What Do Hurricane Ian and the Bank of England Have in Common?

Welcome to the WealthUnion Insider newsletter. Crypto news, financial market moves, & company spotlights - We do the heavy lifting so you don’t have to!

What we're covering this week...

• What Hurricane Ian and the Bank of England have in common

• Why Crypto VC funds are still growing

• How you can invest in blockchain-based startups

• Where the markets may be heading

• Something that will blow you away! (stay tuned to the end)

Note: This is the first week we’re sending this newsletter, so please give us some feedback in the poll at the bottom of the email.

WHAT HURRICANE IAN AND THE BANK OF ENGLAND HAVE IN COMMON

What could Hurricane Ian and the Bank of England possibly have in common you ask? They are both spurring evacuations! One from the bond market, and the other from the coastline.

The Bank of England has announced unlimited bond purchases in hopes of preventing an imminent crash in the markets.

Purchases of $1.07 billion of securities maturing in 20 years or more have already kicked off, and operations will continue every weekday through October 14.

All this while Hurricane Ian is causing some disruptions in the southeast US with airports closing and a wave of evacuations taking place as residents head to higher grounds.

🚀 CRYPTO VC FUNDS ARE STILL GROWING!

Crypto VC funds are seeing exponential growth even though a macro bear market has set in. Venture capital firms are on track to break last year’s record of investments. See where they are investing...

🤔 THIS WEEK'S CHAIN CHALLENGE

Guess the NFT project!

• In the past bull cycle, their current market capitalization was around $1.1 billion.

• Their Metaverse is called the Otherside.

• Rappers Eminem and Snoop Dogg performed as their avatars at MTV's Video Music Awards last Sunday.

You'll find the answer later on in the newsletter!

💡 HOW TO INVEST IN BLOCKCHAIN STARTUPS

As the crypto industry matures, we are beginning to see a flood of traditional accredited investors looking for crypto venture capital deals in blockchain startups. Here's how you can...

📈 THE TRADING CORNER

Bitcoin

BTC is showing early signs of a potential major reversal that is unconfirmed. Let’s take a look at the technical analysis:

•  Currently have an unconfirmed bullish divergence on the weekly timeframe.

•  We are seeing a similar William R indicator wedge that ended the 2018 bear market (pointed out by the blue arrow downward in 2018/early 2019) showing a repeat could happen when we are close to exiting the bear market.

• $20K has been defended very strongly by buyers, which was the all-time high in the last cycle.

• Almost exactly a 1-year time frame from the high to the low from 2017 to 2018; could we see the same here (potentially bottoming a little faster?).

• Fibonacci levels line up perfectly from high to low with major resistance areas where relief rallies usually head to, around .618 ($37.2k). 

• Approaching a major trendline from both highs in the bear market. Breaking this will most likely result in the bear market being over.

• Midterms historically drive stock market rallies from October into the elections.

While it’s too early to tell if the bottom is in, we feel that the risk to reward here is much better being long than short. Prices are very attractive here on many cryptocurrencies at these levels and we believe this is a great time to start building mid to long-term investment positions.

Ethereum

Ethereum saw a major reaction off lows due to the ETH 2.0 merge, which successfully was implemented on 9/15. The market was still in a downward trend due to consistently worse inflation reporting and the FED’s reaction to raising rates. The merge itself was a non-event and led to a sell-off after people realized Ethereum would not rally after it.

• ETH came back to very strong support at $1250 where it’s made a bullish reversal structure and has started to break out with BTC.

• We see the long-term trendline since the high around $1,700. If the market continues to rally we see this to be the next resistance point and a good place to watch how the entire market reacts near these levels.

Total Market Cap

Total Market Cap wicked perfectly into 2018 highs. These levels have been defended 3 times now, with sharp bounces, making higher lows showing strong conviction that the low is most likely in.

Dow Jones Index

The Dow Jones Index (DJI) continues to fall due to the FED raising interest rates. Fear has taken over the market due to runaway inflation.

• The monthly is back to the high before the covid sell off.

• William R is down to levels that have only been seen before as almost the exact bottom in the past 2 major recessions (dot-com bubble in 01/02 and 2008 financial crisis).

• Most stocks have already drastically sold off and seem priced in for current market conditions.

• Markets usually don’t top until the FED stops raising the rates (once they announce no more rate hikes is historically the time to look for your exit).

During the covid crisis, no one was focused on the fact that there was a pandemic and the markets were irrational rocketing upwards to crazy levels because everyone was making easy money. Now that some shock has hit the market on how real inflation is we see an opportunity to buy when everyone is fearful as the market is still in a bullish structure and is at monthly support.

BTC/Nasdaq Performance

If we compare BTC’s movement over the price of Nasdaq (NDQ) we can see BTC has drastically underperformed it since the bear market high in November, but now we have hit very strong support levels and bounced off.

The main takeaway is when BTC is ready to outperform traditional markets that usually means an enormous upside for crypto markets historically and vice versa for underperforming. It seems there could be a strong chance for a relief rally from bouncing strongly off support adding more confluence that a more significant move is coming.

Dollar Strength

DXY (Dollar Strength Index) continues to rise due to the FED fighting inflation and the US dollar being the strongest and most demanded currency among global currencies.

• We are currently at the top of the channel showing confluence for a possible reversal downward causing stocks and cryptocurrency to rise (a weaker dollar usually correlates to strong dollar paired assets).

• European Central Bank has also started to raise their rates drastically as they just did a 75 bps largest rate hike in their history to fight inflation. If other global countries fight inflation, we should see those currency pairs rebound vs. the US dollar.

Continued parabolic movement on the US dollar is not sustainable. Many countries have taken a massive rate decline vs. the US dollar and we believe the market will look to shift out of the US dollar for trade opportunities if other countries start taking deflationary monetary policy actions.

Conclusion

Overall, it’s still too early to tell if BTC has bottomed and if we are ready for a relief rally, but major signs from indicators to price action are starting to show this could be a great time to build positions for a major reversal.

Everyone was telling us when we hit $65K on BTC that it was going to $100K and only a very few could see this was the top. It feels the same at these levels. The FED has spooked enough fear into retail where they feel we are going to enter a long winter and the economy will enter a recession. The masses are usually wrong though and end up buying tops and selling bottoms.

The US is technically in a recession already with GDP being lower in the past 2 quarters, but the economy is still very strong. While the FED says they are pivoting to control inflation history shows the only tool they have been using for the past 4 decades is quantitative easing. This has been a “kick the can down the road” approach that we believe will eventually cause most fiat currencies to lose most of their value.

We will leave you with the classic quote from Warren Buffet saying “When people are greedy, be fearful, and when they are fearful, be greedy”. There’s always opportunity out there if you take away the emotions of the market and focus on what smart money is doing.

Chain Challenge Answer: Bored Ape Yacht Club (BAYC)

😂 PIC OF THE WEEK

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