Fundamental Analysis on BTCUSD October 1st 2017

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As we seem to be nearing the break out from the wedge, I want to give you some final thoughts. A lot of people, when presented with this solid TA say "but FA trumps TA, and our FA is so bull right now". Well, to that I have to say 2 things:

1) TA precedes FA. Almost any FA that you think affects the price often acts just as a catalyst rather than the cause. if you do your due diligence you will see that the scary market crash (and I mean massive selling, vertically going down on 3 hr scale) has already started BEFORE the Chinese news. You may say "it were whales with insider info". Maybe, maybe not. But it doesn't matter as all top TA analysts saw that this crash is very likely about to begin even days before it started. The rising wedge pattern, on a macro scale, with diverging RSI and volume acting funny were the things that many interpreted as "it is very likely ETHUSD will start falling hard soon". Same rising wedge was happening at the same time on BTCUSD graph as well (I did not see that as I mostly was doing only ETHUSD analysis).

Next, read the first few paragraphs of the book called "Technical Analysis Explained". It shows how TA precedes FA. How the stock prices skyrocket BEFORE the company's revenue starts to grow and actually by the time the company is doing well and it's publicly known, the price of the stock is already down.

2) Next, let's try to analyze the fundamentals.

But not with a shallow view, but rather as intelligent investors, who don't simply trade based on the title of the news that just came out, but rather analyze the quality and relevance and the bias of said news. The same piece of news sometimes can be colored in bull or bear, on whatever the editor wants. Based on how he words the article and especially how he words the Title of the article the news can be perceived as bull or bear. While after very careful examination and removing the pain that was added by the editors and just looking solely on the facts that were mentioned in the article, it is often found that the news are actually neutral.

2.1) The China regulations. The recent bullish article that was posted about how "the limitations on crypto will be possibly canceled once the Chinese elections are over, by Oct. 18th". Now go back and re-read the article. There are no sources. This whole article was based on semi-tinfoil hat idea that the China banned ICOs and restricted the exchanges so heavily that many of them had to close down, just to appeal to communist views right before the elections. Now, I am a big procrastinator myself, but I doubt that the Chinese government is as bad as me, to try and rush the ban right before the elections to look good. Yes in some universe this is possible. Maybe that's what happened. But isntead, I rather see that the Chinese saw how bubbly these ICOs are. 95% of them being scam. This is similar to the MMM pyramid (google it), just has a different process of distributing and collecting the money from the further investors that are lower steps of the ladder. When the BlackMoon or whatever that Chinese ICO is called came out with the intention to be the first (afaik) Chinese ICO, government did not want to see the sick ICO craze to spread to China from the West. That's why the stopped it then and there. That explains the timing. If the leaders of the current Chinese government saw the possibility of not being re-elected, they wanted to make sure that what is left after them does not hurt the country. and ICOs are something that will hurt the pockets of many regular people, who buy them the last.

2.2) The Japan regulations.

2.2.1) Margin trading is restricted, not allowed, banned in Japan as the part of those regulations. That is a big part of the volume gone. It's like funny how when a new coin is about to be added to BitFinex or Polo, people get excited, as the price is usually expected to grow cause of the volume of the markets. But when a whole country (which currently holds more than 50% of the trading volume, or at least used to hold before the margin ban) is restricted from trading on margin, people don't see it as bearish.

2.2.2) The tight control (the watching eye) of the funds route will make Japanese (and not only Japanese) mafia that used crypto as money laundering instrument to get out. This is very bearish. It has potential to crush the market completely.

2.3) The volume. How the hell did Japan surpass China and Korea in volume? HOW? Interesting article from January 2017: https://cointelegraph.com/news/the-mysterious-case-of-japans-bitcoin-trading-volumes

BTW, remember that Mt.Gox was based in Japan? At the time (2013) of that huge market crash 80% of the volume or so was concentrated in Japan. I don;'t know exactly where this leads, this is not a clear argument but rather, just an interesting observation, something smells fishy here.

2.4) The Big Short. Last night (after I posted this idea already, don't worry, I'm not simply inspired by that) I was watching "The Big Short" movie. In it there were 3 really interesting things that I found:

a) "It ain't the things that we don't know that ruin us. It's the things that we know for sure that just ain't like that. Mark Twain. Now this is very very strong for trading. It is strong for me too in this situation: I shorted this, thinking for sure that we must fall as all indicators are showing that. There is almost no doubt.If I am wrong it will hurt me a lot.

b) The fraud rates are at their highest historically right before the biggest market crashes (1930s, 2008, etc). That is what Dr. Murray says. Now today after thinking about it a bit I understood what he meant. Or rather, why that is so. Too many people who are not familiar with the market, who don't really know what they are doing, who don't know basic things that anyone operating in this environment should know are coming in here. They are a big number of very gullible of uninformed people. The fraud is easy at these times. So naturally, when you take out the meat and leave it by itself the cats are gonna eat it. Or bears, whatever you prefer.

c) The CDOs. The CDOs were actually a pile of dogshit. The original idea of CDO was a great one. But then the people got less and less diligent and more and more greedy. Thus they started to worsen the quality of CDOs. But the regulators didn't care. The banks selling those CDOs didn't care. They were simply getting their money. Most of them didn't know. Those who did just took their profits.

The ICOs. The ICOs are actually a pile of shit.The original idea... and so on. Instead of banks you can use ETH, Exchanges, whatever it is you like.

3) Your mom. Just kidding.

4) The shoecleaner boy strikes again. Some smart trader guy said once: "Once the shocleaner boy started giving me advice on what stocks to buy, I knew it was time to get out (from the market)." This is simple. When the info (the mystical EDGE that we as traders like to call it) reaches everyone. Those who want to buy will buy those who don't won't. Now simply put, there is no one else to buy anymore. No one will drive the price up anymore. No buying "pressure" (I can actually see now how the word pressure fits so well here) to push the price higher against the pressure of people cashing out.

6) The product. Now let's see, why would people cash out? Well, because people have bills to pay. Imagine you put your money in a bank. Even if it brings amazing return (but sometimes you have to wait months to be profitable rather than in red PL), you have put it there to eventually withdraw and use those money for something. Now, once the price hit 2980s a couple weeks ago, you were like "shit, I have this nice car Lexus that I wanted to buy, but now I can't cash out or I will lose part of my initial investment", and now that the price hit decent points. And starts to slowly creeping down. And the market seems to be very cautious and if you monitor orderbooks, some scary shit going on there, you think "let me get my money out just in case, I don't want to sit and wait another month to be at a good price again JUST IN CASE this thing goes down again. So you cash out. Although we hear constantly that there are tons of ice-cream dealers in Africa selling Ice-cream for BTC and somewhere Tesla can be bought with BTC and entire Japan will sometime soon be all on BTC, guess what? A lot of people don't live in Africa or Japan. And I wanna buy Lexus and not Tesla.

What is the one thing that can be exclusively purchased with crypto? ICOs. That's the market where BTC and more so ETH are used as the native currency. And we are slowly starting to see the truth. How good those ICOs smell.

Go to marketcap.com and check the list and do you not feel disgusted with how there are more than a THOUSAND tokens and coins? Putincoin, Fucktoken, Trumpcoin, Potcoin, Paragon, Monaco, Pay, Astronaut, Mooncoin, Blackmoon, Supermoon, Sailormoon, etc...

This place has become a joke rather than an innovation hub.

We need to take a shower. A good red shower. And start again.

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