It’s been a brutal day but there are always opportunities, if you know where to look.
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Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool.
☄️ ATOMic Gains
For the last few weeks we’ve been watching our Moving Averages and key structural levels.
We’ve approached the Neutral Zone.
We don’t regard the market as fully bearish until we lose the previous low of $30k.
Likely that we will soon test the $44k level. Important to see how this goes. If we lose this level, further downside to $40k level seems likely.
In neutral market conditions, it’s interesting to try spot strength and narratives.
Today, it seems as though crypto assets that incorporate cross-chain / bridge type features have shown strength. Specifically, cryptos that have strived towards interoperability and the ability to move assets, cryptos, smart contract instructions and data across blockchains more easily.
The ATOM chart has shown considerable strength but seems to have approached a resistance level at $44.
Worth being prepared for a scenario where it heads back down. Will depend on overall market conditions.
If we did head back over $44 and wanted to consider a breakout play, there is a strategy we can deploy that provides more confirmation.
A common approach for a breakout play is to wait for price to get above a breakout level.
An alternate strategy would be to wait for the Moving Average to get about the breakout level.
If the Moving Average gets above, there’s more confirmation that the level has really been claimed.
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🔽 BenETH The Surface
Things haven’t been looking up for crypto since the beginning of December.
Ethereum, having recently developed a reputation for resistance to overall market sentiment, showed signs of waning as things continue their downward trend.
The Federal Reserve’s recent release may offer some explanation regarding why crypto assets took another turn for the worse yesterday when prices plunged.
On Wednesday the Fed released the minutes of its December meeting, revealing implications for an unexpected timeline for raising interest rates in 2022.
Soon after the minutes were released, the entire crypto market sharply declined. Ethereum dipped as low as $3,300 in the wake of this news. The fall in price was evident in almost all cryptocurrencies. However, ETH seemed to uncharacteristically shoulder more of the loss than usual.
Ethereum and Solana fell more severely against the dollar than BTC in the same time frame. This out of character behavior for the two L1 networks coincided with a rise in BTC dominance.
Tip! BTC Dominance is a measurement of how much of the entire crypto market cap comprises Bitcoin. When BTC dominance rises, as is the case with this most recent movement, it means that it has claimed a larger portion of the overall market cap when compared to SOL and ETH.
As usual, when things work against our best interest, we search for the reason behind it.
Though the news of the Fed raising interest rates sooner than anticipated may help explain why we saw another reduction in price, we should be asking ourselves why certain currencies felt the move more than others.
🏬 The Meme-Stock Is Back
GameStop revisited headlines this week when they announced they would be delving into crypto to develop an NFT marketplace for video games.
This time last year, they made headlines when Wallstreet Bets, a Reddit group of stock traders, played a short-squeeze with hedge-funds, pushing the stock to an all-time high of $483.00.
Shares typically traded for less than $10, with prior all-time highs reaching up to $60 around December of 2007. The company and stock had seen a steady decline for years until they became the object of meme stock/sentiment investing during the covid era of Robinhood traders. It could have been the wild investor sentiment last year that inspired executives to venture across the crypto line.
According to the WSJ, they are close to tech-sharing agreements with several crypto companies and plan to partner with dozens more, investing tens of millions of dollars in crypto in the coming years.
The NFT/Crypto development division of GameStop consists of at least 20 newly hired employees.
The company recently reported earnings but continued to see its share price fall until this announcement was released, causing an after-hours surge of 20%.
The announcement came right after OpenSea closed a series C funding round in which they raised $300 million, giving the company a valuation of $13 billion. As the rest of the crypto market is contracting, OpenSea is experiencing another type of all-time high in Google search volume. Can an NFT marketplace keep GameStop relevant to consumers and investors? A recently overhauled executive team and board of directors must think so; and they have managed to pop back into the headlines, right on the heels of their recent momentum.
Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
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