The Wolf Den #130 - Highest Weekly Close Ever
Bitcoin Thoughts And Analysis
Bitcoin remains sideways, but did surpass a significant milestone - the highest weekly close of all time. This was a bullish signal that has traders looking to incoming all time highs, although it's hard to discern direction from the sideways chop that we are watching. Zoomed out, all still looks extremely bullish.
MONTHLY CHART
Nothing has changed on this chart and this new candle is only a week old. I just wanted to share it so that you can once again revisit the key levels. Last month was one of the most bullish candles in Bitcoin's history, so there's no rational reason to be macro bearish.
WEEKLY CHART
The highest weekly close ever. Bullish. You can see the red line, which shows the previous high, the week that Bitcoin hit its previous all time high. Hard to feel at all bearish when looking at this chart. We want to see $18,953 hold on the weekly chart moving forward as support.
4-HOUR CHART
As a trader, this is the low time frame pattern that I am watching. While it is clear that we are ranging sideways, we also have a well formed bull pennant now. Remember, pennants can break support and turn into flags (parallel channels) which are still very bullish. So the proper trade is a break of the upper resistance and ideally a retest as support. But sometimes that retest never comes. The target is shown based on the length of the flagpole. $22,935.
Altcoin Charts
Bitcoin Dominance has started to drop a bit today and there are a few alts that are looking promising. These are mostly updates, since people always ask me for them. They are starting to trigger at the next levels of entry.
SUSHI (BTC AND USDT)
This still looks bullish on both pairs. As you can see above, we have confirmed another higher low with a potential higher high since I last shared. There's nothing currently bearish about this chart.
The USDT pair is pushing through supply and resistance. I am already in from below, as you know, but I will add to the position if it can break cleanly through this area and retest as support. That is in confluence with the trade that Altcoin Psycho shared the other day as well.
VET/BTC
I shared this last week and it is currently breaking out. I have entered a trade on this pair on Binance.US, since my Binance account is now closed.
The idea is shown in blue, but that is not based on time or any actual expectation of price action. I just want to see it break each of these levels and test as support before continuing. Bottom line, we have a macro breakout of the black line on strong volume, then consolidation in a bull pennant that now appears to be breaking up.
WAVES/BTC
We have been trading this since the breakout, and most recently from around .0002. I closed the trade when I closed my Binance account, and have nowhere to actively trade it at the moment. It seems a bit crazy to consider trading this now because it has risen so much, but it is currently breaking through an important level of resistance, that red box. This is a weekly chart, so we really want to see it hold above that level in 6 days. However, I would theoretically be comfortable starting a position on the breakout and adding to it if there's a retest as support. Again, I cannot actively trade this at the moment.
Trading Bitcoin Is Hard - 10 Things Every Beginner Trader Must Know
We have all heard hundreds of stories about the life-changing money being made in the crypto space. Anonymous Twitter traders regale us with tales of turning $1,000 into millions in a matter of months, flipping altcoins and making 100x on investments daily.
Moon. Lambo. To the outside observer, this seems like an easy and sure way to get rich quick. They leave their jobs to become “professional crypto traders,” even before learning the basics of trading and managing risk. We all know how this story ends.
Being a trader in any market is hard — 95% of all traders fail, most within a few months. They generally go completely broke or perform far worse than simply investing a lump sum in a safe investment and leaving it to grow. Contrary to popular belief, the crypto market is the most difficult to trade for beginners for a number of reasons.
The casino never closes
The market is open 24/7, giving traders the feeling that they always have to be trading. This causes tremendous fatigue and FOMO (fear of missing out) for emotional traders. Nobody can effectively track a market that is perpetually available, and new traders find it difficult to step away. This often ruins both their personal lives and destroys their finances.
What fundamentals?
The crypto market lacks fundamentals, the cornerstone of trading legacy markets. When purchasing stock, a trader can review quarterly earnings, sales reports, the company’s road map and countless other barometers of success. More importantly, companies trading on the stock exchange are regulated and therefore transparent — you generally know what you are buying.
The strength of a team or project in crypto is nearly irrelevant for a trader’s purposes. Traders rely on technical analysis, which is hard to use properly for newcomers to the space.
I’m making money, so why is my Bitcoin balance down?
The interplay between Bitcoin (BTC) and altcoins adds a complicated wrinkle. Alts are rarely safe to trade and finding opportunities requires tremendous patience and experience — both things that newer traders inherently lack. New traders often mistakenly gauge the success of their trades in the USD value of the coin, not realizing that leaving their capital parked in Bitcoin would have been a far more profitable (and far easier!) strategy. Trading legacy markets with fiat is straightforward — you either make or lose dollars.
How do I set up a stop loss and take profit order?
Legacy traders have the benefit of placing both stops losses and take profit orders, as well as trailing stops. Trades require less babysitting and management. In crypto, exchanges lack the full breadth of orders necessary to properly manage risk, especially in a market that never closes.
Experienced crypto traders can share countless stories about missing a huge pump while they were sleeping because they had their downside protected with a stop loss and were unable to set sell orders at their targets. Traders should never have to choose between taking profit and properly managing their risk.
I can turn $10 into $1,000 with leverage!
Leveraged trading is far too common among beginners. Leverage is a tool that should only be used by the most experienced traders, those who have proven to be profitable for years.
The barriers to entry are non-existent in crypto, on exchanges that are built to transfer the wealth of inexperienced retail traders into the pockets of the exchanges themselves. Beginners will likely lose everything they risk trading with leverage because the downside is massively compounded.
Getting rich quick is easy, right?
In legacy markets, nobody expects to get rich quick. Crypto appeals to people looking to quickly turn a small sum of money into their retirement, which is unrealistic. Twitter is selling Lambos while beginner traders end up selling their cars on the used lot to pay rent.
Those who got rich quick in crypto were most likely lucky, not good. Further, there is a difference between being wealthy on paper and in real life — most of the crypto traders who “got rich” failed to sell at the top and saw their paper wealth disappear as quickly as it was made.
Crypto is not a safe investment
An inexperienced person is far less likely to go broke buying a random stock than they are buying any available asset in crypto. The stakes are far higher! Crypto is not a safe investment and should only be a small part of someone’s overall portfolio.
I get all of my trade advice from a cartoon on the internet
While there are experienced and successful traders on social media, most beginners are learning from other beginners and don’t know it. Taking financial advice from strangers on the internet is the cornerstone of the crypto market.
There is no surer path to financial ruin than spending your hard-earned dollars on assets being shilled by avatars who are likely manipulating you for their own profit. Never base your decisions on the advice of those who don’t have to deal with the results.
Traders do not average down!
A common grave mistake many traders make is Averaging Down: buying more of the coin as the price drops with the logic that a good thing is now cheaper (an even better bargain). This logic applies to investing, not to trading.
A trader has an invalidation level for their idea — price dropping significantly should invalidate their trade and cause their stop loss to fire! Most beginners do not understand this and dig a deeper hole than necessary.
Risk management is everything
Risk Management is boring — and happens to be the most essential skill necessary to be profitable. Understanding how much to risk on a trade and how to properly balance a portfolio are exponentially more important than entries and exits. Learning this takes time — most new traders are broke before they understand risk.
Most people would be far better off slowly investing a small percentage of their entire portfolio in crypto — and in Bitcoin, in particular. Don’t be fooled by the avatars on twitter — trading crypto is hard.
China Pushing Digital Yuan
I stumbled across this article this weekend and was pleased to see an honest assessment of the Digital Yuan, as well as an unbiased and favorable mention of Bitcoin and cryptocurrencies. China's reasons for pushing forward with their CBDC (Central Bank Digital Currency) are clear - more control of the money supply, an end to private transactions, the final piece of the surveillance state puzzle and a move to diminish the power of the US Dollar.
China is way ahead of the rest of the world in the development of their CBDC - the question is will it find adoption in China. That would be first major hurdle before it could be a player on the world stage.
The Sats Vs. Bits Debate
An old argument resurfaced yesterday, which is the proposal to change the term “satoshis” to “bits.” Sats are the base unit of a Bitcoin worth exactly .00000001 BTC, or one hundred millionth of a full coin. The reasoning is that it intuitively makes more sense for newcomers and is more phonetically pleasing.
The debate has no real impact on Bitcoin - it is akin to debating the color of a race car instead of discussing the parts of its engine. Hardcore Bitcoins will have a hard time letting the term satoshi die, but if enough newbies flood into the crypto space, it could happen.
Coinbase Supports Spark Airdrop
Coinbase just announced support for the Flare Network airdrop, allowing all XRP holders to receive Spark tokens to their wallets. Both Coinbase and the exchange Coinbase Pro are participating in the event. The date to receive the token hasn’t been announced yet, but is supposed to occur between Q1 and Q2 of next year. The simplest way to receive the tokens is by holding your XRP on a participating exchange on December 12th. By now, most major exchanges have come forward announcing support, including Binance, Binance US, Huobi, and Kraken. If you wish to receive the tokens in your cold wallet, make sure to follow the 5 steps linked above before the snapshot on December 12th. If you are comfortable using an exchange for the airdrop, I recommend it because the steps below can be confusing, especially if you are new to navigating cold storage. You also need to be sure that your cold wallet has sufficient storage space to support the application required to hold the tokens.
Convert Everything to XRP for Spark Token? I Wouldn't.
The hype leading up to one of the largest crypto airdrops in history has led some people to convert all of their holdings to XRP before the airdrop, increasing the number of free Spark tokens that they will receive. It is possible this strategy could be profitable, but it is a risky gamble for several reasons: exchange fees and conversions are expensive on big orders, exchanges without fees place prices at a premium, nobody knows the future value of the Spark token, and XRP will likely be very volatile before and after the snapshot. Yes, there are free tokens coming, but if the opportunity sounds too good to be true, it most often is for an inexperienced trader. The safer play is preparing dry powder for potential selloffs in either XRP or Spark for better and safer entries.
1% of Ethereum Is Locked
For Ethereum 2.0 to kickoff, the deposit contract had to receive .5% of its supply into staking. A week has passed since it hit the minimum threshold and another .5% of the total supply has been added to the lock-up. Coins staked are estimated to stay locked for 18+ months, which is extremely bullish for holding Ethereum because more tokens are taken off the market for an extended amount of time. Supply down means that price will rise assuming demand remains the same or increases.
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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.