Another overall red day in the markets ladies and gentlemen! The overall crypto market cap declined by roughly 2% today, alongside a general slump in traditional markets as well with VOO, DIA, and QQQ all down 0.5-1.6%. Large cap stocks also declined, as did Bitcoin and Ethereum, again, modestly.
DeFi chains are mostly red today as well, only DeFiChain and Osmosis are green both for the week and month. In addition, protocols are also red. Notable outliers that are showing consistent growth over the last month are Aura, Euler, DeFiChain Loans, ANKR, and BendDAO.
DeFi Opportunity: A new protocol just launched called 0VIX on the Polygon blockchain. It's a borrowing and lending market whose pools are currently live. Their DAI pool is currently offering 2.24% APY (higher than the DeFi average currently). They have a native token called VIX, however it's not launched yet.
If you provide liquidity to their pools you will earn VIX rewards prior to the official token launch. Therefore, a profitable strategy would be to take some spare stablecoins you have lying around, convert to DAI and bridge to Polygon, and supply to earn APY and VIX tokens. Once the token officially launches, sell your VIX position or hold if you're bullish.
Opportunity Cost: 6/10
Ethereum Proof of Work Update
As you know (or if you didn't), 2048 blocks after Ethereum successfully merged to Proof of Stake, the proof of work chain of Ethereum forked off to form the ETHW chain. Activity is crazy over there, and now after 9-10 figures of liquidity has passed through that network, here is where we sit.
Centralized exchanges are terrified to open up ETHW markets, because it will nuke as soon as it's listed. There is no support for ETHW from developers, protocols, exchanges, anybody. So the tokens are/will be completely useless.
Here is the information for adding the ETHW chain to your MetaMask. Whatever ETH balances or token balances you had in your wallet at the merge, you have duplicates of them on the ETHW chain, one for one.
Network Name: ETH POW
RPC URL: https://mainnet.ethereumpow.org
Chain ID: 10001
Currency Symbol: ETHW
Block Explorer URL: https://mainnet.ethwscan.com
Simply add this network to your MetaMask or wallet and you will be able to access your ETHW funds and tokens. You can use KyberSwap to swap your tokens into ETHW. I highly recommend doing this, because IF ETHW gets listed on centralized exchanges that will be your only chance to cash out. If you keep your tokens as tokens, they're useless. Convert them into ETHW, and wait to see if someone is foolish enough to list ETHW, and try to get in as early and fast as you can and sell it all.
Bitcoin continues to grind lower. Currently I am patiently waiting to see how Bitcoin reacts at our current support level of approximately $18,700. If we form a bottom higher than that level, then we will have formed a higher low and despite the general sentiment of the markets, would be a bullish signal.
On the other hand, should we lose that level, I expect a wave of panic selling and a rather swift descent to $17K.
Therefore, my recommendations on Bitcoin are still as follows:
Spot Holdings: 25% of total desired Bitcoin allocation at these price levels.
Margin Trades: 2% risk leveraged long position targeting $30K
Options: 5% risk allocation to $15-$19K Put Contracts expiring no earlier than December 30th.
I believe it's too early to enter into a short position currently, however your own risk appetite and analysis will have to guide your decisions.
Bitcoin: Pathways to Profit Analysis
Bitcoin is trading below the Daily Base Line, indicating a negative or short side bias. Mynx is trading below it's zero line, indicating momentum and price movement is to the downside. Mynx is not oversold, however if price forms a higher low Mynx will confirm that will it's own higher low.
Waddah Attar Explosion is signaling negative delta, confirming price action and Mynx, and a rising Explosion Level hinting at increasing volatility. However, I would disregard that as we had a volatile rejection from resistance due to the high CPI print, throwing this metric off. Wait until it resets, which will occur in several more daily bars.
Parallox is also below it's zero line, confirming the bearish sentiment. However, like Mynx, Parallox will confirm a higher low with it's own.
Nominal Volume remains high and is on the rise, as one can see by observing the Moving Average of Real Volume.
Conclusion: Our trading strategy is not recommending a position at this time, however sentiment remains on the short side.
Altcoin Analysis: COTI USDT
COTI has experienced a 100.71% increase in Open Interest over the past 24 hours. This makes COTI our most attractive target for opportunity.
As we can see, COTI has been trading in a range between 0.088 and 0.102. While it is possible that COTI is forming a long-term accumulation range, given the current market conditions and outlooks of the broader market we have to assume the strategy with the highest probability.
Assuming that stance, we can see that Mynx identifies COTI as being currently extremely overbought, almost in the danger zone. This is also coming off of an "out of nowhere" pump, which we are always wary about having significant continuation. COTI rejected from resistance and is currently trading sideways, generally a sign of distribution that is followed by a sell off.
Expecting a 50% to 60% pullback of the current movement, we can see a likely target for a COTI short position at 0.0944.
Furthermore, we can see from this chart that Open Interest on COTI has been declining during this distribution period, while CVD has been trending downwards or been stagnant. No significant liquidations for longs have been printed either, meaning FOMO buyers who bought the pump haven't been pushed out yet. Generally, price will move down until they are wiped out.
Conclusion: While COTI might be accumulating for a run, it is more likely that it's current pump will sell off and that COTI will remain within it's range. Therefore, one might consider a short trade on COTI with the metrics laid out above.
Alternatively, if we see Open Interest and CVD begin to climb as price moves sideways, it would be a sign of reaccumulation and strength to a potential breakout trade. In that event, I would recommend closing out your short position and watching for a good breakout entry.
Thanks for a great week of trading everyone! Big shout out to the Premium Trading Group Members and Community! You guys are why we do this!
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