The Wolf Den #108 - The Global Economy Looks Shaky
Bitcoin Thoughts And Analysis
I've been buying the dip, as I said I would. I am long once again with leverage on Phemex from $13,090. I am still mega bullish on a macro level, I see no reason to try to short unless you are just scalping.
I shared the 4 hour bear div on Tuesday, that was predictably the top. I also said we would likely see a hidden bull div to follow it (on twitter). That has happened.
MONTHLY CHART
LOOK AT THAT MONTHLY CANDLE. We have a couple of days left, but it's likely that it will close at least similar to its present form. Mega bullish after finding support at a key level on 2 previous monthly candles. A close above $13,863 would be the HIGHEST MONTHLY CLOSE EVER. There's 0 resistance between that line and the all time high on the monthly chart.
WEEKLY CHART
I posted this triangle over and over again for weeks (on the daily chart). It's fun to zoom out to the weekly and see how it played out. Absolutely beautiful.
DAILY CHART
I am still watching for something like this, mostly because I would love the chance to buy more spot Bitcoin in the mid 12,000s! I do expect that at some point we could at least see a wick down to that area... but Bitcoin rarely gives us what we expect! That's why I went ahead and started buying anyway. Every dip is being bought up quickly, as can be seen by the wicks down. Hard to bet against Bitcoin at the moment.
4-HOUR CHART
We saw the overbought bear divs play out, as predicted. This led to a nice RSI reset on the 4-hour chart and hidden bull divs. This is a sign that the bear div is no longer an issue and price can continue up. Cool, right? This div is part of the reason I went long this morning.
I went long on such a simple indicator, and one that I do not go to so often. The 50 MA on the 4-hour. It DOES NOT MATTER WHAT SYSTEM you use to find entries, it just matters how you manage risk. I saw a few 4 hour candles touch this blue line, and when I checked this AM I noticed a nice bounce after the move below and a wick - so I bought right on the line, with a stop below those recent low. That's it, it's that easy. My first targets are the top of the local move at$13,800 or so, but I may hold it longer if we finally see a push through that huge macro level. I will move my stops up with the 50 MA to lock in profit.
Altcoin Thoughts
There's really no good reason to be trading alts right now. We had a few quick opportunities, but none of them are particularly compelling at the moment. This seems like a good time to sit back and let Bitcoin do its thing. I do believe that alts will come back strong at some point and will definitely once again trader higher than their current prices. If you are along term investor in a project, I could understand scaling in to some positions here, willing to hold at a sizable loss before it reverses. Not interested, personally.
Bitcoin Dominance has clearly broken out (as I showed many times) and is now also flipping resistance to support. There's more resistance up ahead and a big gap that could fill, so more pain for alts short term if that happens.
The Importance Of Using A Stop Loss
Stop losses are EVERYTHING for traders. I decided to use this as a blog post, because I think it's such an essential topic. Dig into the article above, and always USE A STOP!
Dollar Cost Averaging 101
By Sahil Bloom.
Many of the brightest minds in the investing world share one common trait: they recommend dollar cost averaging as an investment strategy. But what is dollar cost averaging and how does it work? Here's Dollar Cost Averaging 101!
Dollar cost averaging, or "DCA" for short, is a simple investment strategy in which an investor splits the total amount to be invested in a given asset across regular periodic purchases. The regular purchases occur regardless of price, volatility, or economic conditions.
The goal is to remove the complexities of market timing from the process, allowing an investor to build their desired position without concern for external factors. Its simplicity removes behavioral and psychological biases from the equation. Let's look at an example.
Imagine you want to build a $10,000 position in bitcoin. You have done your research and believe in the long-term story. You aren't sure if it will go up or down in the near-term, so you decide to dollar-cost average. Great decision! How will you do it?
You split the $10,000 up into 20 pieces ($500 each). You could have done any number of pieces, but 20 felt right. You decide on a weekly DCA, so every Monday, you buy $500 of $BTC, regardless of price. After 20 weeks, you have built your desired $10,000 cost basis position.
Alternatively, you may not have a specific position size in mind. You know you believe in the long-term story for $BTC, but you aren't sure about near-term movements. You are confident it's going (much) higher eventually, but with likely volatile swings between now and then.
In this scenario, you may go with a "perpetual DCA" plan. Just buy a set amount every day, week, or month, with no position size in mind. This is an excellent approach for high-conviction, long-term investments. (Note: Perpetual DCA is the backbone of my personal strategy.)
For the vast majority of investors, dollar-cost averaging and compounding are the two concepts that should form the foundation of your long-term wealth creation strategy. DCA + Compounding = All You Need The best part? It's easy. Anyone can do it.
There are many great tools that allow you to automatically execute against your dollar-cost averaging plan. For equities, robo-advisors such as Wealthfront and Betterment offer automated DCA plans. M1 Finance allows for a more user-controlled strategy and experience.
For bitcoin (or other crypto), Voyager, BlockFi, and many others will allow you to execute a daily, weekly, or monthly automated purchase. RoundlyX allows you to invest your spare change in bitcoin. A neat, seamless way to DCA. It is the Acorns of cryptocurrencies.
There are many experts out there that seek to over-complicate things. As you all know, I am not one of them. In investing, as in life, keep it simple! Dollar-cost averaging + compounding = all you need. So that was Dollar-Cost Averaging 101! I hope you found it useful.
Edward Jones Addresses Concerned Investors
In the midst of growing stock market uncertainty, Edward Jones shared a short market pulse newsletter to inform their clients what is causing the recent downturn. Not to be taken as financial advice, we picked out the highlights below.
"We believe that more support is needed, and some form of a fiscal package will eventually be delivered.”
Money printing = stocks go up.
“We recommend avoiding the temptation to make long-term investment decisions based on near-term political uncertainties. Instead, look for opportunities to enhance portfolio diversification to help navigate current pandemic -and election- driven market swings.”
We obviously recommend cryptocurrency as the diversifying asset.
Lastly, “We expect market volatility to continue leading up to and after the election.”
This final point is worth considering because many sources have only counted on volatility leading up to the election. The market will likely react strongly as the president reveals their plans for their term.
Read the full report here: https://edwardjones.bluematrix.com/docs/pdf/6b58be74-a6a3-485e-b93a-36015488355b.pdf
Crypto Company Receives National Bank Charter
The new bank will be subject to heightened scrutiny from the OCC for at least three years.
SoFi, a loan provider and crypto trading company just received a conditional license to operate as a national bank from the OCC. About a year ago, the company received a different license, the BitLicense, which is a New York authorization to deal in virtual currencies. The significance here is that conversion of household named banks to crypto will likely be the result of smaller banks beginning to outpace the bigger names in innovation. It is likely we see many more small scale crypto banks like the Kraken bank before a Wells Fargo or other major name offers a cryptocurrency service. This is also partly due to major banks needing to overcome more regulatory hurdles giving the smaller institutions a chance to get ahead.
Electroneum Continues Towards Mainstream Adoption
Electroneum is truly amazing, working hard to create partnerships and spread the good crypto word around the world. This is just one more step in their charge towards mainstream adoption. I love seeing crypto use cases increase and expand.
The Wolf Of All Streets Podcast Ft. Chris Spadafora
Chris Spadafora happened to work a sales job right above the original Bitcoin Center in NYC, long before Bitcoin hit the mainstream. A combination of luck, motivation and destiny landed Chris deep in the Bitcoin community, eventually leading to him to develop his own project in the DeFi space. With a passion for both Ethereum and Bitcoin, Chris extricated himself from the tribal crypto war and designed Badger DAO to connect the two largest cryptos in a cooperative manner.
Chris and I further discussed working above the OG Bitcoin Center, professional bodybuilding, the life of a salesman, breaking a regimented routine, discovering true happiness on vacation, the 4-hour work week, building on Ethereum, designing a DAO, PayPal in the crypto space, food coins, charity poker, wrapped Bitcoin, a new financial system and more.
Sponsored By:
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Electroneum, has gained widespread adoption providing a mobile-first payment solution to the world's unbanked, attracting more than 4M users worldwide in less than three years. They have since launched a new freelance marketplace, AnyTask.com, which is providing thousands of freelancers the opportunity to sell their services to buyers globally, without the need of a bank account. Learn more at Electroneum.com.
Chart Requests
Here is the video, including all of your chart requests! They are listed below as well. The charts are in alphabetical order in the video, so they are easy to find.
CAKE/BNB
This is the updated view. If it breaks that line, this is what I would be looking for. I do really like those 2 wicks below the previous lows without a candle close above. Nice liquidity grab.
DIA/BTC
Testing the range lows, could easily break down in a bear pennant, but still very good R/R for a long in this area. My bias is up.That's right, you could lose money, but the upside is worth it. If it holds the range lows, look for a move to the descending black line, EQ of range (dashed line) or top. All of those are also potential entries if retested as support. Watch the video! Really nice bull div too.
F (FORD)
I'm not really touching stocks to any great degree, but this does look technically good. It appears to be flipping a key resistance to support and is holding that ascending support in blue. The daily had a bullish golden cross between the 50 and 200 MA (not show) and the weekly here has flipped the 50 to support. Basically looks good if it holds $7.72.
LINK/BTC
I went into a lot of detail on the video, so please watch that. Really just ranging sideways right now, watching to see if the blue line acts as support or breaks. If it breaks that would be a head and shoulders and we should start looking much lower. But it could be a good entry especially if it's around the same area as the black line. LINK always does well when alts reverse, so my bias is towards this doing well sooner than later. But right now I don't see an immediate trade.
TRB/BTC
Already breaking support, falling knife and risky as I said in the video. I don't see any reason to trade this for now until it starts flipping overhead resistance back to support.
VET/BTC
This is dangling over the edge of support and broke just below the 78.6% fib. There is still potential bullish divergence with RSI, but requires definitive movement up today. I don't think this is a terrible area to take a shot with a pretty right stop and a long focus, but it could drop more like all alts. I would still wait for a break of the top descending line. No need to catch the knife.
XAIR (BEYOND AIR)
I really don't know. We did get the breakout we were watching for and this is a retest. But volume is non existent and the MAs are still resistance again. This is technically a decent area to take a shot on the retest as support, but I am personally not really interested. I talked about it a lot in the video.
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My preferred crypto tax software.
Binance is finally available in Florida!
Concierge Phone Service for Americans that protects your from SIM Swaps and other phone related hacks. I cannot stress enough how amazing this service is.
Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
On-chain and fundamental analysis, research, predictions and indicators, all in one place. Highly recommend.
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor.