The Three Ts: Bullish on SEC, no-trade zones, and timing the BTC bounce

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Welcome to the Three Ts with CoinJar. Each fortnight we explore a big Theme, an interesting Trade and some good, old-fashioned Technical Analysis (courtesy of Tom from trading gurus FX Evolution).

SEC it to me, baby

When Gary Gensler was appointed to head up the US Security and Exchange Commission (SEC) earlier this year, it’s fair to say the crypto community was jubilant. After all, this wasn’t just some ex-investment banker with a point to prove: this was an ex-investment banker who taught blockchain and digital currency at MIT.

Perhaps this was the guy to drag the SEC kicking and screaming into the modern era?

Well, it looks like Gensler did have a point to prove, just not the one that the crypto community was hoping for. Appearing in front of Congress last week, Gensler accused all American exchanges of willingly selling unregistered securities and said that there wouldn’t be any “warning shots” when the SEC came for them.

Taken together with the SEC’s lawsuit to stop Coinbase’s lending product, their new suspicion of stablecoins and the pending blockbuster case against Ripple, this represents a new level of anti-crypto combativeness from the most influential financial regulator in the world.

We can assume that Gensler doesn’t want to kill crypto – he just wants it to look more like mainstream finance. But if he gets his wish it could spell a bloody end for many alts. Whatever happens, the next year or so could prove to be a defining time for the cryptoverse.

See no trades, do no trades

In a hyperactive, 24/7 market, it’s easy to feel like you’re always on the verge of a year-making trade. And never is that feeling so strong as in the immediate aftermath of a market crash. 30% discounts across the board? ALL IN.

But unless you’re trading on very low timeframes (i.e. in the hours) and manage to catch the bottom of the wick, these can be hugely risky times to buy in. It’s not that the price is necessarily going to continue lower, but when a big move does occur it resets our information about the market.

While 10% bounces feel bullish, they’re really just a rebound to neutral.

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Right now, the combination of regulatory scrutiny, trend exhaustion and the whole Evergrande fiasco makes it hard to believe in a V-shaped recovery. Perhaps I’m wrong on that, but with that amount of uncertainty swirling around, it might be worth waiting for more definitive signals before piling in.

BTC levels down

From a technical perspective, BTC appears to be transitioning to a different trading range, according to Tom from FX Evolution.

While the flash crash two weeks ago put pressure on Bitcoin’s US$44.2k level, Monday’s dump well and truly sliced through it. With Bitcoin currently trading around the bottom of a new range, any short-term bounce could soon find itself hitting a ceiling at the support-turned resistance directly above.

We can also look to the pivotal 8-hour 200 SMA for confluence – breaking below that point has often presaged a turn in the market, so for the bullish case to continue we want to start seeing closes above that line as soon as possible.

CoinJar is Australia’s longest-running crypto exchange. Since 2013, CoinJar has helped more than half-a-million Australians buy and sell billions of dollars in cryptocurrency.

FX Evolution is Australia’s premier forex, stock and crypto trading community.

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