The Wolf Den #286 - Detach Your Emotions
Bitcoin Thoughts And Analysis
I continue to reiterate that Bitcoin is chopping sideways and should likely not be traded at all. Long term investors will benefit from buying at any level, because we all believe that eventually Bitcoin will trade much higher than the current price. If you are dollar cost averaging or buying with a decade long time horizon or more, I see no reason not to buy here with excitement. If you are trading or are impatient, I would not touch it at all. Price is ranging between 42K and 30K - anything in the middle is noise. That said, the trend turned clearly bearish below 42K, so there's no real technical bullish case short term until price is back above that area. We had a major drop and then consolidation. That leans bearish for traders.
WEEKLY CHART
The last 8 weekly candles have managed to drop below the 34K level and then close back above, largely rising on Sunday to do so. This week looks the same so far, the question being whether it will bounce once again. There has been tremendous demand below the 50% retracement (around 34K) of the entire move from $3,800 to $65,000. It will be interesting to see if price can rally into the weekly close once again and hold this trend for a 9th candle. Pretty insane.
One thing we can be sure of - the longer price consolidates on low volume, the more explosive the eventual move will be. Let's hope it is up. What we are seeing it not unexpected for summer price action. "Sell in May and go away."
DAILY CHART
This is the 12th daily candle that has tested the ascending blue support that was the bottom of the symmetrical triangle that many traders were watching a few weeks ago. Many candles have wicked below and closed above, so it will be interesting if today's candle manages to do the same. Either way, we have a very clear descending blue channel, which statistically should break to the upside. That said, it could still visit the bottom of the channel first, so there's no reason to trade it until the breakout from the top occurs. This is an asset ranging sideways in a very tight pattern. Hard to glean much useful information.
4-HOUR CHART
Price has struggle mightily to break above 36K, the EQ of this trading range. The first sign of bullishness would be price reclaiming that level and trading in the top half of the range. The clear rejection at the end of June was a sign that the range lows were back in play, and we have been approaching that area since. That said, price is in a nice descending channel (dark red), which still requires another touch on the bottom to fully confirm. Perhaps we get that touch soon with a trip a bit lower. I have no idea if that will happen, this is still just low volume nonsense.
We have potential bullish divergence with RSI, but would be very hard to confirm. We need price to close below the black line, RSI to make a higher low and then RSI to turn up on the next candle to give a clear elbow. Still, I am always watching for this. 4-hour bullish divergences have historically been great bounce signals, although better when RSI is oversold.
Altcoin Charts
I still view the altcoin market as extremely risky and not worth trading. To be crystal clear, I would not trade any of these ideas, and they are simply potential setups. I do not provide signals. The goal is to show you what I am watching on a chart and what would qualify as a potential trade for me so that you can put it into your own system and decide if it works.
A huge part of trading is knowing when NOT to trade. That has been the case for crypto, in my opinion, for months. If you are looking for alt trades and are still making it work, then these are a few ideas.
AAVE/BTC
This is a really nice setup. Once again, this is not a signal and is not a "buy now" opportunity.
You can see that we had a beautiful breakout through the descending black line recently, which I posted a number of times. Price managed to break through the key resistance at .008295 and to retest it beautifully yesterday as support. Yesterday's daily candle was a hammer, which is potentially bullish if confirmed by another grey candle today. That means it had a wick down with a nice grey body on top. Added bonus for the wick being below support and the close above.
All of this while forming a perfect bull flag, with alternating touches up and down above support.
The trade here is a break of the flag to the upside. Slightly riskier is to buy the red support at .008295.
Target is shown, based on the length of the flagpole. I would expect the .0107 area to be strong resistance on the way up, if it happens.
I have been tracking this trade for quite a while. You can see that entire thread here.
BNB/BTC
I posted this setup yesterday on Twitter, before the breakout. Unfortunately, I noticed it AFTER I had already sent the newsletter.
As you can see, we already had the breakout through the descending blue line, which I posted previously as a trade. This brought price to resistance at .00978. As often happens, price consolidated below resistance, making a perfect bull flag with 2 alternating touches up and down to confirm. Since I posted, price broke out on exceptional volume.
The last candle closed right at .00978 resistance, so we still want to see a clear break. I would NOT ENTER THIS before candles are closing above, personally. It's rarely wise to buy resistance - the risk/reward is poor, even if it works out. A retest of that area as support after a clear close above would be the technically best entry. A retest of the top of the red flag as support would also be a nice place to bid.
A bull flag target is determined by taking the length of the flagpole and moving it to the point of breakout. You can see that this gives a target around .011, which coincides with the recent highs and a clear area of supply.
Legacy Markets
AAPL (APPLE)
I have been posting long trades on Apple for quite a while now, as it has smashed through each and every target. As you likely know, I am a long time Apple investor, and I rarely sell the stock - it's a buy and hold forever asset, in my opinion. I occasionally dabble in trades in my separate trading portfolio, which I have done on this asset of late.
If you are trading it, it is presently in price discovery after breaking the all time high. Technically, a retest of that level as support would be a great entry, if it happens. That is $145.09. After that, assuming the market continues to rise, sky is really the limit.
Chart Requests
As always, I took your chart requests and looked at them on a Wednesday live stream. The coins I viewed are in alphabetical order. Enjoy!
Trading Should Be Boring
“Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.” - Paul Samuelson
Trading should be boring. Really boring. Watching snails cross the road levels of boring.
I have always loved the above quote because I think that 99% of traders would be better off gambling in Vegas - at least you get free drinks while you are losing your money.
This was a very hard lesson for me to learn. In my 20s, I played a ton of poker - in dingy card houses in New York City, in Atlantic City, and Vegas and online. I was a decent player, although I lacked the emotional discipline and risk management to be truly successful. I largely treaded water, made very little, and wasted a ton of valuable time and sleep.
I found at a certain point that it was becoming far too time-consuming. I would play out of boredom, in the middle of the night, first thing when I woke up and off to the side while I was doing other things. It became habitual to fill my free time (and not so free time) with a few hands at the poker table. One night at around 4 AM, I had just returned home from work (DJing) and a friend called and said that he had hired a limo to head to Atlantic City to play poker. The two of us caught a nap in the car and headed to the Taj Mahal.
We were both exhausted, in limbo between intoxicated and hungover, and really not up for it by the time we arrived. We cashed in for some chips, went to the tables, and did what was inevitable - we lost all of our money. A few times. So much so that we were no longer able to withdraw cash from the ATM. Further, the limo was a company car and went back to NYC hours before.
So what happened? We got on a New Jersey Transit bus at 11 AM to head back to NYC. It was absolutely miserable and took about 3 hours to get us to the city. We were in terrible shape, exhausted, broke, and nauseous. What’s worse? I was wearing a brand new pair of underwear, which gave me contact dermatitis in all the wrong places. I was unable to sit comfortably for a week, and was in serious pain on the bus ride home.
Good times.
Lesson learned. I was a gambler and needed to stop before I developed a problem. So I stopped playing poker, easy.
This translated to my trading as well. I turned everything around when I realized that trading should be a completely unemotional pursuit, that I should not be trading until it gave me little joy and absolutely no unhappiness.
It’s not easy to get to that point, but when you do you are ready to be a successful (and very bored) trader.
Bitcoin SV May Be In Trouble
One of main reasons for blockchains and cryptocurrencies to exist is their ability to solve the double-spend problem. Major payment providers spend millions on centralized security systems to prevent double spending, something that blockchains do on their own. That being said, not all are projects are successful at making sure a double-spend is avoided and as of late, BSV (Bitcoin Satoshi Vision) has been failing at one of its most important jobs.
Starting in July, BSV was suspended from major exchanges when routine checkups alerted them to the fact that the coin was being double-spent due to a 51% attack. This happens when wealthy entities spend large sums of money to gain control of the hash power and reorganize the chain, giving them a temporary window to double spend the asset as the rest of the world is unaware of the attack. Popular coins with low security become a desirable network to hack because they have enough activity and size to churn a profit after the money is spent to gain hash power.
BSV has become a prime target. The recent halving event was expected to draw in newcomers and drive up price, but the opposite occurred. The hash rate dropped about 50% due to low interest, resulting in fewer miners securing the network and fending off an attack. Huobi Global was the first to suspend BSV, followed by OKEex and Bittrex. Coinbase has delisted it entirely. As for now, it isn't clear what exchanges' long-term plans are with the asset, but holding onto BSV can be risky, especially with 51% attacks occurring.
Is Tesla Underwater On Bitcoin?
Is Tesla underwater on their Bitcoin purchase? It is possible - the odds are seemingly 50-50. When the news was first announced and more information circulated, I ran the calculations with my best guess on the average purchase price and made the following assumptions: “A very conservative upper estimate on Elon’s average price is $35,000. It is also possible that Tesla accumulated Bitcoin back in December for much more favorable prices - sub $30,000. A month-old post on Reddit from a Tesla insider claimed that the average purchase price was $33,142.” Therefore, it is reasonable to believe the average purchase price was between $30,000 and $35,000 per Bitcoin.
As confluence to this idea, the article linked above quoted a purchase price of about $30,000. Regardless of the purchase price, a difference of a few thousand-dollar is irrelevant in the long run. Whether Tesla holds or sells, Bitcoin will continue on the path to global domination. Musk is volatile, but his power continues to wane. Max Keiser, a podcast guest, and popular Bitcoin maximalist had a quote in the article I really liked, which I added below.
“When a great mind accompanied by a big ego encounters Bitcoin, it immediately gravitates towards trying to fix it. Elon is not the first and will not be the last. Every great Bitcoin thinker out there had an Altcoin phase. They all thought that maybe a new idea had come along that made Bitcoin obsolete.
Eventually, they all realize that Bitcoin is more of a miracle than a technology. That the economic incentives are right where they belong, and that it’s a machine with the potential of improving the world for everyone.”
Whether Tesla has diamond hands or not will not affect my opinion on the asset and it shouldn't affect yours. Yes, idolizing the “greats” like Michael Saylor and Elon Musk opens the potential for cracks in the system, but at the end of the day, their investment decisions shouldn't impact yours.
The SEC Delays Another ETF
There are now over a dozen ETF applications on the SEC's desk, as they continue to kick the can down the road and refuse to make a decision. We have seen a number of applications pushed back, asking the public to comment on the filings, including Valkyrie, a company that I am invested in.
It is clear that the SEC is unprepared to make a decision. Some would view it as a positive that they have not denied the applications outright. Others view it as negative that an ETF has not been approved.
Regardless, we all know that an ETF is inevitable, whether in the fall or in 3 years. This will be the key to unlocking a wall of institutional money.
Spike Lee Is Taking Us Mainstream
“Our currency is not current, old money as rich as it looks, is flat out broke.” - Spike Lee.
The legend Spike Lee appeared in a crypto commercial for CoinCloud where he explained why our old systems aren’t cutting it for our modern needs. He takes the stance that new money (referring to cryptocurrency) is, “positive, inclusive, fluid, strong, and culturally rich.” Although the commercial fails to mention any specific coin, I’ll give him the benefit of the doubt and assume he is describing a meaningful project *cough,cough Bitcoin.*
The Wolf Of All Streets Podcast Ft. Stephen Stonberg
Exchanges are the engines that make the crypto space run. Behind the scenes of almost every crypto transaction, countless exchange employees are working tirelessly to provide an optimal experience for users while staying on the cutting edge of technology. Stephen Stonberg has been tasked with one of the most challenging jobs in crypto - CEO of Bittrex Global. His job is focused on scaling rapidly in advance of institutional and mainstream adoption. Stonberg believes that, like the internet, blockchain is an unstoppable force that will drastically disrupt the modern financial system.
Stephen Stonberg: https://twitter.com/StephenStonberg
Intro
Bittrex vs. Bittrex Global
Navigating regulation
Why does FUD perpetuate?
Current exchange metrics
Tokenize everything
The Grayscale unlock
Scaling for institutional adoption
The arrival of institutional money
What is Bitcoin’s narrative
Working with the trend
Thoughts on the market correction
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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.