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Bitcoin Fear And Greed Index Newsletter - Issue #37

Bitcoin Fear And Greed Index Newsletter - Issue #37
By Bitcoin Fear And Greed Index • Issue #37 • View online
Welcome to this week’s issue of Bitcoin Fear and Green Index Newsletter. It is a community-driven effort, and we all hope to see this newsletter grow with quality insight and analytics from community contributors like yourself. Read till the end to learn how you can participate.

Current Bitcoin Fear and Greed Index
This week’s Technical Analysis
Bitcoin - Oversold RSI & Implications
Bitcoin - Oversold RSI & Implications
This past week, Bitcoin had a flash crash that sent it plummeting 22% from $34,200 to $26,700 in a matter of 4 days. In today’s newsletter, I will discuss the nature and implications of this crash, as well as the status of the DXY.
Black Swan Event:
It’s important to mention that this drop had less to do with pure market supply/demand and more to do with the sudden collapse of LUNA and UST, which affected the entirety of the crypto space.
When debating the structure of this crash, it becomes necessary to compare it with similar events from the past.
Looking at the chart above, both bear market bottoms of 2015 and 2018 had the weekly RSI drop to 28, indicating significantly oversold levels. Both drops were followed by a prolonged accumulation phase for Bitcoin. However, the March 2020 covid crash had the RSI tag 33 only to be followed by an immediate V-shaped price recovery.
Why is this significant?
Bitcoin’s weekly RSI dropped to 33 during this crash.The key here is for the RSI to hold that level. If that becomes the case, then this crash would have the makings of a black swan event, which would implicate that a recovery is on the horizon. That said, if the RSI was to drop below 33 and revisit 28-30, it would indicate that Bitcoin could enter an extended accumulation phase lasting several months and up to 2 years.
Price Action:
When analyzing the price action, we see that the previous weekly candle for Bitcoin drew a bullish pin bar by closing the week 22% above its low and only -8.5% below its high. Bullish pin bars are candlestick patterns that typically signify a trend reversal.
Figure 1: Bullish Pin Bar - 1W
Figure 1: Bullish Pin Bar - 1W
Figure 1 illustrates the bullish pin bar that took form on the weekly chart. What’s most important here is the volume supporting the pin bar and the range in which the pin bar materialized.
For a bullish pin bar to be valid, the lower wick of the candle must be 2-3 times bigger than the body, and the upper wick must be less than half the size of the body.
The weekly candle shown in Figure 1 represents a perfect pin bar. Not only is it structurally sound, but the volume behind it and the fact that it took place at the bottom/support of the macro range further corroborates the pin bar’s validity.
Technically speaking, this signifies that Bitcoin could be on the brink of a trend reversal. That said, the strength and length of this supposed trend reversal is not quantifiable yet.
Altogether, this supports the case of the crash being a black swan event
Bollinger Bands:
Figure 2: Bollinger Bands - 1W
Figure 2: Bollinger Bands - 1W
Figure 2 shows Bitcoin drawing its farthest extension down from the 1W lower Band since the 2020 March crash. Impulsive sell-offs like these are often followed by an immediate reversion back into the Bollinger Bands, as seen in the 2020 March crash.
The lower Band currently stands around $31,900; it will most likely be tested during this week. Even extensions that take place in bear markets are typically followed by a relief rally in no more than a couple of weeks after the extension.
DXY - Bearish Divergence:
Figure 3: DXY - Bearish Divergence
Figure 3: DXY - Bearish Divergence
The DXY is drawing a bearish divergence on the 1D. Historically, this signaled a nearing top.
This is further corroborated by the fact that the divergence took form at the top of the range and after a parabolic rally. While this does not guarantee an immediate blow-off top, it indicates that the DXY is nearing the end of its run.
Whether this takes a few weeks or months to play out, fact of the matter is that the DXY is flashing top signals and the trend’s momentum is diminishing.
Even a retest of 101 would be sufficient for Bitcoin to rally ~30% from current levels.
Targets:
  • If the DXY begins to trend below 101, I’d expect Bitcoin to revisit mid 40s.
  • If the DXY tags intermediate support at 95.8, I see Bitcoin potentially testing high 40s/50k.
  • If the DXY breaks below 90, that would erase all its gains of the past year and would have Bitcoin potentially retesting 60s.
It’s important to note that the macro environment, especially the FED’s current monetary stance, does not support this thesis.
That said, the data is indicating that the DXY’s bullish trend is weakening, and that doesn’t come as a surprise considering how sharp its run has been.
Figure 4: DXY Bull Run Comparison (2014/2022)
Figure 4: DXY Bull Run Comparison (2014/2022)
The DXY’s current run can be compared to that of 2014 (Figure 4) with regard to its extremely sharp and parabolic structure. A bull run this sharp can only be sustained for so long before a mean reversion materializes.
Figure 7: The Range
Figure 7: The Range
It’s also important to note that the bearish divergence took place at the top of the range/macro resistance.
This is key because bearish divergences that occur around intermediate levels of resistance don’t always indicate that a trend is bound to reverse, but rather that a potential pullback could be on the horizon.
A divergence near the top of a range is a different story. It typically signifies a potential end of a trend. This doesn’t mean that the DXY cannot print a new high, but instead, it tells us that the DXY’s parabolic run is losing momentum near critical levels of resistance.
Figure 5: DXY's 2020 Bearish Divergence - 1D
Figure 5: DXY's 2020 Bearish Divergence - 1D
Figure 4 illustrates the DXY’s bearish divergence in 2020. The divergence took place in the same range and was followed by a blow-off top into a prolonged bear market.
Figure 6: DXY's 2016 Bearish Divergence - 1D
Figure 6: DXY's 2016 Bearish Divergence - 1D
Figure 5 illustrates the 2016 bearish divergence that took place within the similar range and was followed by minor consolidation into a double top pattern, eventually leading the DXY into a bear market.
The takeaway here is to realize that the DXY is beginning to lose momentum and that a cycle top could potentially take form within the next several months. Once that materializes, expect the equities market alongside Bitcoin to regain considerable momentum to the upside.
With that said, have a bullish week, until we meet again.
With that said, have a bullish week, until we meet again.
TA review by @CryptoSultan21
Bitcoin Adoption News This Week
TL;DR
  • President Nayib Bukele Releases Model Of Bitcoin City
  • MARA To Advise Central African Republic On Bitcoin Adoption
  • City of Mobile, Alabama Approved Its First Bitcoin Mining Project
  • Continental Diamond Becomes Minnesota’s First Jewelry Store To Accept Bitcoin
  • Swiss Exchange Relai To Release A Bitcoin Debit Card
  • Former Meta Lead Launches Bitcoin Lightning Company, Lightspark
  • Nayib Bukele Announces 44 Countries To Meet In El Salvador To Discuss Bitcoin
  • CoinCorner Released A Lightning NFC Card For Bitcoin
President Nayib Bukele Releases Model Of Bitcoin City
President of El Salvador Nayib Bukele released a model of Bitcoin City after announcing the bitcoin nation-state had bought the dip. The first pictures released showcase a golden city with a Bitcoin centerpiece and a caption from Bukele stating “Bitcoin City is coming along beautifully.” Bitcoin City is said to have 0% income, capital gains, property, payroll, and municipal taxes, as well as 0% CO2 emissions. The location is meant to be near La Unión, a small Salvadoran city. Bukele followed up with another set of pictures detailing four landmarks to be scattered through the city, one of which looks to be a gigantic bitcoin. Bukele then clarified that Bitcoin City would not be golden. The color choice was simply a design decision from the architect but the actual city will host far more green and blue between the vast amount of trees and expansive sea surrounding the city. In January, 20 bills were sent to El Salvador’s congress providing “legal certainty” for the nation-state’s bitcoin bond issuance meant to fund the city. The bond was initially announced in November of last year with the intention of raising $1 billion, half of which would be used to purchase more bitcoin while the other half would fund the infrastructure of Bitcoin City. The bitcoin bond will pay a 6.5% yield and enable fast-tracked citizenship for investors.
MARA To Advise Central African Republic On Bitcoin Adoption
MARA, a cryptocurrency infrastructure company backed by Coinbase, will advise the President of the Central African Republic (CAR) on Bitcoin adoption following its recent declaration to make bitcoin legal tender, according to a report from Bloomberg. “MARA will become the official crypto partner of the Central African Republic and an adviser to the president on crypto strategy and planning,” the company reportedly stated. MARA has reportedly recommended that the government increase internet penetration and provide more citizens with national IDs. The internet is only accessible to about 11% of CAR’s five million citizens according to data from DataReportal. This lack of connectivity creates extra hurdles for would-be users looking to adopt bitcoin. Chi Nnadi, MARA’s chief executive officer, reportedly stated, “Those are the foundational things they need to accomplish,” referring to the need for connectivity and proper forms of identification. Albert Mokpeme, the spokesman for President Faustin-Archange Touadera, stated that CAR hopes that the use of bitcoin as an official currency will attract investors to the area. The African nation has long suffered from years of conflict and looks to make drastic changes leading to economic growth. CAR Finance Minister Herve Ndoba previously stated, “There’s a common narrative that sub-Saharan African countries are often one step behind when it comes to adapting to new technology,” Ndoba said. “This time, we can actually say that our country is one step ahead.”
City of Mobile, Alabama Approved Its First Bitcoin Mining Project
Distributed Ledger Inc (DLI), a cryptocurrency infrastructure company and GulfQuest Maritime Museum Board announced a partnership to bring sustainable bitcoin mining to the City of Mobile, Alabama, according to a joint press release. DLI is taking a modified shipping container and housing 100 Bitmain Antminer S19’s which will be air-cooled on-site. The machines are intended to mine bitcoin non-stop building towards government funding and further infrastructure to be funded through mining revenue. DLI and GulfQuest hope to accelerate bitcoin adoption as it relates to the government with this venture. “The hi-tech revenue source of Bitcoin mining is tied to the education, adoption, and growth of the next level of encrypted and secure growth of the internet designed to provide a dramatic time and cost savings and a higher level of security for the global maritime industry,” former Mobile Mayor Mike Dow and current executive director of GulfQuest board stated. Mobile City held a city council meeting last month where the city agreed to allow the project to move forward, noting a willingness for the city to expand its exposure to bitcoin and other cryptocurrency-related projects. "We couldn’t be more excited at the opportunity to bring blockchain technology and bitcoin to the State of Alabama and more importantly, the great City of Mobile. Our goal at DLI is simple: help companies and institutions with the understanding, accumulation, and usage of cryptocurrency,” said Mike Francis, Distributed Ledger CEO.
Continental Diamond Becomes Minnesota’s First Jewelry Store To Accept Bitcoin
St. Louis Park-based Continental Diamond is now the first jewelry store in Minnesota to accept bitcoin as payment at its family-owned business, according to a press release. “We are constantly innovating and creating an oasis you can’t wait to come back to! Accepting cryptocurrency seemed like a natural next step to adapt to the changing behaviors and preferences of our customers,“ said Jimmy Pesis, Continental Diamond co-owner, and president. Continental Diamond will be utilizing infrastructure provided by BitPay to facilitate using bitcoin as a payment method. BitPay creates a seamless experience for customers looking to use bitcoin for payment with the addition of simple payment buttons with custom integrations making it easy for companies like Continental to accept bitcoin. One of the perks for Continental using this service is that BitPay protects businesses from volatility by making sure they are paid each dollar charged for the purchase in BTC with daily settlements for a 1% fee. Other retailers and luxury fashion brands have also started accepting bitcoin. Earlier this week Gucci, the famous fashion house, announced they would be piloting the acceptance of bitcoin as payment in five locations.
Swiss Exchange Relai To Release A Bitcoin Debit Card
Relai, a bitcoin-focused savings-investment app, has announced plans for a bitcoin debit card that will allow users to earn BTC with purchases. Relai is currently using the crowdfunding platform Crowdcube where it has already hit its target of $1.5 million, only two hours after going live. Since then, over $2 million has been raised with another three weeks left before the funding round ends. “It’s been amazing to welcome hundreds of investors to the table, and given the early success of the raise we’ve been able to advance our product roadmap plans already,” said Julian Liniger, CEO and founder of Relai. Liniger continued to say “We’re excited to progress our bitcoin debit card, which would give holders the opportunity to grow their bitcoin holding with every purchase they make.” Relai is hopeful that the debit card will be launched later this year and early investors participating in the Crowdcube can invest as little as €10 ($10.41). Should investors want a larger allocation to Relai, not only will the investors receive common shares of the company, but they will also receive 0% transaction fees.
Former Meta Lead Launches Bitcoin Lightning Company, Lightspark
avid Marcus, Facebook Messenger’s former lead and previous PayPal executive, announced the creation of Lightspark, a company focused on building, exploring, and creating on Bitcoin’s Lightning Network, according to an announcement. Marcus noted that Lightspark’s first step will be the creation of a team dedicated to diving into the Lightning Network and that “Downturns are good moments to focus on building and creating value with mission-aligned people,” as bitcoin’s price currently sits around $28,000. Marcus will serve as the CEO of Lightspark and a number of ex-Meta, formerly known as Facebook, executives will also hold executive positions, according to a report from TechCrunch. While details are sparse on the products and services to be offered by Lightspark, a list of investors was provided for the company’s first round which included: Thrive Capital, Coatue, Felix Capital, Ribbit Capital, Matrix Partners, and Zeev Ventures. A16Z and Paradigm also participated and co-led this round. Marcus did comment on the lack of information provided on the company’s public outline stating “We’re excited to dive into Lightning, learn more, and work alongside the community. We’ll share more about our work as we make progress!”
Nayib Bukele Announces 44 Countries To Meet In El Salvador To Discuss Bitcoin
El Salvador President Nayib Bukele announced on Twitter that 32 central banks and 12 financial authorities from 44 countries are to meet on Monday, May 16, to discuss financial inclusion, digital economy, banking the unbanked, El Salvador’s Bitcoin rollout, and its benefits in the country. It took 12 years for the first country to adopt Bitcoin, around 8 months for the second, and if Panama’s president signs their recent Bitcoin bill into law, then they will be the third only about a month after the second. Now, countries from all over the world are meeting in El Salvador to discuss financial inclusion and how adopting Bitcoin can benefit their countries!
CoinCorner Released A Lightning NFC Card For Bitcoin
CoinCorner, a leader in bitcoin and Lightning Network services, has announced The Bolt Card – a contactless, near-field-communication (NFC) card powered by Lightning – via a press release sent to Bitcoin Magazine. The Bolt Card allows users to simply tap any Lightning-enabled point-of-sale (POS) creating an almost instantaneous transaction processed through the Lightning Network in seconds. The legacy payment infrastructure system plays no role in any of the processing. The process is similar to the tap function of a Visa or Mastercard, without the settlement delays, processing fees, or centralized entities. “Making in-person payments with Bitcoin and Lightning is still not as efficient and user-friendly as we need it to be for the mass audience. It still involves unlocking a phone, opening an app, scanning a QR code, and then making the transaction,” said CoinCorner CEO, Danny Scott. “This is a backwards step when it comes to user experience in comparison to what we’re used to today for in-person payments,” Scott continued. At launch, The Bolt Card is compatible with Lightning and LNURL protocols while supporting CoinCorner and BTCPay Server gateways and will soon be compatible with IBEX Mercado, LNBits, and FastBitcoins.
“Progress is impossible without change, and those who cannot change their minds cannot change anything.” - George Bernard Shaw
Stay Safe & Stack Sats!
Adoption Review by @CuredSausage
Community
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