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Morpheus Crypto Report – November 21, 2022
Below is the full, archived version of Morpheus Crypto Report that was sent to paid subscribers.
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Watchlist, Closed Positions, Open Positions
If you’re new to Morpheus Crypto, press here to see standard model portfolio notes.
$BTC Bottom? Potential undercut and double bottom at the 2-year low
In last week’s report, we said that recent, record high volume in Bitcoin ($BTC) could mark a significant, longer-term bottom.
That longer-term analysis still remains valid, but remember our shorter-term bias was slightly negative. Here’s what we said:
“Given the plethora of overhead supply at higher prices, current resistance holds more weight than the single day of support. As such, odds now favor sideways to slightly lower prices until $BTC gets back above the 17,600 level. However, a period of sideways chop seems more likely than substantially lower prices.”
As anticipated, $BTC failed to reclaim the 17,600 resistance level and indeed edged lower for the week.
No biggie, as we remained on the sidelines due to the previous week’s market Sell signal:
So far, $BTC has formed a higher low at the 15,800 level. If $BTC breaks below that prior swing low, then expect a test of the 2-year low at 15,600.
If $BTC tests the 15,600 low this week, pay close attention to the volume pattern and price action.
One possible scenario is that $BTC could undercut its 2-year low, then quickly reverse back above that level on high volume.
IF that happens, then we will be looking for a potential new buy signal of a bullish reversal day—but that’s just one possible scenario. Anything can happen.
With Bitcoin hanging out near its low, most of the altcoin market has also been quiet. Many charts now have a similar pattern of chop and lower volatility recently.
As such, it’s a great time for us to break away from our usual format of chart analysis to discuss the “big picture” of what’s happening in crypto now.
FTX was a problem—not DeFi
Unless you have completely ignored all news over the past 2 weeks, you are likely aware that FTX, formerly the second largest centralized crypto exchange, recently filed for bankruptcy. In case you missed it, press here for a summary of the wild FTX story.
News of the recent FTX meltdown has a lot of crypto investors running scared right now. Considering the billions of dollars many crypto investors lost with this year’s TerraLuna and 3AC collapses, that fear is understandable.
Unfortunately, FTX became the latest example of the crypto space being hurt by the actions of a few bad actors—but not the technology.
Crypto projects that are truly decentralized (the original goal of crypto) and fully run by computer code have had zero issues.
Bitcoin itself, for example, has once again stood solid through all three major crypto disasters (which, again, were originally flawed by design).
Decentralized Finance (DeFi), which relies 100% on computer code for risk management, has also stood tall throughout this mess.
FTX (a centralized exchange) failed because it was regulated by governments—not by computer code.
Code is law. DeFi did NOT when FTX did because it is regulated by code.
Code is regulation, which is why:
- $AAVE is fine
- $UNI is fine
- $MKR is fine
- $COMP is fine
- $YFI is fine
- $GMX is fine
- $SNX is fine
DeFi protocols like $MKR $AAVE and $COMP have performed exactly as designed… which is precisely to prevent liquidity issues (FTX). DeFi is doing just fine, and will continue to do so.
What was the CEO of FTX lobbying against? DeFi.
What could have prevented the FTX meltdown? DeFi.
Which exchanges already publish real-time proof-of-reserves? DeFi.
Yet, despite this, proven DeFi is likely to become the target of regulators.
What can I do to protect my crypto assets?
At Morpheus, we have only ever mentioned Kraken and KuCoin as our preferred centralized crypto exchanges (CEX) for crypto swing trading.
Although FTX had lots of hype, we’ve always preferred more time-tested CEXs that focus on active traders, as well as internal/external security.
We prefer Kraken as a fiat on-ramp/off-ramp, and KuCoin for its wide range of available altcoins and low fees.
After the FTX news broke, KuCoin even took the proactive, transparent step of showing their crypto holdings to the public. Kraken put out a similar statement.
NEVERTHELESS, every crypto trader should ALSO maintain a personal crypto wallet.
Keeping SOME funds on a centralized exchange makes sense for ease of active trading, low fees, ability to set stops, ease of use, etc.
However, as we always say in the chatroom, it’s best to store your crypto assets on a hot or cold crypto wallet. of your own.
For long-term investing, cold storage such as a Ledger or Trezor device is the way to go.
TIP: Buy your crypto wallet directly from the manufacturer, to avoid any (minimal, but possible) chance of third-party hacking before your purchase.
Again, consider keeping only the amount you’re actively trading on any CEX.
When crypto assets are stored at a centralized exchange, the exchange acts as a custodian for your crypto. This works fine…until “disaster” strikes one day.
So, remember this: NOT YOUR KEYS, NOT YOUR CRYPTO.
Drop us a line in the chatroom if you have any questions or would like more insight on wallets and exchanges. We work hard to keep members safe through continual crypto trader education.
Morpheus Crypto Portfolio Update
We listed 2 new swing trade setups for potential buy entry last Friday ($LTC and $SCRT). However, neither crypto triggered our buy stop price for entry. As such, the Morpheus Crypto portfolio remained 100% cash over the past week.
Our patience once again paid off, as virtually any new trade entry last week would likely be showing a loss right now.
If you’re new to our service, it’s important to understand that our “big picture” swing trading strategy is to step on the gas pedal when market conditions are bullish, but stay out of harm’s way (in cash) when the odds are against us.
Unlike other services, we do not just give you swing trade picks for the sake of excitement and action. Rather, we provide you with an objective crypto swing trading system designed to properly manage risk in all market conditions.
We are continually scanning the markets for ideal trade setups, so don’t worry about missing opportunities; we will alert you when it’s time to jump back in the market.
In the meantime, the current environment is a fantastic time to focus on mastering your discipline and continually improving your trading plan.
But right now, your sole focus right should be on capital preservation. Doing so enables you to protect the big gains your portfolio generated from this year’s big winning trades.
Simply knowing when to be OUT of the market is an extremely valuable part of your service (as is knowing when it’s time to get back in).
It’s certainly been a challenging year in crypto, but the long-term outlook of crypto remains stellar!
The young, booming industry of crypto is just suffering growing pains.
The crypto industry exploded so quickly that it needs time to take out the trash that accumulated along the way. That’s what happening now.
The internet as we know it today grew out of the dot com boom-bust cycle of the 90s.
In our view, the burgeoning industry of crypto is likely to follow a similar course.
Lots of hard lessons are being learned now, but they will only stand to strengthen the future outlook of the crypto space.
Regulation of some degree will eventually come, which is realistically necessary for crypto assets to eventually gain mainstream acceptance.
Crypto may be stuck in a slow grind lower in the near-term—at least until there’s an impetus for the bulls to return.
Regardless, nothing changed for Morpheus.
We remain HUGELY bullish on Crypto, and fully anticipate massive future growth in the industry. We just need to get through the growing pains of revolutionary technologies.
Regardless of how bumpy the road ever gets in cryptoland, Morpheus will be here beside you with continued swing trade picks, educational technical analysis, and ongoing crypto updates.
Remember to trade what you see, not what you think!
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