March 12, 2022
Cryptocurrencies: Daily Update
We found out at the beginning of the week that President Biden was planning to sign an executive order regarding regulating cryptocurrencies in the US, but nobody was sure of what the order would actually set out to accomplish.
Fortunately, we found out on Wednesday that this bill will actually do nothing other than set the objectives of consumer protection and encourage healthy innovation in the blockchain industry.
Rather than signing any immediate regulations over the cryptocurrency industry, Biden’s order sets out the mobilization of nearly all sectors of the US government to research and prepare to regulate responsibly.
It was inevitable that the US Government would have to take a stance on the emerging blockchain industry sooner or later, but many expected it would be a strict regulatory approach in order to facilitate the adoption of a Central Bank Digital Currency.
Now that we can see that the Biden administration is attempting to walk the bi-partisan tightrope rather than polarizing and overly politicizing cryptocurrencies, we believe that the flood gates are beginning to open for massive innovation and adoption across nearly every American industry.
This has us very excited, because the Presidential order is the greenlight that institutional investors have been waiting for.
CoinShares reported that last week saw a 3x increase of American inflows into digital asset investment funds, totalling $127 million for the week.
Then, this week in anticipation of Biden’s announcement, Goldman Sachs began offering the GalaxyDigital institutional Ethereum fund to clients. As of today, reports are already indicating that Goldman Sachs has sold roughly $50 million of ETH to their accredited investors.
To top off all of the pro-crypto news, Dubai passed a similar order to that of the Biden administration regarding their country’s desire to become a leader in the digital space, and South Korea elected a pro-crypto President.
Clearly, cryptocurrencies are at the top of nearly every government's docket because they simply do not want to miss the opportunity to innovate and bolster their economies. Furthermore, institutional participants are right on pace with the governments and regulators that reside over them.
We’ve Seen This Setup In Bitcoin Before
Bitcoin and the cryptocurrency market have received a ton of attention over the past 2 years despite blockchain existing for over 13 years as a technology. This is a blatant indication of rapid adoption taking place by retail, institutional, and governmental interests. Now, we have regulators across the globe finally showing up to the party, and nobody knows what it will do to cryptocurrency prices.
Bitcoin has remained range bound since the beginning of 2022 similarly to traditional risk-assets. However, the sentiment regarding cryptocurrencies continues to improve at nearly all levels at a time when traditional financial systems are being blamed for global inflation and supply chain disruptions.
Trading between $35,000 support and $44,500 resistance, Bitcoin has been consolidating and slowly coiling up for over 2 months. Moreso, we can see a positive trend that remains intact on price, short-term 10/50 Real Motion, and even on the longer-term 50/200 Real Motion.
If you’ve been watching, the current price action we’re seeing with BTC isn’t completely unique… in fact we saw this type of range bound trading take place from May to July 2021 which ended up putting in the bottom that would make room for a run to the $69,000 all time high later in the year.
In 2021 we saw a general decline of price within Bitcoin’s trading range, which continued in a tightening wedge until finally breaking out after reaching oversold levels. At the time, bearish sentiment may have been supported by the negative slope of the 50/200 Real Motion as well. However, the short-term 10/50 Real Motion improved across this period.
Using bollinger bands on price in combination with short & long-term Real Motion would have pinpointed the exact day that Bitcoin had become oversold across all 3 measurements and finally bottomed.
Following confirmation of oversold levels, the 10/50 Real Motion saw an overnight phase improvement from bearish to recovery.
Five days later, both the 50/200 Real Motion also improved from bearish to a recovery phase, and continued on to reclaim a bullish phase.
Our Real Motion indicator worked extremely reliably at calling the bottom of last year’s extended crypto market selloff, now we’ll wait and watch to see if it will again.
Our belief is that all of the build up we’re seeing in the crypto market could just as quickly result in…
The difference between the current situation and what we saw last year is that price is currently trending up within its range, leading many to believe that Bitcoin’s bottom will be set soon.
Only time will tell, but with risk-managed trading strategies you can come out ahead either way.
**If we discussed a cryptocurrency that you would like to trade but isn’t offered on your current crypto exchange, please see coinmarketcap.com in order to view a profile on any tradable cryptocurrency, as well as a list of exchanges that do offer the coin for trading.**
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