The Wolf Den #184 - Keep Calm
Bitcoin Thoughts And Analysis
Bitcoin has continued to correct, dropping a few thousand dollars further over night (for me), breaking 45K by a few hundred dollars. Not ideal, but also completely normal.
I cannot find the chart, but there's credible evidence that a single miner, F2, has sent billions of dollars to exchanges to sell - not surprising that a mining company would take profit after this parabolic run. For now, we are still seeing meaningful volume on the way down, so it's hard to confidently say that price has bottomed.
Yesterday had that beautiful, massive wick down - so I am a bit surprised that the drop has continued. That said, there' information we can glean from this fact. What sometimes happens is that a major player sells to trigger liquidations, causing price to continue dropping. This push down in price caused all of the buy orders down to 47K or so to fill, sending price back up. This "cleared the runway" for further selling and allowed the seller to start again at a higher price, rather than continue from the lower position. Less buyers on the way, easier to keep pushing. Not altogether surprising - people selling billions of dollars worth of an asset are looking to maximize profit.
4-HOUR CHART
We saw a very similar drop at the beginning of the year, when price dropped from 42K to roughly 30K in a few short days. That was roughly at 28% drop. This move looks very similar at the moment. If it repeats (that's huge speculation, this is just for fun!) then price would bottom around 42K - the same level that we topped out at before that very move. This level was the all time high for many weeks and was never retested as support.
RSI is now oversold on the 4-hour chart, which is where I start looking for reversals. This works more times than not, but is NEVER certain. I will be watching for a potential bullish divergence to form with RSI here, but that will take a while. First we need to see price head up to make the first elbow on RSI. Then we need a bit of time for a few more candles to close and for price to eventually push down for a lower low, coinciding with a higher low on RSI. This is JUST AN IDEA and it's very early. We can go much further down and still have something like play out from lower prices and RSI.
Note: the hourly has already confirmed a couple of bull divs, but that's a low time frame. Not convincing enough on a dump this big.
Altcoin Charts
I am not interested in trading altcoins still. Sitting on the sidelines the past few days and not sharing setups has been a great decision that I stand by. I want to take a quick look at Ethereum, as it can give us some clues to what is to come.
That said, if you are investing in altcoins and willing to hold long term, I can definitely see why you would buy these dips or dollar cost average in. I believe that long term these are low prices and we will once again see alts appreciate.
Its up to how you personally approach the market.
ETH/BTC
Ethereum found support against BTC in a major area of demand and bounced nicely... for now. This could just be an impulsive bounce, as we expect every major drop to bounce around 50% even if it is going to continue down. It is currently finding resistance in a higher demand zone that acted as support before ultimately breaking down. For me, I want to see price above this upper zone and ideally breaking the purple line to signal that Ethereum is ready to head back up on this pair.
ETH/USD
I am not saying that Ethereum has bottomed on this move, I have no idea. I am just pointing out that, for now, we have a very normal and expected retest of the previous all time high as support. If you are an ETH trader, you likely had bids sitting here waiting, just in case it came back down. This is a classic resistance to support flip for now, but remains unconfirmed until the daily close. It's scary to buy the dip, but from a technical perspective this was very much a good spot with great risk/reward.
You Aren't Perfect
Humans are predictable.
Inevitably, traders look at their portfolio all time high as the ultimate bar, viewing everything below it as a “loss.” You are mentally always “down.”
One should focus on the longer term gain and not the temporary drawdown. If you are up 500% on the year, but down 20% from the top, then you should be gleeful, not depressed. But rarely does it work that way.
Viewing your portfolio as “down” vs. your ATH implies that you expect to be perfect and sell everything at the dead top. Not something anyone does or that an investor should attempt.
It also implies you would actually be actively buying back in after the drop.
You wouldn’t.
Comparing your performance to the best possible outcome with perfect timing and foresight is a sure fire recipe for poor emotional decisions.
Hindsight is 20/20.
Man (or woman) up, accept you are not perfect and make the best decisions possible with the information you have.
The goal of trading is profit, not perfection.
Further, like markets, nothing goes up in a straight line. If your portfolio continues to make higher highs and higher lows, then the trend remains up!
Tether Settles, Case Closed
The New York Attorney General has closed the case against Tether. They paid a small fine of 18.5 million dollars (meaningless to them) and were not forced to admit any wrongdoing.
Hopefully we can finally move on from this ridiculous narrative and accept that tether is a part of the market and is not a harbinger of death.
Ethereum Flash Crash On Kraken
Ethereum underwent a +60% correction on Kraken yesterday morning, tanking down to around $750 for a brief moment. It isn't clear if traders were liquidated or had stink bid fills, but any affected trader should immediately open a Kraken support ticket. Cardano also showed the same wick, but both were likely the result of a glitch or technical error within the exchange. I haven’t seen anyone come forward yet with evidence of liquidation due to the move. Many traders did report limited activity, which likely prevented orders from being filled or arbitrage from taking place. At this point, it seems to only be an interesting non-event.
Over 100,000 BTC Addresses Are Worth Over $1,000,000
It has been reported that about 109,000 BTC wallets are worth over $1,000,000. Of those 109,000, about 9,000 of them hold over $10m in value. The numbers also tell another story. There are over 24m wallets holding a significant amount of Bitcoin ($100+). If all of the Bitcoin wallets over $100 dispersed to the world population, only .3% of people would be lucky enough to receive the $100. At most, only .3% of the world’s population has a Bitcoin wallet worth ver $100. Roughly .1% of the world’s population has a wallet worth over $1000. Owning just $100 worth of Bitcoin may seem like peanuts, and obtaining $1,000,000 may feel impossible, but falling anywhere between these two figures puts you squarely into a category far ahead of the global population - a position of privilege.
The Bloody History of March
Historically speaking, March has been a bad month for Bitcoin. Last March Bitcoin was affected by the COVID-19 crash and dropped to $3,800 in just a matter of days. Bitcoin has had a red month 80% of the time in its brief history. In the past 10 years, Bitcoin has ended March with a green candle. One time was bouncing off of the last bear market bottom in 2019 and one time was the bull market in 2013. Price appreciated 171% that month. The March candle will not affect my long-term bias - that the asset continues to rise through the year. It is still always interesting to note the history, lest you repeat it.
The Wolf Of All Streets Podcast Ft. Bill Barhydt
Bill Barhydt, recruited by NASA and the CIA at the age of 18, stood out as a computer genius and cryptographer. Branching out of government work, Bill pursued his passion for IT ultimately leading him to Bitcoin and resulted in him giving the first-ever TED Talk on the subject in 2012. Bill’s early crypto adoption saw him found crypto exchange Abra, a US-based company offering exposure to digital assets and ushering Bitcoin towards its role as a global reserve asset.
In this episode, Bill and I discuss a range of topics including:
Hacking and programming
Working for NASA and the CIA
New reserve asset
A collapsing bond market
Bitcoin’s “rocket fuel”
Living to 175 years old
Crypto banking
A yacht as collateral
Elon Musk and Doge
The world computer
Bitcoin leaving exchanges
A massive wealth redistribution
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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. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.