The Wolf Den #167 - Reddit Vs. Wall Street Live Stream
Bitcoin Thoughts And Analysis
Bitcoin made roughly a 20% move off of the lows. It was already heading up when Elon Music changed his twitter bio to #Bitcoin, which fueled the second leg of the pump. For me, the bullish divergences that were building over the past few days that I shared were the key indicator, and the confirmation of the 12 hour div yesterday was the clear bottom signal for me. We also had the bullish SFPs I shared with the sweep of the lows below the trading range. There was a lot of fear, but to me the charts were saying that up was more likely than down.
MONTHLY CHART
Still 3 days, too early to celebrate... but it is interesting to note how much panic there was about this candle when price was lower. It looked like a shooting star and very toppy.
Looks good now.
You have to wait until a candle is closed to incorporate it in your analysis.
Note, this is likely to have the highest monthly volume EVER.
4-HOUR CHART
Price exited the huge descending wedge, which should be a signal that the downside is over for the moment. But you obviously never know. Resistance is currently being retested as support - this is a classic buy signal. That does not mean it will work out! But if you trade patterns, you buy support.
Price swept the range lows, pumped, broke above the range EQ (equilibrium, center dashed line) and confirmed a double bottom by breaking the pink line. The target of that pattern is shown. It would be normal to see a retest as support of the EQ and that pink line, both textbook long entries targeting the range highs and all time high.
The Sectors Of Crypto And A Glance At Web3
A Twitter user (@scottwalker99) posted an excellent Tweet about the breakdown of the crypto market into 8 distinct sectors. They rank as follows:
1. Currencies (BTC/others) 625B
2. Smart Contract Platforms (ETH/others) 195B
3. StableCoins (Tether/others) 35B
4. DeFi (Uniswap/others) 18B
5. Web3 (Chainlink/others) 13B
6. CEX (BNB/others) 10B
7. DEX (Uniswap/others) 8B
8. Privacy (Monero/others) 5B
The dollar values above shift quickly within the market, but their overall percentage of the market share moves much slower. Cryptocurrencies hold about 70% of the market share, smart contracts hold about 20% and the 6 other sectors compete for 10% of the remaining market share. Most of the sectors on the list I have covered at one point or another, but one that hasn’t received as much attention is Web3, which I intend to dive into below. Keep in mind that many of these sectors overlap - the point is to make distinctions where possible.
Web3 is currently one of the hotter trends in cryptocurrencies because Web3 projects like Polkadot and Chainlink have risen through the ranks of CoinMarketCap, displacing longstanding top contenders. To understand the evolution of Web3, it's best to start with the origins of the computer and the world wide web. At first, there was only data and basic calculations, on massive machines like the Altair 8800. In time, the transmission and storage of data improved rapidly, creating a shift into the Web2 phase. With a desire for better communication, platforms were built around the ideas of ease of use, user-generated content, and interoperability. This is Web2, which has exploded the past 10 years and is the web that we are all familiar with. Examples of Web2 are PayPal, Facebook, Microsoft, AWS, etc. These modernizations have made it extremely simple to connect with anyone in the world that has a phone and connection, but sending value and democratizing data still faces friction . Web3 solves this.
Data exists on the internet, but its functionality is clunky, unreliable, human dependent, centralized, transactionally poor, and so on. Web2 brought us closer together, but between every exchange of value or information, there was a man in the middle collecting toll money and slowing down the process. Decentralized blockchains, as the backbone of Web3, create a universal state layer that isn't a company or 3rd party, it's just an underlying technology enabling peer to peer interaction. In theory, Web3 could be broad enough to include Bitcoin, because it follows the principles of Web3, but if you want a clearer picture of Web3 start by researching Polkadot’s light paper or Chainlink’s white paper. From there, the rabbit hole really begins, and only then if it begins to make sense and fits your investment strategy should you consider taking a long-term position in one of these coins. This is one of the 8 sectors, but its importance can't be understated. Good luck on your Web3 journey!
The Story Of Morris Chang
Written by Sahil Bloom:
In 1983, a 52-year-old senior executive at Texas Instruments was passed over for the company's top job. He would go on to found and build the most strategically important company in the world. Who's up for a story?
Morris Chang was born into a middle-class family on July 10, 1931 in Ningbo, Chekiang, China. The early years of his life were set against a backdrop of hardship. Wars and widespread poverty had overwhelmed the country, exposing him to this suffering at a young age.
His father - an official in the local government - encouraged Morris to focus on school. Fleeing the violence of the ongoing wars, Morris and his mother moved frequently. His studies became his respite. In 1948, at the height of the Civil War, they moved to Hong Kong.
In 1949, Morris Chang was accepted to Harvard University. He moved to America. After just one year at Harvard, he transferred to The Massachusetts Institute of Technology (MIT) to study engineering. He graduated in 1953 with a B.S. and M.S. in Mechanical Engineering.
While he had originally intended to continue his studies and get a PhD, he failed his qualifying exam, so was forced to enter the job market. He took an entry-level job with Sylvania Semiconductor, but quickly realized the company wasn't forward-thinking enough for his style.
After just three years, he left Sylvania and accepted an engineering supervisor role at Texas Instruments, a growing technology company in Dallas, Texas. It all clicked for Morris Chang at TI. By 1961, he was managing a full department. He was on the fast track.
Seeing his potential, TI offered to sponsor him for a PhD, even agreeing to continue paying his full salary while he was pursuing the degree. This was an offer he was unable to pass up. He passed his qualifying exam (the second time was the charm!) and enrolled at Stanford.
Completing the degree in 1964, he returned to TI and continued to climb the corporate ladder. By 1967, he became the GM of the most important semiconductor department at the company. A few years later, he was promoted to Vice President of its entire semiconductor business.
After 6 years running the semiconductor business, and seemingly on the fast track to the C-suite, Morris Chang's career took an unexpected turn. He was transferred to lead the struggling consumer business, then to a staff role. In his own words, he was "put out to pasture."
There is a lot of speculation about why - some believe he was passed over due to being of Chinese origin - but Morris Chang had clearly been snubbed. He resigned from TI in 1983. Now 52, an age where most careers are winding down, Morris Chang's journey was just beginning.
Shortly after his departure from TI (and after a short stint at its competitor, General Instrument), the government of Taiwan called on Morris Chang. Their proposal: come to Taiwan and help the country modernize its technology complex by creating a semiconductor industry.
Before accepting the task, he examined the current state of affairs of the semiconductor industry in Taiwan. What he found was not encouraging - no R&D, no design capabilities, and no IP. The only strength that existed was in some semiconductor manufacturing capabilities.
Interestingly, this manufacturing capability aligned well with an observation he had during his days at TI: Chip designers often wanted to start their own companies. But at the time, it was believed that success required integrated chip design and manufacturing.
Given the incredibly high expense associated with building chip manufacturing capabilities, these chip designers were unable to raise enough money to leave and start their own companies. Morris Chang believed that this constrained innovation in the semiconductor industry.
So in 1987, Morris Chang founded Taiwan Semiconductor Manufacturing Company (TSMC), a pure-play chip manufacturer. In the same way that Shopify has enabled independent players to sell online, TSMC enabled independent chip designers to start their own companies.
An entire ecosystem of "fabless" (i.e. design-only) chip companies quickly sprouted up. The flywheel effects for TSMC were powerful - as the market grew, so did its revenues, which allowed TSMC to reinvest in advancing its capabilities, which drove further growth.
Today, TSMC is the world's largest contract manufacturer of chips, with annual revenues approaching ~$50 billion. Its manufacturing capabilities are second-to-none. In an industry where technological advantages are extremely difficult to overcome, TSMC appears unstoppable.
TSMC is also a company with massive strategic importance - arguably the most important company in the world. This is a developing story that will undoubtedly be front and center in the decade to come.
Morris Chang retired from the CEO role in 2018, but remains TSMC's chairman. His net worth is >$3 billion. So that was the tale of Morris Chang, the man who was "put out to pasture" but went on to build one of the most important, influential companies of the modern era.
AOC And Ted Cruz Found Common Ground
Ted Cruz and Alexandria Ocasio-Cortez are like night and day on the political spectrum but as reasonable people should, they found common ground on the Robinhood shutdown and market scandal. A lawsuit and or investigation is surely already in the works; hopefully meaning there will be answers, justice, reformation, and restitution.
The Reason Doge Matters
Doge run ups have historically been a leading indicator for alt season, like a hint or clue from the crypto gods. Doge’s last pump was about 100% and Ethereum saw an almost 100% rise shortly after. This Doge pump, as of last night almost went almost to 1000%. If alts begin to show strength the next couple of days, there could be some massive growth across the board. Just because it happened in the past does not mean it will happen in the future! But it's worth watching. Side note - those of you have been members of the newsletter likely bought DOGE at 15 sats. I hope you enjoyed the ride.
Michael Saylor Is Hosting A Conference For Big Money
Next month, Michael Saylor, the CEO of MicroStrategy is hosting, “a digital summit all about bitcoin and its ongoing benefits.” Saylor has continued to make headlines as he adds to his Bitcoin stockpile of over $1.1B. In a recent interview, Saylor said about the summit, “We’re going to have thousands of executives, officers, directors, and advisors of corporations coming together in the first week of February. They all want to figure out how to plug bitcoin into their balance sheet or their PNL. We’re going to publish our playbook, all our accounting guidance, our legal guidance, all the work we did over the course of months to get ready to do this as a publicly-traded company, and we’re going to open source it, making it available to everybody with the thought of saving them millions of dollars in weeks or months to make this an easier transition.” Michael Saylor will likely go down in history as one of Bitcoin’s greatest advocates for the traditional finance world.
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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.