TST NEWSLETTER – 27/06/2021
Are We There Yet?
- Are We There Yet? The Decline of The Cryptocurrency Markets
- Last Week In The Forex Markets
- Top 3 Pairs For Next Week
- The Social Traders Free Training Video
Are We There Yet? The Decline of The Cryptocurrency Markets
The cryptocurrency markets have been volatile for the last few weeks, declining 24% in the last month. Many factors have played a part, but the major one being China's decision to stop the mining of Bitcoin (BTC), with China making up around 70% of the mining power (hash rate).
When we see Bitcoin decline in value, we will also see many other, if not all cryptos decline in response.
In this weeks newsletter, we take a look into this developing issue and the implications crypto currency holders face.
Bitcoin has started another nose dive, losing over 12% in 24 hours.
It's no surprise that after China's announcement to ban the use and stop the sale of mining rigs, ceasing all operations in the country.
China's role in the cryptocurrency space has always been heavily invested, when Bitcoin first came on the scene China saw the potential for the technology but pursued to obtain most of the BTC in distribution by controlling the mining power, thus giving them the largest rewards when any new BTC was mined.
Since their latest crackdown on the industry since the start of 2021, we have seen a much larger decline in the value of Bitcoin.
Many holders have been left in negative, if not left with no profits to their investments.
There are still many sat in profit but with many world governments looking to follow suit we should be asking ourselves, where will we see the price decline to? potentially leading to a huge sell-off in the markets from all holders wanting to get out.
We covered the topic back in our newsletter 'Maybe Not Then' but to refresh, Elon Musk decided to sell off all of Tesla's holding of the cryptocurrency Bitcoin, selling these pretty much near the highest price seen. Leaving many out of pocket and the markets starting their inevitable decline.
When we last wrote about this topic we had seen a large 15% decline and then a pullback, since then it has been declining towards levels not seen since January 2021.
What Can We Expect Over The Next Year?
Coming back to the question 'where will we see the price decline to?' it's hard to say, with most of the mining networks in China, and with China's government now pushing forward legislation to stop the use of Bitcoin completely we could see this become a very messy situation.
Many of the top mining business's from China are moving their operations overseas, giving them hope to bypass their countries laws and continue business as usual.
Again though we may see more crack downs world wide, leading to a witch hunt on cryptos.
But not all is doom and gloom, many expect new emerging cryptos to come out on top, with many fan favourites dying in the process. This is just an evolutionary step for the cryptocurrency markets and will continue to be a part of everyday life.
We have touched on the subject of Proof-of-Stake, this is a much more effective, cheaper and environmentally friendly way to conduct the use of cryptocurrencies.
What Can We Do As Trader's?
For us holders and traders of the many cryptos which have been affected by this problem, then maybe look at how heavily invested you are, and whether it may be time to cut your trades/holdings here.
Depending on how invested you are in this technology, saying that you will not be financially ruined by a huge crash, then it may be best to hold onto your stake for the long run and not look to be driving that supercar any time soon.
But as always traders, discretion is a must, do what suits your approach and risk appetite the best.
This is not financial advise, just a matter of opinion
Last Week In The Forex Markets
Following the dollar strength last week, we have been looking for ways to capitalise.
Here are some of the trades we took last week, as always these where shared with our Pro Members.
This setup was shared with our Pro Members.
EURCAD has been a great pair to trade for us recently.
Here we can see that price action has broken the previous high, following that it has descending in a channel back to the block of orders that caused the BOH.
Simply we traded that order block to just above previous structure points, securing 4% all in all.
GBPUSD presented us with a great opportunity which unfortunately we missed but we wanted to share this with you anyway.
We can see that price action on the 15m has been pushing higher and higher.
Identifying what way price action was going to go isn't easy, but broken down we can see a block of orders in play, giving us good reason for this pair to want to go lower once hitting that order block.
Simply we were looking to trade the order block into the previous structural highs, unfortunately, we missed our entry by a few pips, but this would have been an awesome move to capitalise on.
EURGBP: [Break Even]
EURGBP presented us a great opportunity from a technical standpoint, but this pair just didn't play ball.
Price action has been moving side ways, but with a slight descending nature.
It then proceeds to break above previous highs, naturally, we looked for the order block that caused this.
Price action reacted but was shortly met with a return to our entry point, taking us out for a break-even.
Top 3 Pairs For Next Week
USDCAD: [Short to Long]
Every Saturday we send a 'Market Breakdown' to our Pro Members, here are some of the setups we have already shared.
USDCAD heading into next week is looking great for a short term sell, and a long term buy.
We can see that price action has recently broken a previous structural low.
We are simply looking to trade the block of orders being the cause for the break of low, we will then look to close that position and take price action to the upside, corresponding with the order block in play causing the break of high seen on the 16th.
GBPJPY is on our watch lists for next week, we feel that overall the highest quality setup on this pair will be the sell position but we may see some buys on the table.
So breaking this pair down we can see that we have a lot of imbalance printed over the last few weeks.
We know that it will need to be corrected to balance order flow.
Evidently, we can see that there has been a break of low, this gives cause for the price to return to the block of orders, giving us the trader a great way to capitalise on the expanding move.
GBPJPY will be updated first thing next week for all of our Pro Members.
AUDCAD: [Short to Long]
Finally for our outlook for next week, we are looking at AUDCAD.
Highlighted in the market breakdown this week, here we have a great set-up to share with you guys.
Let's start out by looking at price action, we can see that price hasn't been the easiest to read but when breaking it down we can treat current price action as 'corrective', this then gives us a cause for the price to return to the block of orders in play.
This block of orders caused a previous break of high, giving us a precise point in the markets to look to enter a trade.
The Social Traders Free Training Video
This week we thought we would treat our free members to a free training video.
Here we will be covering 'discretion', now this is a subject all traders should take notes on as Dylan will explain in the free training video below.
We plan on doing more like this so be sure to let us know what you guys think and if you would like to see more of these!
Want to learn exactly how we trade the markets?
Why not check out our ‘pro package’? You will gain access to our in-depth course as well as many more features – www.thesocialtraders.com
Looking for a reliable broker with raw spread accounts and 1:500 leverage? Try our partnered broker – https://www.axitrader.com/uk/live-account?token=IDUZ-LFrugU5oKniM-HhFmNd7ZgqdRLk&affid=7138
We thank you for reading this week's addition to the TST Newsletter, have a great trading week, and stay consistent. – 'The Social Traders Team'
Written by – Karl Milward