The Wolf Den #111 - Michael Saylor's Bullish Case
Bitcoin Thoughts And Analysis
Bitcoin appears to be going parabolic. If you remember the bull run of 2017, charts became somewhat irrelevant, as Bitcoin broke out of "bearish" ascending patterns over and over again. We once again have seen Bitcoin break out of the top of an ascending channel and continue up. I would not short this thing with free money from my worst enemy. I am buying dips.
I feel like I cannot scream any louder for people to "buy Bitcoin," but I will certainly try. If you have been following me or have been a member of this newsletter, then you have seen ample entries to catch this incredible bullish move. One of the most recent was the breakout of the triangle shown below, which I talked about on countless occasions.
You can see that Bitcoin is going parabolic. It's not stopping to take a deep breath. It's not even consolidating in descending patterns. It's just going up.
It will stop at some point. It will likely have some massive retraces. We say multiple 30% retraces in the bull run, to shake out leveraged longs and refuel. That is probably going to happen, so be careful. This is not a time to throw in long leverage and hope for the best. All I can say is to slowly buy dips and hope the ride continues.
For fun, here is the weekly line chart. It's basically a straight line up. The line chart eliminates the noise from candles. Would you short this? Obviously not. It's a straight line with no actionable intelligence on where the top is likely to be.
Here is the ascending channel that Bitcoin just smashed through. As you can see, we formed another local support at $14,098, which could be a nice entry if this cools off. It may not. I am still watching the bigger area at $12,500 as well.
Altcoin Thoughts
I had some setups prepared and even took a few small positions in alts, but Bitcoin has continued to rage and Dominance continues to rise. I am just taking a little nibble, but don't feel it is responsible to share trades right now while Bitcoin is going parabolic. You can see some ideas in the chart requests and the video of me charting, if you are interested. But be so, so careful. If things change, I will share some setups tomorrow. Also worth noting that Bitcoin Dominance has filled the gap I was talking about for ages.
Noise Bottleneck 101
By Sahil Bloom
With the media in election frenzy, it has become increasingly difficult to find the signal amidst all the noise. We encounter a classic Nassim Taleb "noise bottleneck." But what is a "noise bottleneck" and how does it work? Here's Noise Bottleneck 101!
First, a few definitions. What do the terms "signal" and "noise" actually mean? The "signal" is the meaningful, relevant information you are trying to detect and absorb. The "noise" is the irrelevant information that interferes with our ability to detect the signal.
In simple terms, "signal" is good, "noise" is bad. With this in mind, the natural human inclination tends to be to consume more information. We believe that more information consumed equals more signal consumed. But this logic is flawed. Enter Taleb's noise bottleneck...
As a human being trying to survive in a dangerous world, your goal is not to simply consume more signal. Your goal is to consume more signal AND less noise. You want a very low noise-to-signal ratio. This will optimize your decision-making and allow you to stay alive.
But as Taleb points out, consuming more data with increasing frequency actually leads to a high noise-to-signal ratio. This is a paradox. More information may actually leave you worse off, less knowledgeable of your surroundings, and lead to poor decision-making.
Let's illustrate this with a few simple examples. Stock price charts. If you analyze a monthly chart for $BTC, you might learn some useful info. Mostly signal, perhaps a touch of noise. But look at the chart every minute and most of what you see is noise and randomness.
If you fail to realize that fact, your "learnings" from the minute chart may lead to poor decision-making (e.g. selling when nothing fundamental has changed). You consumed more information, yet because the ratio of noise to signal increased, it led to a bad decision.
The news. Have you ever noticed that people who constantly watch the news seem to know very little about the world? This is a classic noise bottleneck at play. More information consumption has led to a high noise to signal ratio. Their map is not the territory.
We believe consuming more information leads to better decision-making, but the reverse can actually be true. Now more than ever, beware the noise bottleneck. Perhaps it is best to take Taleb's advice: "Ration the supply of information, as naturalistically as possible."
So that was Noise Bottleneck 101. I hope you found it useful.
ETH 2.0 Development, Staking Has Begun
Vitalik Buterin, the brains behind Ethereum, took to Twitter to announce today that Ethereum holders can begin depositing ETH for staking. ETH depositors are required to stake a minimum balance of 32 ETH to participate in staking. ETH price jumped $25 on the news of the announcement, which is really just the beginning of a long series of ETH 2.0 developments and hopefully positive announcements. Staking has strong potential as a catalyst for upward price movement vs. singular news announcements which are largely expected. I will continue to monitor the total ETH staked and circle back to this down the road. For a deeper analysis of our thoughts on whether you should consider staking, read our blog above.
Crypto Derivatives Exchange FTX Was One of Joe Biden’s Top Contributors
Scrolling through a list of Joe Biden’s top campaign contributors, FTX is ranked #17 for the most amount donated. Above FTX is primarily political groups, hedge funds, and major companies like Alphabet. If Joe wins, hopefully, he does FTX a solid favor and demands long-awaited regulatory clarity.
2 Pro Crypto Politicians Won Their Races
Tom Emmer led the first-ever crypto hall meeting a couple of months back and accepted crypto as campaign contributions. He won a seat in the House. Cynthia Lumins bought Bitcoin back in 2013 and continues to publicly advocate for it today; she won a seat in the Senate. It is slowly happening. My guess is that far more politicians are exposed to Bitcoin and refuse to talk about it. That will change soon.
Fancy Bitcoin Whitepaper
Found this gem on Crypto Twitter. The Bitcoin whitepaper is most definitely worth a read through. If you are less technically inclined like me, at least read the abstract and introduction. The entire paper is challenging, to say the least.
Phemex Crypto Talk
I had an amazing chat this morning with Jack Tao, CryptoJack and The Moon Carl this morning. Phemex asked me to moderate the stream, where we discussed the future price of Bitcoin and whether it will break the all time high, DeFI, CBDCs, MicroStrategy and more. It's a good listen, check it out!
The Wolf Of All Streets Podcast Ft. Michael Saylor
Michael Saylor made headlines when his company MicroStrategy publicly purchased $425M worth of Bitcoin. This massive buy order ignited the “MicroStrategy Effect," forcing major companies to consider purchasing Bitcoin to hedge against inflation and dangerous monetary policy. On the day of the recording, Michael also divulged his own purchase of Bitcoin - in excess of $200M.
Scott Melker and Michael Saylor further discuss Michael Saylor Bull, Bull, Bull, joining Crypto Twitter, falling in love with Bitcoin, channeling monetary energy, the “MicroStrategy Effect”, running a company with 1,000s of employees, the problem with inflation, COVID’s impact, the new normal, a “K shape recovery,” the FED injecting money, cash flow and monetary expansion, shorting the dollar and more.
Chart Requests
Here is the video of your chart requests! Please watch these, they are so much better than the descriptions below.
ALGO/BTC
This looks like it could be bottoming. As I said in the video, there's a daily bull div, as well as multiple divs on the 4 hour, not shown in this chart. Safest entries are a flip of 1794 and better yet a move above the descending black line.
ANKR/BTC
Watch the video. I said this was a buy at 51 sats when I was live, and it went up 20% from there before starting to retrace. Harder to read now, I would want to see it back above 58 with candle closes. But this was bullish yesterday for sure.
BITF (BITFARMS)
Bullish. Breakout of the descending blue channel, flipping levels from resistance to support, above both MAs. This should keep going, nothing not to like here. You can try to catch it on a retrace, but when we were charting this yesterday I said it looked amazing and it's continued on.
EASY/ETH
The pennant I drew yesterday broke down. This happens ALL THE TIME. Pennant often become flags. This is why I said the best entry is a break of the descending top black line. I would still wait for that, not touch it until it happens.
ETH/USD
Break of descending channel, but volume, retest of the channel as support. Bullish. I am still long ETH from 386.
Bullish chart. Higher highs and higher lows. We need to make another higher high here to confirm the most recent low. Now that the EQ of the range is support again, I am targeting a move to the range highs, near $480.
PDD (PINDUODUO)
Please watch the video, I go into depth on why I was "wrong" and how to approach a trade like this. It looks bullish in price discovery... but worth watching today's candle, because it has the potential to become an evening star. If that happens (we see a doji and then a down candle tomorrow) then this looks topped out and I would look for a drop to the range highs or ascending black line as support.
TOMO/BTC
Watching this one closely because it is sitting on support and is tragically oversold like most. Really want to see it break the descending white line before entering with any real position.
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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.