higher low, and confirmed a bullish market structure on the 4H timeframe. At the moment, price is breaking above the 200 MA (Black) and is also breaking above the upper diagonal as well. The first initial resistance to pay attention to here is $38,600. This marks the top of the original pump that was immediately faded back down. If price can break above this level, then Bitcoin is looking good to continue towards the $42,000 level and beyond.
In reference to Zhusu’s Tweet, the momentum that would proceed after Bitcoin breaks $42,000 is likely to lead into another parabolic uptrend. This is what we witnessed when Bitcoin broke the previous All Time High at $20,000 as well. In general, Bitcoin breaking previous ATH’s has lead to extremely strong uptrends. Zhusu’s Tweet linked above are the only two levels we are paying attention to at the moment for a reaction. Do remember that these levels are only significant if price is able to break above the $42,000 region first.
Ethereum Clear Skies Ahead
At first glance, ETH/USD looks relatively bullish here on the Daily. The initial thought is that the market generally does not give multiple chances to sell the top of a market cycle, so it seems unlikely that this would be a top. With that being said, ETH/USD has clearly tapped away around the $1,440 region and is now making a fourth attempt to break upwards significantly past the previous All Time High set in January ‘18 at approximately $1,420.
Also, take note of how the 21/26 EMA’s (Brown/Orange) have continued to hold up successfully during this consolidation period. Each tap so far has provided a solid entry into ETH/USD. The upside here is quite significant and price can easily double from here very rapidly similar to Bitcoin’s extreme rally once it broke the previous $20,000 All Time High. Regardless if anyone has been able to enter based off of the trending EMA’s in the chart above, a move above $1,477 should ABSOLUTELY NOT be faded. A breakout above this level and price will likely continue upwards with extremely strong momentum. The first initial level to pay attention to would be around the $2,000 region.
Taking a look at the Weekly chart for ETH/BTC… This looks incredible. Price was able to break the Gray Resistance region and close above it. We then saw price action immediately come back the next week to bullish retest the Gray Resistance and turn it into Support, leaving behind a wick. Now, price is looking primed to begin moving upwards towards 53,000 sats. A solid gain of approximately 30%. IF Bitcoin were to continuing moving sideways, then this would put ETH/USD at around $1,900. However, it is likely that ETH would end up leading the market and drag Bitcoin up with it as well. Overall, ETH looks extremely bullish on both USD and BTC pairs. Although ETH/USD has continued to tap away at the new All Time High set in January, do not be surprised if price were to simply blow past it and continue upwards in another parabolic uptrend.
DeFi Printing
UNI/USDT:
It’s safe to say that DeFi alts have continued to print candles despite Bitcoin’s choppy price action and recent pullback over the past month. $UNI is one of many DeFi alts that have continued its strong uptrend and has extremely strong momentum towards the upside. Taking a look at the 4 hour, price pulled back to the 21 EMA (Brown) a few days ago. This wick marked the absolute bottom of the short pullback before moving higher into yet another All Time High. At the moment, price is pulling back again after a confirmed Bearish Divergence on the 4H RSI. However, it would appear that this divergence is near the end of its’ move because a Hidden Bullish Divergence has popped up as well. Any further downside here would lead into another test of the 21 EMA and still keep the hidden bullish divergence. Price would have to break and close below the 21/26 EMAs in order to wipe out the current uptrend in the short term. Any pullbacks into these EMAs are clear entries for LONG POSITIONS.
DEFI-PERP:
It should come as no surprise that the DEFI-PERP on FTX has also continue to trend upwards as mentioned in the previous newsletter. Over the past couple weeks, the 21/26 EMA’s (Brown/Orange) have held strong and still provided solid entries, albeit with occasional downside wicks. Given that this bull market is likely no where near over, DEFI-PERP should continue to move upwards towards $10,000 and possibly beyond that as long as DeFi holds up with Bitcoin.
(For a majority of Alts like UNI, AAVE, SUSHI, etc. The 4 hour 21/26 EMA’s provide extremely simple setups in a parabolic uptrend. DO NOT overcomplicate things in a raging bull market, especially with crypto. Dumb it down, simplify it, and stick to a clear strategy that continues to trend upwards! I recommend setting alerts for these EMA taps on both the 4 hour and Daily timeframes on TradingView.)
FTT/USD:
FTT/USD is holding the uptrend extremely well. Take note at strong coins that are moving upwards and blowing past their previous All Time Highs while Bitcoin consolidated and pulled back during the month of January. These are likely going to be the most strongest coins throughout the bull market. FTT is the exchange token of FTX. It has grown significantly since it first began a few years ago and is continuing to grow across the globe. Sam Bankman-Fried is also a well established person in crypto, and a CEO who is extremely active on Twitter. Tokenized Stocks like $GME, $AMC, etc. have been added to FTX recently along with other Special tickers and pairings. The above chart is a longer term swing position that has two entries aiming for a nearly 100% gain and a 140% gain on FTX, but depending on momentum, price can move significantly higher as well. Simply put, if you are bullish on crypto and expect more users to show up as the market continues to grow, then holding FTT is likely a strong play. You can read more about FTT HERE and follow Sam Bankman-Fried on Twitter by clicking on his Tweet below.
Robinhood Mania & “The Anomaly”
As many are aware by now, Robinhood restricted the “buying” of Stocks like $GME & $AMC not long ago due to extreme price movements upwards. $GME printed a nearly 1000% gain in less than two weeks with $AMC following suit as well. Why did this happen? Well, it is what I like to call, “The Anomaly.”
These Stocks were some of the most heavily Shorted stocks in the entire U.S market. Funds like Melvin Capital took heavy positions on $GME at prices like $15 as price began to collapse past sub-$3 levels. However, the amount of Shorts that piled in here created extreme momentum if price were to slip towards the upside… and that is exactly what happened. Like a crack in a dam, it all spewed upwards and eventually created one of the biggest Short squeezes ever seen in the U.S markets.
Reddit thread, R/WallStreetBets, and their original posts that grew across Social Media is what created this upward spiral. For the first time ever, Retail money was able to flock together in an extremely Short period of time and create a tremendous Short squeeze AGAINST the Institutions. For years, it has always been Wall Street and Institutions getting the jump on Retail money and being able to take advantage of their massive bankrolls and leverage. However, this “anomaly” that has occurred recently represents a huge paradigm shift that has never happened before.
So, despite these meteoric rises, what did funds like Melvin Capital do? They get Robinhood to restrict buying these Stocks so that price can no longer move upwards for “customer safety,” yet, they allow users to sell their shares instead. This is quite clearly market manipulation in what is supposed to be a “free market.” Institutions speak out on live television channels like CNBC to talk about this movement and how they are being attacked by those who are not in the Upper-Class. Although many have known that Wall Street and the 1% have always been the favored ones in the market, this recent string of events really put into perspective how big the edge is for the Upper-Class.
Institutional Money Flowing
Recently, nearly $500 million USD worth of Bitcoin was transferred out of Coinbase and taken into cold storage. As always, Ki Young Ju and BTC JackSparrow were on top of it with on-chain analytics and speculating who this big buyer may be.
This type of money pouring into the market right after a 30% pullback on Bitcoin is surely no coincidence. Institutional money is still pouring in and the amount of capital going into Bitcoin directly is astounding. The evidence here does line up with Guggenheim and their recent SEC filing for $GBTC. Furthermore, Scott Minerd also came out and said that Bitcoin could see sub-$30k prices without institutional demand not long after these giant transactions were detected… Keep calm and HODL on!
The Biden Package
With the recent Inauguration Day in the U.S.A, Biden has officially become the new P.O.T.U.S. His biggest concern at the moment appears to be passing an extremely large stimulus package. Business Insider does a fantastic job of summing up Biden’s Plan along with the Republican’s Plan below as well.
Regardless of which plan or middle ground is met, another stimulus package is almost certain to come and Crypto will almost certainly benefit from this. Over the past year, Stimulus has led to a weaker dollar along with huge volume influxes on Bitcoin.
If we combine everything that has happened the past year and is still currently happening today, we get a combination of stimulus, stock market manipulation, institutional money flowing in, etc. Bitcoin has done extremely well due to all of this chaos and it should come as no surprise that Bitcoin will likely perform well moving forward as long as this all continues. The fundamentals and current events have never been stronger during these troubling times!
Please note that this newsletter is NOT Financial Advise. Neither Methodical Trading and/or it’s associates should be considered Financial Advisors. Any and ALL related Market centric material should be considered educational content for entertainment only. Methodical Trading and/or it’s associates are not responsible for any financial endeavors an individual/group chooses to take.