Stormrake - Insights #DOJ

A 291 Day First for Bitcoin

Fri, 09 Aug 2024 13:29:57 +1000

Bitcoin's first 10% + day since October 2023

To those checking the charts for the first time today, yes, Bitcoin has had its first green 10% candle in 291 days (October 23, 2023). What feels like a well deserved candle for the patient investors, it is even more sweet for the ones who bought the recent dip. The investors who saw the opportunity and took it without haste could be up as little as 14% to as much as 25% assuming one bought below 54k.

Many of our clients at Stormrake saw the opportunity and grabbed it with both hands and are now reaping the benefits. To ensure you don’t miss these rare opportunities, subscribe to not only our morning note, but also our weekly and monthly articles .

TON begins trading on Binance:

Whilst the entire crypto market rallied, one coin went early. This was TON (The Open Network), why? To understand why, let’s refer back to our ‘Is there a TON of opportunity in Toncoin?’ article written by us back in the middle of June. We identified the strength and market support of TON, a relatively new coin that made its way into the Top 10 only a few months ago. As predicted in the article, TON would be listed on Binance. Immediately after the announcement, TON experienced a 16% pump within two hours.

The research provided in our article has led our clientele to purchase a high volume of TON. These clients are more than pleased with the coin’s recent performance and will likely continue to reap the full reward of a Binance coin listing. It is not too late to buy TON, with the average return of a Binance Listing being 73%. Pair this with a full fledged bull run and you’ve got something great waiting to happen.

BTC/USD Key Levels and Price Action:

It’s safe to say that the last two US trading sessions have been a tale of two halves for BTC. Yesterday's US session saw BTC fall and retest a key level of $54.5k, whilst last night's session saw BTC rally and break through two key resistance levels. We are now sitting above the orange support line of $61,200. If BTC is to retest this support and hold, we remain with a bullish structure and $63,800 is our next target. Let’s see if the bullish momentum from the US can translate across to the Asian session.

BTC Total ETF Flows for 8 Aug: $ +37 Million

ETH/USD Key Levels and Price Action:

Ethereum’s recent weakness vs Bitcoin may be coming to end. This morning's recent pump has seen ETH break above the recent hurdle of $2,556 and end the day up almost 15%. As we stay above it and the once resistance turns into support, ETH’s next target sits at $2,865 (approximately 7% from current price action).

ETH Total ETF Flows for 8 Aug: $ -14.6 Million

Written by Alexandar Artis

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The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.

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All statements made in this newsletter are made in good faith and we believe they are accurate and reliable. Stormrake does not give any warranty as to the accuracy, reliability or completeness of information that is contained here, except insofar as any liability under statute cannot be excluded. Stormrake, its directors, employees and their representatives do not accept any liability for any error or omission in this newsletter or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided in this newsletter is owned by Stormrake. You may not alter or modify this information in any way, including the removal of this copyright notice.

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The Currency Trade That Crashed Global Markets

Thu, 08 Aug 2024 14:50:14 +1000

The Aftermath of the USDJPY Standoff

Our April edition of the Rake Review included an educational piece on the standoff between the US Dollar and the Japanese Yen. Months ago, the Yen was at 30 year highs of 160 with interest rates of 0%. As predicted, an intervention occurred as the Yen was beginning to reach an unsustainable level.

The low interest rates led to carry trades on the Yen by foreign inventors. A carry trade refers to borrowing a currency at a low interest rate and re investing into a currency or financial asset that provides a higher rate of return. The Bank of Japan has held negative interest rates for the Japanese since 2016, giving foreign investors the opportunity to conduct a carry trade through the Yen. However, the recent interest rate hikes by the BOJ had foreign investors panicking.

The unexpected rate hike to end July saw foreign investors scramble to repay the borrowed Yen by selling off the assets that were bought with these borrowed funds. The sale of the assets led to markets cascading, and experienced some of the largest amounts of liquidations and money wiped out of the market since Covid.

$2.9 Trillion was wiped out of the stock market and almost $1.1 billion dollars of leveraged crypto positions were liquidated all within 24 hours amid recession fears. Over these 24 hours, the S&P 500 fell approximately 4%, one of the worst days for the stock market in the last four years.

$2.9 Trillion wiped out of the Stock Market, Source: @RadarHits via X

Is the US in a Recession?

Whilst investors rushed to repay their borrowed Yen, US unemployment numbers were released. It was forecasted that the unemployment rate would be 4.1%, whilst the actual rate turned out to be 4.3%. This unexpected rise in unemployment triggered the ‘Sahm Rule’, one of many recession indicators. The Sahm Rule indicates a recession has started when the three-month moving average of the US unemployment rate is 0.5 percentage points or more above its lowest during the previous 12 months. The current 12 month low is 3.8%, with the recent increase to 4.3% thus meaning the 0.5% increase from the low has been fulfilled. Hence, the mass panic sell off and calls for an emergency US Federal Reserve meeting to deal with the potential recession.

Source: @GRDecter via X

The interplay between the US Dollar and the Japanese Yen has significantly impacted global financial stability. The Bank of Japan's unexpected interest rate hike led to substantial asset liquidations and market sell offs, while rising US unemployment rates triggered the Sahm Rule, signalling a potential recession. Although markets have seen some positive recovery, further downside risks remain. Our Rake Review will continue to monitor these developments, providing insights to keep you informed and prepared for what lies ahead.

Written by Alexandar Artis

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The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

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The Spot Ethereum ETF is Here as is Mt Gox’s Repayments

Wed, 24 Jul 2024 19:09:21 +1000

Spot Ethereum ETFs Begin Trading:

Another big day for cryptocurrency as the Ethereum Spot ETF was launched and eclipsed $1 billion of volume in its first day of trading. However, the net inflows of the ETF was just over $100 million. Meaning the outflows from Grayscale totalled almost half a billion dollars.

Source: https://farside.co.uk/?p=1518

Similarly to the Spot Bitcoin ETFs first day of trading, it was highly volatile and turned out to be a sell the news event. The day saw a net inflow of $203 million, this was greatly hindered by the mass outflows by Grayscale of almost $500 million.

There are parallels between Bitcoin and Ethereum price action at the first day of their respective ETFs trading.

Both BTC and ETH were approximately 40% away from their previous all time highs.

The launch days were ‘sell the news’ events with the majority of the gains and price increase being made in the lead up to the event.
Grayscale BTC and ETH ETFs were finally allowed to trade again, which lead to major outflows.

If Ethereum is to follow Bitcoin’s post ETF price action, we may see a retracement in Ethereum’s price due to the mass selling by Grayscale. The first fortnight of BTC ETFs trading saw a 20% retracement in BTC due to Grayscale outflows. A similar trend may occur with ETH as Grayscale outflows should sustain selling pressure on ETH until they exhaust their outflows (a 20% pullback would see Ethereum at ~$2,800).

The ETF hype drove BTC to new ATHs prior to the BTC Halving event, this occurred 2 months after BTC ETF was launched. Aforementioned, ETH is ~40% from its ATH, will we see a new ATH set by ETH in the coming months as a result of the ETFs?

Mt Gox. Continues to Make Repayments:

This positive news has been overshadowed by Mt Gox. moving almost $3 Billion dollars worth of BTC onto exchanges to continue repayments. What was one of the major catalysts of driving BTC down to 54k has reared its ugly head again. If Mt Gox is to sell all of this BTC, then it will outweigh all of the BTC ETF inflows over the last couple weeks which helped BTC recover from $53.5k to the current price. Whilst it is unlikely to see these repayments negate all of the gains BTC saw as a result of the inflows, it would be wise to expect a slight pullback.

If a pullback is to occur, this should be seen as a time to 'buy the dip' before BTC continues on higher.

While the immediate impacts of the Ethereum Spot ETF launch have mirrored the volatility seen with Bitcoin's ETF debut, the long-term outlook remains highly favorable. The initial sell-the-news reaction and significant outflows from Grayscale have temporarily pressured Ethereum's price. However, if Ethereum follows Bitcoin's post-ETF trajectory, any short-term retracements could pave the way for substantial gains and potentially a new all time high in the months ahead. We remain bullish on Ethereum, confident that the long-term effects of an Ethereum ETF will further solidify its position as a leading asset in the cryptocurrency space. The introduction of the ETF is expected to drive increased institutional interest and broader adoption.

Written by Alexandar Artis

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Reach out to us at Stormrake for further market insight and allow us to help you navigate the sea of mania and laser-eye memes, so that you can realise your goals in the market!

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The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

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Are We Back?

Tue, 16 Jul 2024 17:58:07 +1000

If someone asks what it feels like to be invested in crypto, show them the cover image. It's a perfect depiction of what being invested in cryptocurrency feels like.

Not too long ago the entire crypto market was in a state of despair with fear being extremely high and Bitcoin looking like it may fall below $50k. Bitcoin has recovered over 20% and has now touched $65k. It seems as though those who were brave enough to purchase BTC when the market was extremely fearful have been rewarded.

Does this mean we’ve seen the pullback lows for this correction and the bull market is back on. Most likely, yes, but let’s dive deeper to get an understanding of what may be in store after this recent Bitcoin price action.

Fundamental Overview:

Whilst BTC rallied more than 10% over the weekend, the headlines capturing every media outlet was the attempted assassination of former US President Donald Trump. Trump is the self-proclaimed ‘Crypto President’ and has announced his support for Bitcoin. Many speculated that if Trump were to win the election, the ‘Trump Pump’ would occur and see Bitcoin and other markets rally. However, the recent events over the weekend may have kicked off the ‘Trump Pump’ early. BTC rallied 10%, and Trump related meme coins such as TRUMP rallied 70%.

A major catalyst for Bitcoin’s pullback to the low of $53.5k was the German Government selling their seized Bitcoin. This snowballed along with the US DOJ selling their seized assets and Mt Gox’ repayments. It has been reported that the German Government has fully exhausted their seized Bitcoin, thus relieving BTC of major selling pressure. With this lifted, allowed BTC to regain $60k and almost reach $65k less than a few days after this information was reported. The image below shows the balance of the German Governments' Bitcoin wallet. Almost $4B worth of Bitcoin was sold off over the since June with nearly $3B of the selling occuring within the last week.

A clearer view of the above image can be found here: https://static.news.bitcoin.com/wp-content/uploads/2024/07/german-government-donated-btc-1536x540.jpg

Inflation is showing signs of easing with the latest CPI data set coming in under forecast for the third month in a row. This has resulted in some calling for two interest cuts towards the backend of the year. As expected, decreasing CPI figures leads to bullishness in risk on assets. BTC has reaped the rewards of these figures. The next key event to watch out for is the upcoming FOMC meeting where the next interest rate decision will be made. The graph below shows the likelihood of the decision, it is more than likely that we don’t see a change in interest rates at this meeting. However, the meeting in September shows a high probability for the first interest rate cut.

Future interest rate probabilities can be found here: https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

All of these events over the past week have been bullish for Bitcoin which has been reflected in price action and may have set the tone for the remainder of the year.

Technical Overview:

From a technical standpoint we delve into a recent Bitcoin chart to gain an understanding of what is to come.

A clearer view of the above chart can found here: https://www.tradingview.com/x/W3AE9D6g/

The chart above may seem daunting at first, however, it is quite simple. The current breakout and the creation of a new higher high indicates that the trend has begun to flip bullish and momentum is with the bulls. To solidify the trend switch and bullish case back on, the next pullback that occurs must create a higher low (stay above the recent low of $53.5k).

The two fair value gaps displayed on the chart above provide us with a probable area of where to expect the pullback to reach. The lower fair value gap sits at approximately $58k with the closer one around $61k (5-8% retracement). If BTC were to retrace to this level and then continue upwards from there, the upward trend would be confirmed with a higher low being set.

Things are looking bleak for the bears right now, they failed to push BTC below $50k and have seen over $400 million USD worth of shorts get liquidated over the last four days. To fuel the bearish hopium, one would hope that this major move is one massive bull trap due to the potential hidden bearish divergence that could be setting in. Hidden divergence often leads to a continuation of the overall trend. Divergence will be confirmed if BTC fails to get above $66.5k on this move up before a pullback. The divergence should drive BTC down to the pullback regions mentioned above, if the divergence is strong enough and bears continue to push BTC below these levels, then a bull trap may be confirmed. But until then, the momentum remains with the bulls and the likelihood is that we continue higher after a small pullback.

Whilst things look bullish and we have seen the majority of coins move 20%+ over the last week, with some meme coins such as WIF returning 40% since the lows. However, it is way too premature to call for an alt season or even a full fledged bull run, BTC remains 15% from its all time high. Whilst majority of altcoins are yet to set a new ATH, ETH remains 30% away from its ATH set back in 2021, whilst WIF (which returned 40% in a matter of days) is still 55% away from its April ATH.

Whilst 30% or 55% away from ATH may not seem too distant, coins require a much greater increase to recoup a loss. The graph above provides the visual description on what is required to make up for a 30% or 50% drawdown. Majority of altcoins are down 50-70% from their ATHs, alt season will need to arrive for them to have any chance at creating new ATHs. The general rule of thumb is that once Ethereum has made a new ATH, then alt season is set to begin.

Things are looking good for Bitcoin and the crypto market, but we are not out of the woods just yet. Fundamentally, Bitcoin looks strong and to be bullish, whilst some technical analysis may suggest a slight glimmer of hope for the bears. Overall, Bitcoin remains an asset we are long term bullish on, pullbacks may be scary and emotional, but they present the investors with golden buying opportunities. If a potential pullback is to come, then be sure to take advantage of it by purchasing Bitcoin.

Written by Alexandar Artis

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Reach out to us at Stormrake for further market insight and allow us to help you navigate the sea of mania and laser-eye memes, so that you can realise your goals in the market!

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The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.

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Bitcoin is Below $60k..... No $55k..... DON'T PANIC

Fri, 05 Jul 2024 12:31:23 +1000

The bulls displayed a valiant effort over the last couple months defending the $60k USD level and not allowing BTC to stay below it. However, it seems as the pressure grew too strong and the dam finally gave in.

The selling pressure grew too much once Mt. Gox had moved test repayments to exchanges (over 47,000 BTC) as well as the US Department of Justice and the German Government began selling their seized Bitcoin. This major selling created deep fear within the market which led to the largest amount of long liquidations seen since pre BTC Halving levels (April 12).

Whilst the current trend looks bearish and could be posed for further downside, let’s zoom out and take a look at prior bull runs and understand why this pullback may not be a cause for concern.

Bitcoin's Bull Run Pullback History (2017-2024)

A clearer view of the above chart can be found here: https://www.tradingview.com/x/Sz1knhey/

Pullbacks occurring during a bull market are not foreign concepts for BTC. Over the years we have seen many large pullbacks throughout a bull run. Over the last three bull runs BTC has experienced seven major pullbacks on its way to setting new all time highs and is currently in the process of having its eighth.

As seen on the chart above, 2017 experienced four pullbacks of over 33% on its way to creating a new all time high. If one was to buy during the fourth pullback in 2017, they would’ve seen over a 300% increase to the 2017 ATH in their position acquired during that dip.

2021 also saw two pullbacks of 21% and 30% which were prime opportunities to buy before BTC continued onto setting another ATH. Last year BTC went through a 30% pullback before continuing on and setting the current ATH of 73k (almost a 300% increase from the pullback in August 2023).

Assuming we are still in a bull market, this current pullback should be of no concern. This current pullback is currently 27% from the top, so it is safe to assume we are still in a bull run. A 30% pullback from the current top would put BTC at ~50k. Meaning, if BTC were to return to its ATH, it would be a 50% increase from that level and much more if BTC is to create new ATHs.

These pullbacks may be frightening for those who aren’t familiar with the space, yet, they are golden opportunities to buy the dip and dollar cost average into your BTC positions. Past cycles have demonstrated how buying these dips provided extraordinary returns to those who were brave enough to buy these pullbacks.

To take advantage of this dip, contact us at Stormrake to average into your BTC positions or buy your first lot of BTC, these opportunities don’t come around very often.

Written by Alexandar Artis

Create a brokerage account today

Get Started

Reach out to us at Stormrake for further market insight and allow us to help you navigate the sea of mania and laser-eye memes, so that you can realise your goals in the market!

No Advice Warning

The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.