The word “crash” has been doing the rounds in the finance world since a few month in face of what appears to be a raging bull smashing one all-time-high (ATH) after another despite, and arguably due to, the troubles of the world with the pandemic still alive and kicking, and with many sectors fiercely hit by the lockdowns. This overconsumption of the word by itself should be unnerving because it is a clear indicator of worried investors and that a massive sell-off is just waiting at the door, ready to answer the first clear sign of a bear: when the majority will resort to taking profits or cutting losses, and the prices rapidly go down with double-digit percentages, similar to what happened to the Crypto markets a couple of weeks ago.
In this state of what seems to be like paranoia, each time the market (especially NASDAQ) stumbles a bit, people start to ask whether it is the big one. Yet, no body exactly knows what is the big one and how big it would be. Luckily, we don’t need to resort to the horoscope to estimate an answer, as we have the tools of the trade (pun intended) to do so.
Analyzing many graphs across many time frames, and comparing to previous crashes, I was able to identify several red signals which indicate a crash around the corner. Let’s break down some of them:
US30, US100, and US500 correlations with Crypto currencies.
This is rather a new phenomenon that started in the end of 2019. Whenever the stocks market goes up or down, the Crypto currencies echo such a movement eventually, but rather with higher amplitudes. Looking into it with more details reveal that sometimes it was the other way around where the Crypto market dragged the stocks one. This hasn’t happened with the latest Crypto crash…yet. The reason for the correlation is most probably the rise of retail investment and this still exists, even though volumes are decreasing as lockdowns are being eased, which feeds further into the market decline.
US100 lower weekly Bollinger Band
In each crash since the dot-com bust, and only in the event of such crashes, the lower Bollinger Band was touched or surpassed. We were half way there (judging from the median line) in the second and third weeks of May. Currently, US100 is a bit above the median but there’s a major squeeze in the hourly chart. Would it go further up? The stars don’t seem to be aligned for that.
Something is brewing in the stocks
Looking at many stocks, there are indicators of an imminent major change, regardless of the direction. This is due to the flattening in the past few weeks. With flattening, comes tension; and tension eventually causes displacement. All major players are already overvalued and we have already seen Tesla and Amazon, the once best performers of the post-COVID19 market saturating.
It’s no secret that the market follows the Fibonacci sequence religiously. Just pick any retracement tool for any graph and you would easily find the areas of support and resistance falling on each of the Fibonacci levels (there are even automated tools for that). Currently, we are at a major retracement level of the post-COVID19 trend, and we are already experiencing friction. If no crash happens at this stage, this means we would need to wait a few more month and prices should get at least between 10% and 20% increase. As we have seen with Bitcoin, the bigger you get the harder you fall. It might be better for the market to crash now with a major correction than later.
Foreign Exchange (FOREX)
While this market is not directly related to crashes, the currency-pair dynamics are largely affected by it. Mainly, CHF and JPY catch major gains during the first days of turmoils, and looking at the charts, the indicator seems to favor a major change in the near future. This is very clear analyzing the ranges of GBP/CHF.
Last but not least, my favorite tool is an analysis methodology I have developed out of a mix of tools while analyzing different charts during the past few months. It’s a mixture of harmonic patterns, trend analysis, and visual arts. By applying geometric figures like trend lines, curves, and Fibonacci spirals to the chart, I define points of tension and centers of gravity to understand the behavior of a trend. Moreover, through using concepts of symmetry and detecting repetitive patterns, I estimate the future movements that would increase the overall harmony of the graph based on the Golden Rule. Applied to US30, this method strongly indicates a crash in the coming weeks since it shows that we have reached the peak of the current uptrend. If a crash doesn’t come, the harmony of of the US30 monthly graph would become too complex to be achieved except if the market keeps expanding further with the same pace in the coming month, which is rather unlikely. Hence, looking at the fundamental analysis as well as using Occam’s Razor to filter out complex solutions to the harmony problem, one could theoretically predict the time of the crash.
At this point,some could ask what is a market crash exactly, to which the answer would be the ever boring “it depends.” I would leave the financial jargon to fundamental analysts, but what’s important for me is how to define a crash based on price movement. For this, one should only look at history. As mentioned before, the lower weekly Bollinger Band was the historical indicator of a crash for US100 (NASDAQ). For US30 (DowJones Industrual Average), that might be a bit different because it is less volatile. However, since the lower Bollinger Band is just another name of the lower bound standard deviation, it must be a good indicator of the significance of a market correction, provided that it wasn’t touched before during the bullish trend. If it were touched before, then we would probably be in the post-crash flat period (akin to US30 during 2018 until August 2019) or even the start of a bear market.
Every bubble is bound to burst and whatever comes up would eventually come down. That applies to Capitalism as a whole, but for now, it’s the gains in the smaller market of stocks which are at imminent stake. Of course, as long as Capitalism’s bubble is still expanding, the stocks market would eventually create a new bubble after each crash. We just need to keep in our mind that the bigger the bubble is, the harder the crash will be. Just look at the state environment around us; we don’t need a graph for that.
Even if my prediction is wrong in the short term, it won’t be long until we start counting the losses. Crashes are part of the system after all, aren’t they?!
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How Archer Swap Has Helped End Ethereum’s Bidding War
Most DeFi users have heard of Ethereum’s high congestion issues, but few are aware of the controlling forces operating behind the scenes, and how badly they can be impacted by this single problem. When traders send a regular transaction via the Ethereum network, it is susceptible to attacks from bots or front-running software run by entities seeking to profit from trader activity.
Ethereum’s ecosystem is perhaps amongst the fastest growing in the crypto space. Thus, there are already many solutions that tackle this issue and operate for the benefit of the users and decentralized exchange (DEX) traders. Most of them have gone under the radar.
Archer Swap is part of the Archer DAO, a project with features designed to mitigate the risks associated with sending transactions on Ethereum. It protects users from Miner Extractable Value (MEV) strategies, sandwich attacks, and front-running bots while maintaining a connection with Uniswap and SushiSwap, two of the most popular DEXs on Ethereum.
In this sense, Archer Swap can be described as a DEX extension that enhances the trader experience on these dApps. This protocol combines two powerful sets of features that give traders improved operations on Ethereum – protecting them and making trades more cost-efficient.
The first set of benefits are called Archer MEV Shield. Besides protecting transactions from bot attacks, it allows users to eliminate failed transaction fees, a recurring problem on Ethereum. Traders can also cancel transactions at no additional cost.
The second feature is called Archer Trader Extractable Value (TEV), a proprietary and innovative concept introduced by Archer Swap. Operating within the Archer Relay, Archer TEV uses automated rebalancing transactions with bots to sync market prices when big market moves occur.
After a trade or a big swap, there is usually an arbitrage opportunity in a market. Archer TEV uses these opportunities to capture the value and redistribute it to Archer Swap users. In essence, Archer TEV takes revenue generated by Archer Swap and gives it back to one of the protocol’s core components, the traders.
Archer Swap Launches Campaign To Reward Traders
Following a community vote, Archer DAO recently launched a 6-week campaign to buy back and distribute its native token ARCH. In this way, the protocol can reward early adopters. The tokens will be acquired with the revenue generated by Archer TEV.
The protocol won’t have to touch its treasury reserves to attract new users to the platform. The protocol and the users will benefit – as more users trade on Archer Swap, the campaign will have more resources to acquire and distribute ARCH. Therefore, the token will most likely see an increase in buying pressure during the coming weeks, and the platform will see a surge in the number of users.
Archer DAO will distribute rewards every Friday from June 11th to July 16th, 2021. The platform will calculate rewards for each user based on their transacted volume for each week. The rewards will be delivered automatically and with basically 0 risk for the users, all they need to do is trade.
Archer Swap has had famous trades. In May, during the high of the dog meme coins, the inventor of Ethereum, Vitalik Buterin, used Archer Swap to dump his supply of Shiba Inu (SHIB), AKITA, MIRI, ELON, and others into the market.
The dump served a good cause, as Vitalik used this money to send over $1 billion to different charity organizations. The most notable is the Covid-19 relief campaign for India started by Polygon’s co-founder, Sandeep Nailwal. This trade could be among the most famous in 2021 and was enabled by a protocol whose main objective is to shield its users and give them back the power to operate safely within the Ethereum dark forest.
Crypto Crash Trends On Twitter As Bitcoin Falls Below $30,000
Twitter has gone into a frenzy after bitcoin fell below $30,000 this morning. The hashtag #cryptocrash is currently trending on the platform. This is after the coin broke the $30,000 stronghold and fell below it. A price that has been a stronghold for bitcoin for a while now. Speculations were that as long as the asset didn’t fall below $30,000, then there would be a recovery.
Related Reading | Galaxy Digital CEO: Bitcoin Dips Should Be Bought Despite BitMEX News
Bitcoin has been in a downtrend for a couple of days now. News of mining rigs closing down in China pushing the price even further down. Falling below $30,000 means bitcoin is about to erase its gains for 2021. The coin was trading at $29,001 n December 2020. Only breaking the $30,000 barrier in 2021. Now bitcoin is trading at only 3% gains for the year 2021.
Bear Market Trends
Richard Bernstein was on Trading Nation two weeks ago to talk about the trends in bitcoin. The CEO called bitcoin a bubble. He pointed out that bitcoin was currently in a bull market. Noting that people were leaving the markets that were actually in a bull market behind.
Bitcoin crashes below $30,000 before recovering back up to $32,000 | Source: BTCUSD on TradingView.com
Bitcoin has been struggling for the past two months. This was after the coin finally hit the all-time high of $64k in April. There was a lot of speculation that the coin was headed for $100k. But it seems the asset had other plans.
Analysts have compared this to the 2018 crash. When bitcoin hit a new ATH of nearly $20k and then proceeded to lose 80% of its value. At one point trading at a little over $3k.
There Is Still Hope For Bitcoin
Novogratz further explained that calling a bottom on the crash is hard to do. This he attributed to the large liquidations currently taking place across a number of assets.
With regards to the $30,000 price level, Novogratz said, “We’ll see if it holds on the day. We might plunge below it for a while and close above it.”
Related Reading | Over 3 Metric Tons Of Bitcoin Mining Rigs Airlifted Out Of China
The co-founder of Galaxy Digital noted that he wasn’t worried about the price crash. Explaining that he does not expect another crash of the 2017 magnitude to occur again. This he chalked up to the maturity of the ecosystem. Pointing out that much more mature players are now moving into the system.
“Every single bank is working on their own crypto project, how they can get bitcoin to their wealthy clients. I think a lot of clients that didn’t buy it the first time will see this as an opportunity to buy it and get involved.
– Mike Novogratz, CEO of Galaxy Digital
Twitter users have taken to the platform to express their opinions on the current market movements. There are countless tweets asking people to not panic. That the market is going to recover. And right now, it is starting to look like they’re right as the market has gone back into the green. Bitcoin is currently back up to $32k, after a dramatic price drop below $30k.
Featured image from Forbes, chart from TradingView.com
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