The Wolf Den #159 - Staying Calm Is Key
Bitcoin Thoughts And Analysis
Not much has changed since yesterday for Bitcoin. I zoomed into the hourly chart to take a look at what is happening locally, for the scalpers among you.
As you can see by the red checks, Bitcoin has been in a local downtrend since the all time high. It made a high, low, lower high, lower low. It would take a break of the red line to make a higher high and cancel this downtrend, from that perspective.
That said, the blue descending resistance is broken and price has been heading back up, making higher lows and higher highs shown by the blue checks. It's all a matter of time frame and perspective and what you are watching. On larger time frames, none of this is particularly significant.
If you are a scalper who trades channels, the ideal trades are shown. Blue would be a flip of the local resistance at $37,402 and retest as support. The even safer entry is a break and flip to support of the red line.
If you are looking for shorts, a break down of the channel support and retest as resistance would be a decent shot. I am OBVIOUSLY not looking for shorts, just trying to show you what to look for if you are scalping and have no bias.
Ethereum All Time High
Ethereum bulls breathed a sigh of release today, as the coin finally breached it's all time high before pulling back slightly. Of course, this is only on the USD pair, with the BTC pair still far from reaching it's previous top. If you have been here with me, you know that I have been dollar cost averaging into ETH for over a year now and remain bullish on the coin. I believe it will even perform better than Bitcoin for the foreseeable future. Look at what happened when Bitcoin finally broke it's highs... it more than doubled in a short period of time. I see that kind of upset for Ethereum.
The chart also lined up very nicely for this move, with a break of descending resistance, then a confirmed double bottom and clean flips of each resistance to support. This pair has looked bullish for ages.
We want to see candles start closing above the highs. The 12 hour and below already did it, but it would be great to see the daily, weekly and monthly all achieve the same feat. For me, that would be a sign of a real flip to support.
Remember, Bitcoin made an all time high for a brief moment around 20K before pulling back for almost 2 weeks... then it made the real push. We could see a similar situation here.
As a trader, I either want a break of the highs (and retest, although that may not happen) or to buy after a consolidation under these levels - even down to around $1200 if it happens. But my bags are frankly packed already.
Altcoin Charts
Injective went up 68% from the setup yesterday! Incredible movement and it flipped two of the resistance levels to support almost to the sat on the way up, giving a few solid entries on pullbacks. I hope some of you caught it. DOT also pulled back perfectly to the green box that I drew, so there was a nice potential entry there. All of that said, all eyes seem to be on ETH today, and I don't see any other incredible setups at the moment today. Alts seem to be pulling back a bit... right after everyone started screaming about alt season. I will share more tomorrow if the market looks good.
REN and BAND from last week also broke out and look to be retesting previous resistance as support, so I would take a look at those.
Legacy Markets
SPWR (SUNPOWER CORP.)
This is an update from last week. As you can see, price did in fact break the high and flip it to support yesterday. This is now officially through resistance and much higher targets should be in play with time. I am looking for a 2x from current price, but it will take a while if it happens.
DeFi Lending And Borrowing, Explained
This is a great, quick article from CoinTelegraph on the basics of DeFi lending and borrowing. Really worth giving it a read if you are looking to better understand DeFi and its power/
What Is Going On With Tether?
Tether FUD (fear, uncertainty, doubt) is not a new concept, and it seems like every few months the topic resurfaces before quietly disappearing into the ether. Tether is currently the largest stable coin, with a 4x market cap lead on its closest competitor, USDC. The Tether FUD picked up again when it was publicly announced that Tether Ltd. was under investigation by the Office of the Attorney General for the Southern District of New York back in April 2019. A recent and very well-written investigative article was just anonymously published called “The Bit Short: Inside Crypto’s Doomsday Machine.” The title is clearly a spinoff of “The Big Short”- a movie about the 2008 housing bubble. The article raises a number of alarming accusations, stating that “if Tether flows were partly or wholly fraudulent, that would have a significant effect on the correct market price of Bitcoin.” According to the article, 70% of Bitcoin’s buying volume is accounted for from Tether. Furthermore, the anonymous author claims this is the case for almost the entire crypto ecosystem. If the article is correct, than Tether is largely unbacked, issuing fraudulent promotions, washing money through offshore banks, and propping up the market - but that does not mean that this is the truth!
It was this article in conjunction with a pause in Tether’s printing that caused the landslide of recent FUD, but is this all true and/or a concern? First and foremost, Tether is only a fraction of the size of Bitcoin and it seems likely that Tether holders would trade out of their position into Bitcoin, USD, or an altcoin. The news would certainly be bearish, likely causing short-term fear, but this does not impact the fundamentals of Bitcoin. Traders and investors rely heavily on Tether and other stable coins in order to move quickly in and out of the market, so it's obvious that Tether accounts for a lot of the volume. But it does not drive the price of Bitcoin. The absence of Tether, in theory, should only mean a short-term dip in Bitcoin trading volume, not a long-term price plummet. Compared to other events Bitcoin has survived (Mt.Gox, Silk Road, Chinese Regulation, etc.) this would only be a scratch. If you do wish to better ascertain whether Tether is fully backed, a good starting place is the 2019 case docket. Then search for rebuttals and decide for yourself what sounds closest to the truth. Many crypto experts have come forward dismissing the article, including Pomp, Selkis, Balajis, Alistair Milne, Willy Woo, Preston Psych, and others. I am of the same belief - the Tether accusations are nearly irrelevant in the current market.
Grayscale Is On A Buying Spree
In the past 24 hours, Grayscale has bought 16,224 BTC, currently worth just shy of $600M. When the Grayscale buying spree first started gaining media attention, Grayscale was buying 2 to 3x the BTC being mined at any given moment. The purchases from the last 24 hours represent 18x the daily amount of BTC added to the market from mining! Grayscale now holds 22.9 billion in AUM in its GBTC Trust, totaling over 3% of the total supply. When you factor in lost Bitcoin, Grayscale realistically holds between 4-5% of the circulating supply. Bitcoin price dips are becoming so sought after that a dip is indirectly causing exchange outages and supply shortages across the board. This will probably only become more rampant as price rises and more overall participants join in the market.
Bitcoin Is The Most Popular Trade On Wall Street
Being long Bitcoin is officially the most crowded trade among fund managers, measured by the size of capital inflow, surpassing "long tech." Think about that. FAANG and tech stocks have largely carried the entire stock market on their collective backs through the pandemic, and now they are the second most popular trade - behind BTC.
What's the third most popular trade? Shorting the dollar.
The Wolf Of All Streets Podcast Ft. Justin Sun
Justin Sun is one of the most prominent members of the crypto community. His crypto story started in 2012, when Justin worked on some of the the earliest projects in the space before building Tron (TRX). Justin's previous experience gives him unique insight into every major trend occurring in 2021, and has Justin poised to make Tron a major player in the DeFi space and beyond.
Just and I further discuss working for Ripple in 2012, graduating from UPenn, the pre-Tron days, solving the scalability problem, building Tron, 2017 ICOs, paper Bitcoin, learning from Jack Ma, dot-com and crypto bubbles, the digital Yuan, North Korea, the future of Tron and more.
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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.