The Wolf Den #123 - One Year Of The Wolf Den!
Bitcoin Thoughts And Analysis
Bitcoin dropped roughly 17% from the top - $19,500 to $16,100. This is NOT THE SAME as a 17% retracement. A retracement is based on a specific move - a correction from the top is calculated as the percentage drop from the highest number. Example:
If price starts at $12,000, goes to $20,000, and then drops to $18,000.
Retracement is 25% (2,000/8,000). The drop is $2,000 on an $8,000 move.
Drop (or correction to some) is 10%. (2,000/20,000)
Here is a daily chart showing the relevant Fibonacci levels from the March 12th lows to the recent top. I also added a level (not a FIB) at 20%, to show that this has been roughly a 20% retracement on a 17% drop.
$13,455 is the 38.2% retracement level of the move up from March. This would be roughly a 30% correction or drop from the top. There's an 8% difference between the 2, but both line up in that area for a reasonable and expected retrace if this continues further down. I am not saying it will. Just an area to watch.
The black lines on the chart below are all key levels that were blown through. So keep an eye on those. Ultimately, I still have heavy orders at $12,500, which I have discussed a number of times. This was a very important level and has never been retested as support.
Retracement is HEALTHY. You WANT to see these levels retested for confirmation of the bull trend. There is still nothing bearish at all on any time frame. Higher highs, higher lows.
We had continued bearish divergence with overbought RSI on numerous time frames. In a bull run, Bitcoin tends to push through these but they do eventually catch up for some correction. The daily had a few.
On a positive note, basically any reversal above $13,275 will make a clear hidden bullish divergence. RSI is still above 50, which is the point where it flip from bullish to bearish.
That said, we do expect RSI to eventually travel from overbought to oversold, which could coincide with the larger drop to complete a full retracement.
The bear divs are far clearer on the 4- Hour chart... which has already basically tapped oversold.
You can see those bear divs above in red.
My favorite reversal signal is an oversold bullish divergence on the 4-hour chart, so I have drawn an idea of what I will be looking for. This is not tied to specific price, just showing you a general path to an oversold bullish divergence. This could start now without dropping lower on RSI, or we could see a much larger dip into RSI, which would make this more likely. Basically need to see price recover a bit then drop harder for a lower low with RSI pushing a higher low. Happens very often in this moments.
I often talk about the impulsive bounce after a major drop. It is very common to see price bounce 50% after a major drop, which is also often the top of a bear flag. For now, we see very little bounce and have not seen this. This idea at the moment is also predicated on the idea that the immediate bottom has been found, which is far from a certainty. But watch for that 50% potential bounce if we do find a more definitive bottom.
Bottom line - remain calm! There is nothing out of the ordinary happening right now.
Go eat a turkey and chill.
Chart Requests
Since today is a holiday I do not have time to write out all of the chart requests. I am sure they have changed a bit with Bitcoin moving anyway, but here is the video from yesterday. Thanks for your understanding!
Base Protocol
In an effort to be fully transparent, I intend to share with you the coins and companies that I take early allocations and investments in. This is one of them. Remember, I had the opportunity to buy in far cheaper than most, but my coins will remain locked and vest over many months. Here is more about Base.
Base Protocol (BASE) is the S&P 500 of crypto - the world's first tokenized crypto industry index. BASE is a token whose price is pegged to the total market cap of all cryptocurrencies.
Pegged at a ratio of 1:1 trillion, the protocol works like this:
If crypto market cap is $400B, BASE is $0.40.
If crypto market cap is $800B, BASE is $0.80.
In effect, BASE allows traders to speculate on the entire crypto industry with one token.
As crypto enthusiasts, we often disagree on which projects will prevail - but we all agree that the overall industry will grow in the future. BASE allows traders to speculate on that consensus.
BASE will be useful for existing crypto traders looking to hedge their portfolios, institutional investors looking to diversify their crypto exposure, and it removes the guesswork for novice crypto traders.
Key Partnerships
Base Protocol is a tier 1 incubation project with DuckDAO, the most renowned community-based VC in crypto.
Base Protocol has partnered with Chainlink to build the first total crypto market cap oracle.
Base Protocol has partnered with PlasmaPay to offer BASE as a borrowable asset for hedging.
Several other synergistic DeFi partnerships on the way.
BASE Presale Opportunity - Listing on November 30th
BASE launches on Uniswap on November 30th.
*BASE achieves its price peg through an elastic supply, similar to Ampleforth. While BASE aims to track the pace of the aggregate crypto industry, it is still a risky / rewarding small cap project with huge growth potential. Early holders stand to benefit from runaway rebase profits, just as AMPL holders did during adoption.
There is a small allocation left in the presale to buy BASE at a discount, for buyers willing to accept the 4 month vesting schedule. Apply to join the presale here: baseprotocol.org/presale
Learn more:
Website: baseprotocol.org
Twitter: twitter.com/baseprotocol
Telegram: t.me/baseprotocol
Blog: medium.com/@BaseProtocol
BASE x DuckDAO
BASE x Chainlink
BASE x PlasmaPay
https://medium.com/plasmapay/plasmapay-announces-partnership-with-base-protocol-b5556da3cb86
Brian Armstrong Warns of Possible Threatening Legislation
Brian Armstrong, the CEO of Coinbase, revealed on Twitter a rumor he heard regarding crypto regulation that he found concerning. According to Armstrong, the US Treasury is planning rushed legislation around KYC of self-custody crypto wallets. The legislation would require financial institutions to be able to verify self-identifying information on the recipient for a withdrawal to complete from an exchange to a wallet. I believe that this would seriously stifle innovation in DeFi, smart contracts, and NFTs, along with blocking out people in developing countries and emerging markets. The legislation runs counter to the philosophy of crypto and luckily Brian received an outpouring of support from his Twitter post. Other major investors and crypto companies joined in with Coinbase to write to the US Treasury to prevent the rumor from coming true.
This would be a disappointing act from Mnuchin and the current administration on their way out the door.
Read the entire thread.
Don’t Day Trade on PayPal!
It’s comical to even have to say this, but day trading on PayPal is not a good idea. One user who recognized the platform offers zero fees began trading a large stack, likely overflowing the order book with trades. With no warning, his account was temporarily banned for 6 months. If you’re a beginner to crypto, PayPal can be a comfortable starting place to buy some, but for anyone with a little experience, we recommend moving past PayPal onto a platform more suited for your needs.
eBay Coming to Crypto?
Popular auction site eBay now offers Bitcoin rewards through shopping app Lolli
Just in time for holiday shopping, eBay publicly announced a partnership with Loli, a crypto rewards company. Now eBay shoppers can receive 1% back in Bitcoin for all purchases they make on the site through Loli. Rumors have been circulating for over a year that eBay is exploring crypto as a payment option. We suspect it will likely happen at some point if they plan to stay competitive with evolving e-commerce. If eBay is next, that leaves one last giant to talk about - Amazon!
The US Intelligence Community is Eyeing China’s CBDC
The business world and regulatory world may be behind in crypto, but the US defense community is realizing it can’t afford to be. The director of national intelligence, John Ratcliffe, sent the SEC chairman Jay Clayton a letter just this month outlining his growing concerns for the US. In it, he cited China’s progress in developing their digital Yuan and the lack of progress here at home. He even went as far as to offer Clayton a briefing, but nothing is likely to happen because Clayton is stepping down at the end of this year. The transition will likely add another month of missing updates from the SEC commenting on crypto until the new chairman or chairwoman is settled in. Regardless of the intentions of the defense community, this will continue to add pressure on the SEC to act, bringing clarity sooner than later.
This Headline Is Stupid!
This is low brow, stupid clickbait.
“Losses in a day” are irrelevant in an investment, especially when it’s up 70-80% in a couple of months.
Get a grip.
The Wolf Of All Streets Podcast Ft. Chen Zur
Chen Zur has a diverse background in a multitude of sectors and over 20 years of experience at Ernst and Young. Upon E&Y’s discovery of blockchain 6 years ago, Chen became the US blockchain leader for the company, helping clients implement blockchain at scale. His ability to explain complicated and abstract technologies and concepts in a way that everyone can understand makes this episode unique.
Chen and I further discuss working at Ernst and Young for over 20 years, working on the blockchain for 6 years, the internet of value, the 5 reasons for utilizing blockchain, China’s CBDC and the imminent digital dollar, big brother, NFTs, the gold standard, removing the middle man, the normalization of blockchain, the future of precious metals, private vs. public blockchains and more.
My Recommended Platforms And Tools
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This is one of the main places where I hold crypto to gain interest. Celsius also offers dollar or stablecoin loans against your crypto, starting at just 1% annual interest. Celsius is giving WOAS followers $20 to open a new Celsius wallet. All you have to do is enter promo code WOLF, then transfer and keep at least $200 worth of crypto in your wallet for 30 days.
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.