The Wolf Den #172 - EVERYONE IS A GENIUS IN A BULL MARKET
Bitcoin Thoughts And Analysis
Not much has changed since yesterday. Zoomed on the hourly, you can see that we did, in fact, appear to make a higher low - right after the newsletter went out. However, that low is not confirmed until we see another higher high.
Regardless, this still looks bullish to me, not seeing many signs of weakness or any reason to really feel bearish on most time frames.
The daily is once again attempting a breakout from the massive bull flag. If this candle closes above that resistance, I would expect consolidation to be over and for the move up to continue.
LINK/BTC
Altcoin Charts
Basically every setup that I have shared of late is doing well or looks ready, so please revisit the older newsletters. They're all valid. As I said above, everyone is a genius in a bull market. It seems like you can practically find a coin that has not really moved yet, buy, wait, pump, sell.
ENJ/BTC
This fell right into the buy zone that I posted last week. It's struggling for the moment to make a strong move, but this support should theoretically hold and this was the area that we were targeting. Personally, I would take a smaller position with my stops somewhere around the bottom red box - far enough below the next level to account for a wick. But stop losses are a tricky thing and I would really rather not see price dropping that far in the first place - I want to see it go up from here.
This is just a friendly reminder that ETH looks insanely bullish still. It is in full price discovery on the USD pair, making new all time highs by the minute. The BTC pair broke out of a multiyear bottoming inverse head and shoulders and now looks to have successfully retested the neckline as support. This looks like the beginning of 2018, when Bitcoin topped and then Ethereum followed. What will happen after ETH tops is anyone's guess, but I think this still has a long way to rise.
LINK/BTC
This is an interesting one. I had it ready to post, and then saw that huge wick down. That appears to me a major liquidity grab by a large player, pushing price down to trigger a bunch of stops and then fill bids. After that, I have to imagine that this should continue up. Everything about this setup looks bullish.
POLS/USDT
This chart is not on Tradingview, so here is a link.
Unfortunately I did not see this setup yesterday before sending out the newsletter. I posted it on twitter instead.
Amazingly this hit it's target in under a day, really a perfect bull pennant move. I am not sure it will happen, but I would definitely watch this and see if it retests those previous highs, at the blue line in the top image around $1.72. If it does come down, I would buy that for sure.
Legacy Markets
The Hunt Brothers And The Silver Market
By Sahil Bloom:
With #silversqueeze trending on Twitter, it appears that this week's market spectacle may well be in the silver market. A perfect moment for a thread on the Hunt Brothers and their alleged attempt to corner the silver market...
First, let's set the stage. The Hunt Brothers - Nelson Bunker Hunt, William Herbert Hunt, and Lamar Hunt - were the sons of Texas tycoon H.L. Hunt. H.L. Hunt had amassed a billion-dollar fortune in the oil industry. He died in 1974 and left that fortune to his family.
After H.L.'s passing, the Hunt Brothers had taken over the family holdings and successfully managed to expand the Hunt empire. By the late 1970s, the family's fortune was estimated to be ~$5 billion. In the financial world, the Hunt name was as good as gold (or silver!).
But the 1970s were a turbulent time in America. Following the oil crisis of the early 1970s, the U.S. had entered a period of stagflation - a dire macroeconomic condition characterized by high inflation, low growth, and high unemployment.
The Hunt Brothers - particularly Nelson Bunker and William Herbert - believed that the inflationary environment would persist and destroy the value of their family's holdings. To hedge this risk, they turned to silver. They began buying the metal at ~$3 per ounce in 1973.
Not a conservative bunch, in the mid-late 1970s, the Hunt Brothers began more aggressively buying physical silver. But it didn't stop there. They started buying all of the available silver futures contracts as well.
Typically, these futures contracts are settled in cash, meaning the buyer (the Hunts) just receives cash for whatever the contract is worth at expiry. But the Hunts were not typical - they wanted the silver! So planes were loaded and shuttled silver to vaults in Switzerland.
In addition to using their personal cash fortunes to execute this buying, the Hunt Brothers began aggressively leveraging their position. They used margin (primer below) to expand their buying power in the market. Their silver position ballooned.
With the flood of demand from the Hunt Whale, silver prices began to rise. At this point, it was rumored that this was more than a simple bet on silver as a hedge against paper currency. The Hunt Brothers were attempting - rather successfully - to corner the silver market.
Cornering a market means an individual or entity acquires enough shares or ownership to manipulate the market price. The individual backs the market into a corner - the market has nowhere to run. The cornering party has full control over it. It seemed like the Hunt's plan.
In addition to their prolific buying, the Hunts brought other investors, some of Saudi origin, into the trade. As prices climbed, a short squeeze was on. Silver shorts were forced to cover their positions, further accelerating the price rise.
The price of silver skyrocketed from $6 per ounce in early 1979 to over $49 per ounce in early 1980 (a 700%+ spike!). The Hunt position was now worth ~$5 billion. They were believed to control 2/3 of the available market - intentionally or not, they had cornered the market.
With prices at all-time highs, the silver frenzy was in full effect. The price rise was so dramatic that Tiffany's took out a full-page ad in The New York Times deriding the Hunt Brothers for their actions and their impact on pushing mom-and-pop silver buyers out of the market.
At this point, the government took notice. And if there is one thing we learned in the last week, it's that the rules of the game can be changed at any time. Unfortunately for the Hunt Brothers, the rules of the game were about to change and pull the rug from under them.
In January 1980, Federal regulators stepped in. In "Silver Rule 7," regulators increased the margin requirements on silver futures, meaning purchasers would need to post additional collateral to support their loans. The rules had changed - the Hunts were now the hunted.
What followed was a classic, leverage-induced downward spiral. The price of silver began to fall. The Hunt Brothers were issued margin calls on their loans. To meet the margin calls, they had to sell silver. The selling dropped the price, leading to more margin calls.
On March 27, 1980, when news broke that the Hunt Brothers had been unable to meet a $100+ million margin call, the silver market collapsed 50% to under $11 per ounce. The government even grew worried about the systemic risk to the system if the Hunt's brokers went under.
Given their other business interests, the Hunt Brothers were able to secure a rescue package of $1.1 billion from a variety of banks in order to meet their obligations. While they did later declare bankruptcy to protect certain assets, the family fortune generally survived.
Throughout the government and legal proceedings that followed the incident, the Hunt Brothers denied any wrongdoing. They maintained that their silver purchases were not an attempt to corner the market but a legitimate investment in a hedge against fiat destruction.
So as the world once again turns its gaze to the silver market, I hope the story of the Hunt Brothers provides an interesting historical backdrop for this week's show. As always, do your research and never take undue risks!
PayPal’s First Quarterly Report
PayPal capped off a successful 2020 with record Q4 earnings.
The results of implementing digital assets into their suite of services has exceeded expectations, according to PayPal’s CEO Dan Schulman. Specifics around how much revenue was earned from crypto products haven’t been publicly announced, but future plans to turn PayPal into a “super app” and intentions to “introduce tools to 29 million merchants worldwide to begin accepting crypto as payment” have been publicly announced. The future is looking bright for PayPal, with quarterly revenue exceeding $6 billion for the first time, and expectations for revenue to grow around 19% in 2021, to over $25 billion. Knowing how lucrative the digital asset space is, expect PayPal to explore support for new tokens and improve custody options for crypto holders.
Dogecoin Is Not An Investment!
I love DOGE. That said, it started as a meme and very much still is one. It should go without saying that Elon Musk is posting about DOGE simply for entertainment. Fun and games aside, there is a wallet that holds 27% of the supply, valued at around $1.2B. The massive mystery wallet, plus the 19 other largest wallets, hold over 50% of the supply - not good tokenomics. Speculators have claimed that the mega wallets are in cold storage and owned by exchanges, but nobody knows for sure. DOGE is a great meme and riding the pump cycles is easy money. As an investment, it is pretty much worthless unless you like investing in jokes.
YFI Lending Pool Exploited
Popular DeFi token, Yearn.Finance was exploited, with $2.8M stolen from a lending pool. In total, the vault lost a total of $11M and the token saw a sharp decrease in price moments after the attack. It has since rebounded. One of the reasons DeFi is so lucrative is that it is still in its infancy and presents a very high-risk opportunity. Be careful out there.
Phemex Launches "Earn" With Giveaway
Phemex, the anchor sponsor of the newsletter, just launched their interest bearing savings accounts. In celebration, they are giving away up to $500 and a PlayStation 5. Use the link above to sign up for Phemex, and then go HERE to sign up for "Earn Crypto."
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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.