The Wolf Den #116 - Traders Vs. Analysts
Bitcoin Thoughts And Analysis
Bitcoin continues to push hard, showing little sign of reversal or correction. Really impressive and likely a result of the fundamental narratives that we have been been discussing for years finally coming to fruition. There's low supply and high demand. The number goes up.
Nothing has changed from the charts yesterday in a meaningful way. Bitcoin is presently parabolic.
MONTHLY CHART
Just a reminder that there is nothing but thin air until the all time high. For fun, I added one more purple level based on the top of the wick from the major correction after the all time high. It's right at current price. Not a particularly meaningful level in my mind, since it's just touched once. But zoomed in on the daily you can see there was some nice price action here a few years ago. Around $17,100 was the top of the dead cat bounce on the way down to the lows.
DAILY CHART
For illustration, here is that monthly level above shown on the daily in January of 2018.
Altcoin Charts
Dominance is still ranging, but trending in the wrong direction for altcoins if Bitcoin continues to rise. A sizable Bitcoin correction would also likely be bad for alts, so this remains a risky time for trading. Remember, no matter how good an alt setup looks, it is ultimately at the whim of Bitcoin.
From the setups yesterday, HOT looks good, VOX is sideways and nothing has changed, LTC was rejected at resistance and XRP continues to look very strong. Here are a few more worth watching.
Remember set your alarms for if/when these trigger. These are not signals and I am not telling you they are worth buying right now.
ADA/BTC
I am watching larger cap coins that are trading on leverage exchanges at the moment, because they tend to move first if alts recover, and because we have already seen movement from coins like LTC and XRP.
ADA has significant bullish divergence on the daily, coming out of oversold RSI. Further, it has bounced off of a key support level. It could be bottoming.
The safest entry is to see price flip the long box around 700 back to support and a break of the descending blue line, which would ultimately signal that this is likely ready to continue up. We saw LTC rejected at a similar line yesterday, for now. Depending on what price does in the coming days, this is the basic idea of the setup I would be looking for.
I could see an argument for entering now on the daily bull div, but it's risky because price can drop without invalidating that divergence, and there is a lot of likely resistance over head. The safest way to take any trade is on confirmation.
YFI/BTC
This chart is very promising. As you can see, it has broken out of the small bull flag that I shared on the livestream this weekend. More importantly, it is breaking and retesting that descending blue resistance, so this area could be a good entry. That is only confirmed on the 4 hour. On the daily below, you will see that this candle has not closed.
There's also a potential inverse head and shoulders, although I do not love the small left shoulder. It's valid though, and would be confirmed with a break of the slightly ascending blue line on significant volume. The target of that move is shown based on the depth of the pattern on a logarithmic chart. Here is the macro view with daily levels mapped.
Legacy Markets
Today's analysis from Altcoin Psycho.
Before I jump in to my trades for the week, I wanted to just give a quick update on the most recent trade I signaled last week, Moderna.
At $82, I shared a setup for Moderna due to some unusual options activity, with the speculation that big news was coming. This hypothesis was right on the money, as Moderna announced a vaccine with an almost 95% efficacy rate. The stock is now trading at $100, and I've exited my position here.
Now it's time for some new plays!
ACB (AURORA CANNABIS)
I think marijuana stocks saw a bit of a sell off due to the uncertainty around the election results. With that said, betting prediction markets are starting to show lower and lower odds for a Trump election reversal. I think marijuana stocks will quickly bounce again because of this. I'm targeting $9.70 on ACB, as we have a nice gap up ahead at that level that looks like it will get filled.
DRGV (DRAGON CAPITAL)
HIGH RISK HIGH REWARD!
I do not have a chart for this one as it's an over the counter penny stock that is not available on certain brokers. If you're using TD Ameritrade (and possibly Robinhood), you're in luck. DRGV is producing a beautiful electric car, and with a market cap of only $3M I personally think there is a massively positive risk/reward ratio here. I invested in this one myself last week, and I plan on holding this stock for a long time to see what happens. I highly recommend doing your own research on this company to fully understand what they do.
Regardless if you choose to invest or not, can we just take a second to admire how beautiful their cars are?
Important Ethereum 2.0 Update
While the price of Ethereum has remained elevated, a concerning roadblock has arrived for the Ethereum community. In order to proceed on time with the highly anticipated 2.0 update, 524,000 Ethereum have to be delegated for staking. Currently, only 18% of this goal has been achieved, with the intended completion exactly one week away. This is likely due to the weak staking incentives. The returns are estimated between 5-10%, with an expensive barrier of entry to participate. More than likely, the next stage of 2.0 will be delayed beyond December 1st and will eventually occur 7 days after the 524,000 threshold is met. IF this has an effect on price, a lower Ethereum price may help people accumulate the 32 needed to stake, in turn pushing 2.0 further along. We will continue to monitor the progress as it unfolds.
Another Hedge Fund Exploring Cryptocurrency
In a notice to shareholders and investors, SkyBridge Capital - a megafund headed by Anthony Scaramucci - revealed its intent to explore digital assets. SkyBridge is planning to “invest in funds that provide exposure to digital assets.” Skybridge capital currently has 9.3 billion in assets under management. If you want to read more about their intentions, look at pages 2, 51 and 52.
Grayscale Continues to Accumulate Bitcoin
As we have continued to document, Grayscale is still accumulating Bitcoin. Just yesterday, they announced that they have surpassed 500,000 Bitcoin, which is somewhere between 2-3% of the total supply accounting for lost and unrecoverable Bitcoin. If you are looking for a sign that we are still early, then look no further than Greyscale continuing to purchase Bitcoin, even with the asset up more than 4x from its yearly lows of $3,700.
Hedge Funds Are Shorting Robinhood Fomo
This study shows that Robonhood stock fomo causes an average 14% daily rise in a stock that users "herd" into. There's also evidence that Wall Street is using this data to identify good shorting activities, making an average of 3.5% by shorting the stock after the herding event and then buying it again a few days later.
A really interesting article on what has been driving the market on a number of hot ticket stocks, and much effect Robinhood (and really Dave Portnoy) have had on the stock market.
Tesla Joining The S&P
"Tesla Inc., Elon Musk’s 17-year-old upstart carmaker, took a giant step toward blue-chip respectability on Monday, getting named to one of the world’s most famous stock indexes in an action that will greatly broaden its investor base.
The announcement that Tesla will enter the S&P 500 on Dec. 21 follows months of speculation, and one temporary setback, after the stock failed to make the cut during the index’s quarterly rebalancing in early September. The anticipation has helped drive a nearly fivefold rally in the stock this year to almost $390 billion, making the electric vehicle pioneer the biggest company ever to be added to the gauge. It will also be one of the index’s most influential constituents with a weighting that falls around those of Berkshire Hathaway Inc., Johnson & Johnson and Procter & Gamble Co.
It’s so big that S&P Dow Jones Indices said it is seeking feedback from the investment community to determine if Tesla should be added all at once or in two separate pieces. The company that Tesla is to replace in the index will be named later, the index provider said."
The Wolf Of All Streets Podcast Ft. Trevor Jones
Trevor Jones formally started his art career at the age of 38. He started small, selling his paintings at local gallery exhibitions, catching the eyes of collectors worldwide. His newfound fame allowed him to begin experimenting in the amorphous space at the intersection of technology and fine art. After diving face first into NFTs a year ago, Trevor began striking gold, selling interactive one-of-a-kind art to collectors for hundreds of thousands of dollars. Trevor is now regarded as the lead artist in the NFT space and is spearheading the charge towards mainstream acceptance.
Trevor and I further discuss the artist checklist for success, drinking wine for inspiration, Trevor’s very first art exhibition, painting QR codes and augmented reality, Picasso’s Bull, Nonfungible tokens, an abstract understanding of ownership, selling one piece for $300,000, opening the NFT floodgate, accidentally giving the cold shoulder to Tyler Winklevoss, the different ways to invest in NFTs, emotionally detaching from your own work, how to display an NFT and more.
My Recommended Platforms And Tools
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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.