The Wolf Den #194 - Airdrops Are Taxable
Bitcoin Thoughts And Analysis
Bitcoin looks strong. While there are no guarantees, it is now less than 10% off of the all time high and above most key levels of resistance. Not much has changed from the charts yesterday, so you can revisit those for the bigger picture.
4-HOUR CHART
Bitcoin successfully broke out of the trading range that I shared yesterday and retested the range highs as support. This is bullish action and usually means that accumulation is finished and price is ready to head back up. We have seen minimal volume in general since the beginning of the correction, so not much conviction on either side. To me, this is more bullish than bearish because we have not seen follow through from sellers who were pushing price down. This makes sense, since we have seen more outflows from exchanges and less inflows from miners. You can see the supply zone above where there's likely to be quite a bit of resistance.
Altcoin Charts
I still think that the altcoin market has been difficult to trade for a couple of weeks and that setups are likely to continue failing as BTC makes a decision. Very choppy, lots of strange charts. Trade at your own risk.
ADA/BTC
As I mentioned a few times, ADA was due for a correction after it's massive move over the past few weeks. This was clearly signaled by overbought RSI with bearish divergence. That said, price has now dropped a bit and we have potential hidden bullish divergence at support. We really want to see RSI make a definitive elbow up to confirm on the daily close and to see price hold the support at 2108. If those things happen, this could be reversing back up for another move.
4-hour RSI hit oversold and bounced, in confluence from a retest of this descending resistance as support. We want to see strong volume and price moving quickly away from the blue line.
ERN/USD
I have had quite a few requests from subscribers to look at new coins that are launching on Uniswap and beyond. Ethernity started trading yesterday and has been a largely hyped project. This is nearly impossible to chart, with limited price action and no chart on TradingView. I use DexTools to take a look - as you can see, it's just an image and not a link.
This is the proper contract address for ERN, if you are looking to trade it: 0xbbc2ae13b23d715c30720f079fcd9b4a74093505
This is risky, no stop loss on Uniswap. I recommend small position sizing in case a coin goes to 0 - really.
Price appears to be finding support in a very local demand zone. This is a 30 minute chart with only a day of trading, so everything is conjecture. That said, this looks ready to bounce and reverse back up to the highs. Personally, I would view a coin like this as more of an investment than a trade, because the potential to the upside is endless if the project does well.
This appears to be a great project with a ton of VC and celebrity support. The NFT space is obviously extremely hot and Ethernity could be a major player.
Here's more info about the project.
Legacy Markets
DXY (DOLLAR INDEX)
For now, the DXY was rejected soundly at resistance, but it's a bit early to celebrate. This could easily consolidate here for a push through. Again, a rising dollar is generally bad for other assets. A weakening dollar is generally bullish for stocks, metals and even Bitcoin.
As bearish I have been on the dollar for months (which has paid off), it's always important to see the other side. Here is a solid thread from Remi Tetot of RealVision who believes the dollar is about to recover.
As I mentioned last week, I intend to share far more information about emerging projects, primarily in the DeFi space. This is a starting place for you to do your own research and discover new tokens and projects that are either brand new or coming soon.
Dafi - A New Token Distribution Model
DAO Maker Research - Dafi (Strong Holder Offering)
All emerging decentralized economies are faced with a tough philosophical question to answer - what is a fair token distribution method and model. The tech can be state of the art, user adoption can be booming, and everything can appear to be going right, yet something as simple as the token distribution model can break the entire economy.
Dafi rewards users based on network adoption using synthetics for a better incentive model for every decentralized economy. It’s the first protocol to enable staking, liquidity, and bounties proportional to every network's own demand. When a project first emerges, adoption is typically slow and small. Dafi accounts for this by reducing the number of network rewards initially until demand picks up.
Dafi increases issuance of tokens only as adoption rises – forming a direct link between these two market-factors for a better, healthy growth of decentralized economies. Furthermore, it will enhance scarcity when networks decline in demand ie. a bear market, thus protecting the economy. An adaptive response prevents an over-release of tokens. Even during low-demand periods, users are still rewarded for participation later – when demand rises. If you’re unsatisfied with preexisting token distribution in the market today, Dafi’s model may be a fit for your investment thesis or trading strategy.
Ripple’s Partnership With MoneyGram Is Finished
Almost 2 years ago, Ripple began a partnership with MoneyGram to improve on cross-border payments. That partnership has now come to an end as Ripple is currently in the process of being sued by the SEC. Many of Ripple’s partnerships and exchange listings will likely never return if XRP is found to be a security. This remains a risky investment due to the outcome of the lawsuit, which is likely to play a large role in the long-term success of the token.
The IRS Is Stepping Up Enforcement
Operation Hidden Treasure is the name of the IRS’s new anti-fraud initiative designed to dig up unreported transactions and identify would-be tax evaders. Since there is a criminal tax division involved in the operation, reporters are under the impression that they’re looking for evidence of concealment and evidence of intent to not pay what's owed. This can be anything from dark web transactions, offline sales, mixers and tumbling services etc. The IRS is looking for the biggest fish to fry - there should be no need to panic if your reports aren’t accurate to the exact dollar. Pay for a tax calculation service and save yourself some stress - the IRS has a lot to gain and nothing to lose by coming after evaders.
Another ETF Approved In Canada
Mike Novogratz’s Galaxy Digital Bitcoin ETF has been approved, marking the 3rd Bitcoin ETF approved by our Canadian neighbors. The first ETF was approved in February and the second approved shortly after in the same month. GalaxyDigital, the newest company to receive approval, has also filed for an Ethereum ETF which seems likely to be approved. Canada is offering an incredible road map for what’s to come in the U.S. First, there will be an approved Bitcoin ETF, then multiple to choose from, and then likely Ethereum will get its turn. Bullish for crypto.
The Wolf Of All Streets Podcast Ft. Caitlin Long
After years of trial and error, plus extensive legislative work, the first-ever crypto bank was established in Wyoming, headed by Caitlin Long. As impressive as the advancement is, according to Long, it’s really only the first inning for digital asset collaboration with legacy banking. Ultimately, it will be the velocity of technology and private sector innovation that drives crypto adoption around the world, creating a new financial system that supersedes our outdated way of doing things.
In this episode, we discuss a range of topics including:
The difference between value and price
Long-term capital investment projects
Unstable interest rates
A deleveraging FED
Avanti Bank
The velocity of new technology
The crypto bank misnomer
A Bitcoin lending market
Crypto efficient payment systems
The blockchain taskforce
Central banks buying Bitcoin
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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.