Paradigm Insights #003
Bull Market 2.0
In the Market:
Risk of inflation is one of the many reasons in owning an asset like Bitcoin. New money is sloshing around the markets looking for a place to settle down and Bitcoin will become more and more comfortable as a place to store value over time. Demand has been rising as more companies and institutions are accepting bitcoin as a form of payment. Recent highlights include the second largest mortgage company to be accepting bitcoin by end of 2021 as well as AMC theatres.
Regulation was looming the last insights newsletter and that largely hasn’t changed. What regulators fail at understanding is that the purpose of cryptocurrency is MEANT to be self regulated and secured through mathematics. Of course they wouldn’t understand it’s purpose as it doesn’t include them. It also exists in a world where control by one party or the other can’t be bought. Sure, there are risks when it comes to pricing out digital assets but there are a lot of benefits as well. It’s a learning process of trial and error. Regulators are trying to stifle the trial process and to compound the cost of error by adding unnecessary regulatory rules that need not apply. While I agree with some forms of regulation regarding brokers, hedge funds, and the chartering of stable coins as banks, most rules effecting developers and the average user shouldn’t exist. That being said, it was a big day when the trillion dollar infrastructure bill was put on hold due to pointless provisions around cryptocurrency. The end result wasn’t ideal but it was nice to see legislators forming meaningful conversation around the subject and a lobby in it’s infancy taking a stand.
We’re moving into the second phase of our four year cycle bull market and Bitcoin had an explosive move out of a two month rut, struggling to break above 40k. Many are still questioning whether or not we will continue the trend up or if 65k was the top back in April. While volatility is guaranteed, many signs point to a continuation of the bull market that was paused mid-may.
Technical Analysis:
The technical analysis below focuses on the Bullish aspect over the next few months. I used the 12 hour chart, where each red and green candle is a 12 hour time period. The longer the time frame the clearer the long term movement looks. Smaller time frame volatility is ignored.
You can see several trend lines. The orange line represents recent bullish resistance and will likely be a magnet through the end of August. The upper red/green lines track the steep move up from 29k in late July. This is the most bullish scenario, but as you can see we’ve broken below that trend briefly and found support above the slightly less bullish channel. There is a possibility price action will be a magnet toward this slightly less bullish channel in the month of September but will ultimately swing upwards October — December considering many other fundamental factors.
The Hash Ribbon Indicator has been thrown around recently. It is a new one to me but seems to indicate a good entry based on past performance. More info in the article linked.
Major Technical Developments:
Ethereum has gone through with EIP 1559 and their London Soft Fork. Since it went live early August over 50,000 Ethereum have been burned (no longer exist to be bought, sold, or staked). This was explained in the last insight newsletter where there is a major change in how fee’s are processed with the upgrade. Essentially this is a deflationary mechanism that reduces the overall supply as more transactions are processed. In a way, it incentivizes users to hodl as transaction volume goes up.
Wrap Up:
It will be a wild ride over the next few months with a strong shift in sentiment towards the upside. Ultimately, I see strong support above 42k where it held resistance most of the summer and will likely see some resistance near our previous ATH 60–70k .
In the near future I expect to go off the recent newsletter script and will expand on the DeFi Ecosystem, explaining some technical aspects, as well as the benefits and dangers of Yield Farming. The purpose of this newsletter will be less price speculation and more along the lines of real world value, how blockchain will change industries, and how Paradigm Dynamics can help you get ahead of these changes.
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Disclaimer:
While there are many quality sources discussing crypto, there are many that aren’t. In doing research you should always be skeptical and weighing opinions against what you know to be true along with a majority consensus. Even the most experienced traders in crypto are susceptible to misinformation, including myself. Please assume all assets discussed in this newsletter are held by its writer unless otherwise specified. Do not use this newsletter to make any financial decisions. All investment decisions should be your own and the newsletter should be treated as purely educational information.
