The Wolf Den #226 - Plan Your Losses
Bitcoin Thoughts And Analysis
I am still unsure about Bitcoin at the moment, and believe that it could go either way. My preference would be for it to remain sideways so that altcoins can thrive. I can present to you both short term bullish and bearish cases, so I am staying away until we have more clarity. On larger time frames, everything still looks exceptionally bullish, so I am speaking just as a trader. As an investor, buy dips and hodl.
DAILY CHART
The daily does not look bad - it still potentially has higher lows and highs unless the green demand zone is broken and a lower low is confirmed. That said, I was bullish on the three previous daily candles that had nice long wicks down. Yesterday's candle pushed back down to where we saw demand on those wicks and closed there, meaning those orders were largely cleared out and bears were able to advance a bit. Not a big deal, but worth noting that the bullishness of those candles is canceled. We also have 3 consecutive closes below the 50 MA, if that is meaningful for your system. We have not seen price close a single candle below that line since October, 2020. So it's worthy of note as well.
I have circled the last time it traded below the 50 MA. You can see that it did not drop far below, but it did remain there and sideways for quite a while. We could potentially range here and see something similar, but certainly no guarantees. Just interesting to look at what happened last time.
4-HOUR CHART
Nothing has really changed here. We still have price trading in the bottom half of the larger blue range. We have moved to the top half of the red range, which is encouraging. Still, this is all chop and not tradable for me.
Coinbase made a second low exactly at the same level as the first one on the other drop. That puts a double bottom in play, although it would require a break of the swing high between them to confirm. That would coincide with a flip of the EQ (center) of the blue range back to support. The problem? Other exchanges did not drop as far, so the potential double bottom is less in play. Either way, a double bottom is just an idea until that high between the two bottoms is broken.
As always, I look for a bullish divergence after RSI reaches oversold, especially on the 4- hour chart. These have historically been good reversal signals. I drew the idea a few days ago and shared it. Well, good news and bad news. We had confirmed hidden bearish divergence in red, which was replaced by bullish divergence in blue. That cancels the hidden bear div. Cool.
But... I was looking for the larger bullish divergence, the idea shown in black. Price dropped far enough on a wick but close above the recent lows, meaning no divergence. Higher low on price, higher low on RSI. That is the div I would view as meaningful.
The blue divergence counts, it could be a bottom signal. But it's less compelling for me since it does not start in the oversold region.
Altcoin Charts
Yesterday I shared DOT and LINK setups, both of which are progressing nicely and in profit. SOL, FTT and others I have shared are still absolutely flying, and I LOVE ETH, LTC and TRX still, which I have shared countless times. If the altcoin market bounces here, we can expect good price movement across the board.
BITCOIN DOMINANCE
Notably, Bitcoin Dominance could potentially drop below 50% for the first time in years. This is a function of both more alts being added to the market and the strength of larger caps over the past few weeks. But a continued drop in Dominance should lead to some fun in the altcoin market.
Doing TA on a Dominance chart is a bit of a meme - there is no asset being traded, therefore no support and resistance, supply and demand, caused by traders placing orders. But if it's your thing, you can see the chart above.
More importantly than TA, you can see what the massive alt seasons in the past looked like on Bitcoin Dominance. Huge and steep drops that led to epic gains on alts. We are starting to see something very similar here. According to the chart, if Dominance loses the 50% level, it could free fall to the next level of "demand." That would make for an epic continuation of the alt party we have been seeing.
ATOM/BTC
This was a request on the livestream yesterday. I shared the idea of the inverse head and shoulders, which was not yet confirmed. Now we have confirmation with a small spike in volume on the breakout that I consider valid. Price has also just retested the neckline of the IHS as support.
Zooming in, you can see the target, based on the depth of the pattern. You measure that depth and then pull the same difference to the breakout. This also coincides with the cluster of price action that I circled on the left, which you would expect to be major resistance.
If I was trading this, I would put my stops comfortably below the bottom of the right shoulder in case of a wick.
ETH/USD AND ETH/BTC
I have shared a number of newsletters and videos about this setup, which has a target of $3,600. More immediately, price is making a new all time high and heading into price discovery, assuming we see a daily close above $2,546. That would be further confirmation of ETH bullishness.
As a trader, I am FAR more interested in ETH right now than Bitcoin (different as long term investor, perhaps) and have been for quite a while. I think that ETH still has not made it's big move after breaking the all time high. We saw BTC pull a quick 3X on the same concept.
I have already shared ETH/BTC this week, which looks even better. Here is the update on that.
Inverse head and shoulders confirmed, breakout of resistance since all time high confirmed, new local high confirmed. What else do we need?
LUNA/BTC
This got away from me before I could share, although I was pretty passionate about this in the live stream yesterday, which you can watch below. You can see that this bounced beautifully out of the demand zone and break through the descending resistance. It is currently at the 50 MA, which could act as resistance. To be clear, the best entry was in demand on the breakout, so now I would wait for either a drop to that area, or to break resistance and above and retest as support. The idea is drawn, but it's not related to the actual time frame it is drawn on - just a general kind of path for it to take it if continues up. Play each level as a resistance to support flip. If you are an MA trader, you could trade the break of the 50 with a confirmation of a close above.
Wish I had been able to get this out a bit sooner!
Chart Requests
Here is the chart request live stream from yesterday. A lot of coins seem to be reversing and showing signs of strength today, which was not the case when we reviewed. Still, this should give you a good idea of what is going on.
Next week we will be CHANGING THE WAY YOU MAKE REQUESTS, using a google form. The email method is unsustainable with how many requests are coming in, so PLEASE DO NOT EMAIL ANY MORE CHART REQUESTS.
$AAPX $ADA $ALGO $AR $ARPA $ATOM $AVAX $BAND $BNB $BQX $CAKE $COTI $COV $DIA $ETH $FET $GLM $HBAR $HXRO $ICX $KIN $KSM $LSCC $LTC $LUNA $MIR $NANO $OMI $ONT $PRQ $POND $QTUM $RAMP $RAY $REN $RLC $ROOK $ROT $RUNE $SC $SCRT $SNOW $SNTVT $SXP $VRA $VYGVF $WAVES $YFI $YFII
U.S. House Passes Bill Favoring Crypto Regulation
The Eliminate Barriers to Innovation Act is long overdue legislation designed to initiate collaboration between the CFTC and SEC. Right now, these two governing bodies are doing their best to define digital assets within their own limited frameworks and are individually failing to capture the nature of cryptocurrencies. While the act sounds vague in that it only mentions “innovation,” it was intentionally designed with digital assets in mind.
A working group would be established between the two agencies to legislate on digital assets. The group would be given one year to answer fundamental questions needed to move the space forward, including: regulations around markets, fairness in markets, effectiveness of U.S. laws and security standards. Still needing approval from the Senate and then the President, this legislation will hopefully prevent impractical blanket labeling of cryptocurrencies as either being entirely securities or commodities.
Brian Brooks Hired As CEO Of Binance.US
Brian Brooks, former head of the OCC under President Trump, is joining Binance.US as CEO. Brooks did a phenomenal job publishing interpretive letters for banks to interact with crypto, assisted in stable coin regulations, and approved the first federal bank charter to go to a crypto-native company.
Brooks will be replacing Catherine Coley, a guest I have featured twice on the podcast. Coley has done a phenomenal job establishing Binance’s U.S presence and I count her as a friend and am personally very sad to see her go. According to Brooks, not only will Binance be giving Coinbase a run for its money, it will also be searching for new licenses to expand the services offered by the platform.
Mina Protocol - The World's Lightest Blockchain
Mina Protocol's Official Blog.
Mina Protocol have been amazing supporters of the Wolf Of All Streets podcast and the newsletter, so I wanted to take the opportunity to more properly explain why the project is so exciting.
Mina is the world’s lightest blockchain — weighing in at a consistent 22kb thanks to advanced cryptography and recursive zk-SNARKs. It is powered by participants. Every user is a full node and can connect peer-to-peer without the need for intermediaries. Mina’s application layer is home to a new kind of decentralized SNARK-powered app — called Snapps.
Mina solves (at least) three problems:
Blockchains are heavy. Mina is light.
Blockchains don’t interact with the internet. Mina privately interacts with any website.
Powerful players demand user data. Mina keeps users in control of their data.
These three features make Mina a powerful tool — but what are they building with it?
A Private Gateway between the Real World and Crypto:
Mina is focusing on use cases that will help us build a private gateway between the real world and crypto — and the secure, democratic future we all deserve.
Examples:
End-to-End Data Privacy: From Online to Onchain
Users can access critical on-chain services without sharing their personal data. Instead, they use Mina to prove that they meet the requirements. No need for a trusted enclave that can be compromised. See Teller’s Snapp Demo here.
Permissionless Web Oracles.
With Mina’s Snapps, developers can leverage private, verified, real world data from any website to build decentralized apps. They can input any information that is publicly available on the web (without needing that website’s permission). And they can access, use and protect sensitive data by only sharing the relevant proofs. No need for trusted oracles or custom website integrations.
Mina Community
Mina is powered by participants, with an uncapped number of block producers. Their inclusive community unites people from more than 100 countries around the world with a passion for decentralized blockchain and user-centered technology.
Official links
Website: https://minaprotocol.com/
Telegram chat: https://t.me/minaprotocol
Discord: https://bit.ly/MinaDiscord
Twitter: https://twitter.com/MinaProtocol
Reddit: https://reddit.com/r/MinaProtocol
YouTube: https://www.youtube.com/c/MinaProtocol
Here is my recent podcast interview with Evan Shapiro, CEO of Mina.
AIOZ - Revolutionizing Entertainment With Blockchain
AIOZ Network is a Layer-1 blockchain-based content delivery network that revolutionizes the entertainment industry. AIOZ Network utilizes blockchain and decentralization to improve upon traditional methods of content distribution. A distributed Content Delivery Network (dCDN) uses nodes for storing, streaming, and transferring data instead of traditional data centers operating on a P2P model.
Nodes in the AIOZ Network are the community members that give the company access to their redundant storage, computing power, and bandwidth. Advantages of AIOZ Network includes faster streaming, an incentivization model for content creators and community members, and is much cheaper than traditional CDNs. Read more about AIOZ Network from the link provided.
Read more about the cost saving of uploading content like a video on AIOZ Network as compared to Youtube:
https://twitter.com/AIOZNetwork/status/1377930751879086080?s=20
Highlights of AIOZ Network in the Media:
https://cointelegraph.com/news/a-new-era-of-content-monetization-blockchain-tech-can-get-you-paid
The Wolf Of All Streets Podcast Ft. Ari Paul
One of crypto’s most trusted voices of reason, Ari Paul, is gifted with the ability to stay neutral and logical while many others swing wildly between euphoria and depression. Although Paul remains optimistic towards Bitcoin, he understands that it fundamentally, and existentially, still has some growing to do as it morphs into the ultra-secure network many believe it will become. Furthermore, he knows that if grandma can't easily navigate and trust the system, it isn't truly ready for the masses. The truth isn't always easy to hear, but in this episode, Paul offers one of the most holistic and logical views regarding Bitcoin and the crypto space.
Follow Ari Paul: https://twitter.com/AriDavidPaul
In this episode, we discuss a range of topics including:
The Coinbase listing breakdown
Exposure to exchange tokens
Bitcoin’s existential risk
Billion-dollar slippage
Bull market phenomena
Trusting grandma with crypto
Coordinated Bitcoin attacks
Fragmented crypto liquidity
Uniswap rug pulls
The natural trend towards consolidation
Ledgers in a safety deposit box
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My Recommended Platforms And Tools
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Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
On-chain and fundamental analysis, research, predictions and indicators, all in one place. Highly recommend.
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.