The Wolf Den #278 - Whales Are Accumulating
Bitcoin Thoughts And Analysis
WEEKLY CHART
We continue to see demand on the weekly chart, with wicks below $34,378, the 50% retracement level of the move up from $3,800, on the last 7 candles in a row. Insane how strong this has continued to be as support on a weekly basis. This could eventually fail, but it is very clear that for almost 2 months, large players have been buying every dip below the 34K level.
DAILY CHART
Boring. We had yet another weekend move up on weak volume which has been, thus far, followed by a dip. Price is once again trading around the EQ of this blue descending channel, but the more time that passes, the less relevant any TA becomes outside of a close >42K = good and <30K = bad. There's almost no reason to be looking at Bitcoin for the moment.
4-HOUR CHART
Price rose this weekend on non existent volume and was rejected exactly at the EQ of the 7 week trading range. This is shown by the blue arrow. As you can see, price has dropped since, finding support in a local demand zone, shown in blue. Local supply was formed above, also shown in blue. I would NOT TRADE THIS, personally, just showing you where and how supply and demand zones can be drawn and how they work. You can see that price basically retraced the entire move up back to where it started. Nothing but sideways chop.
Crypto Trading Demand Cut In Half
Crypto exchanges showed a 50% decrease in volume from May to June, a somewhat astounding number. It is very clear that demand has decreased dramatically among retail investors and traders.
Volume always seems to return when it is needed.
Vietnam Is Going Digital
For years, the state bank of Vietnam has made it clear that cryptocurrencies, “were not legally recognized in Việt Nam and the use of cryptocurrencies as a means of payment was also not legally recognized and protected in the country.”
This is changing.
The PM of Vietnam has officially asked the state bank to “study and carry out pilot implementation for cryptocurrency based on blockchain technology in the 2021-23 period.” The direction the government wants to take with this initiative is not clear, but it may be plausible to rule out the idea of “Bitcoin as legal tender." Vietnam has made it clear that they are moving towards a digital government - as they call it an “e-government.” Blockchain is only one focus of the initiative, as it also includes AI, big data, AR, and VR. The report sounds like the government is simply transitioning into the digital age, not that they are relinquishing the power of their native currency to an open-source free system. Nonetheless, this seems to be a step in the right direction, considering no crypto entity or use was permitted in the country up until now. So far, it sounds like they are moving towards a CBDC.
Bitcoin Completed Its Massive Difficulty Adjustment
As expected, Bitcoin’s difficulty just dropped nearly 28% - the largest adjustment in history. Miners that are unaffected by the recent migration with sustained operations should see significantly higher profits in the coming weeks. This could partially explain why mining stocks have seen steady growth over the past two months, outperforming Bitcoin. As miners relocate, the total hash of the network should increase, bringing difficulty up with it. For the time being, U.S. established miners and other non-China-based operations should financially prosper with their boosted margins. With the drop in difficulty, transaction fees also dropped significantly, which some have speculated to cause a short-term price jump as transactions are more attractive. All in all, if Bitcoin goes on a strong run while the mining difficulty is low, it may be safe to bet that mining stocks will continue to perform well. This is pure speculation (not advice) and entirely dependent on Bitcoin’s price action, but the fundamentals seem to be indicating this is possible.
As I have mentioned a few times, I have recently dipped my toes into Bitcoin mining. My daily revenue has jumped more than 50% in the past two days, since the difficulty adjustment. I use Compass Mining - you just buy a machine and choose the location and pool and they do everything else, including setup and maintenance. I am not actively doing anything for the moment - just stacking more sats.
The Ghost Chain Debate
One of the common criticisms Cardano has faced has returned - the “ghost chain” debate. Around this time last year, Charles Hoskinson, the founder of Cardano, predicted, “there will be hundreds of assets running on Cardano, thousands of DApps, tons of interesting projects and lots of unique use and utility.” Critics have claimed that there are only a couple of projects working on the protocol, thus the nicknames - "ghost city" or “ghost chain.” Hoskinson has refuted this claim, citing, “there are thousands of assets on Cardano. I guess you haven't been paying attention. Tons of devs learning, training, writing. Lots of launch apps.” Critics countered that the “thousands of assets” have so low volume they can’t be considered alive. All in all, smart contracts are slated to release on the platform this September which will be a huge fundamental upgrade. We also know that Grayscale has started buying ADA, so it is worth watching this project.
My Recommended Platforms And Tools
This is where I trade with leverage and can also trade spot with no fees.
This is where I spend my days teaching and learning! Our Discord group is a one stop shop for everything you need to learn to trade and control your emotions. Feel free to DM me on Twitter or respond to this email for questions. Code Wolfsden50%off for a 50% discount on the first month.
This is where I invest, commission-free. They now let you earn interest on your Bitcoin held in Voyager, so you can compound while trading. Not only that, you’ll get $25 in free BTC when you download & fund.
Rewards Code: WOLF25
Mining for everyone! You can buy an ASIC and have it set up at a destination of your choice by them, and you only pay the electricity cost. Absolutely awesome.
I use RoundlyX to buy small amounts of Bitcoin every single day. They automatically round up my credit card purchases (with 10x multiplier) and invest them in crypto. Absolutely brilliant. Passively invest money you don’t need without a thought. Further, they have integrated with Voyager (see above) to offer commission-free purchases.
Rewards Code: WOLF
Concierge Phone Service for Americans that protects your from SIM Swaps and other phone related hacks. I cannot stress enough how amazing this service is.
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.