The Wolf Den #291 - Elon Musk Is A Hero Again
Bitcoin Thoughts And Analysis
Bitcoin bounced nicely after the drop two days ago, and on the hype surrounding the B Word Conference. Now we need to see some real follow through. There is endless resistance ahead on almost every time frame, so caution is always wise.
WEEKLY CHART
We are very early in this candle, so we can't judge it yet. That said, at present we have a bullish hammer with a long wick down and small body. A few hundred more dollars up and it could hold the 50 MA as support once again. This will be fun to watch over the coming days.
DAILY CHART
As you can see, price was rejected so far at the EQ of the descending blue channel. The EQ is the equilibrium - that dashed 50% line of any channel. We want to see price flip that, which would be an indication that it is ready to head to the top of the channel. For now, price is once again at resistance.
Altcoin Charts
To be clear, I am still wary of altcoins here. A big Bitcoin move in either direction would likely be bad for them, and even sideways price action has not given them much room to move.
XLM/BTC
XLM bounced nicely off of support on the BTC pair. It should be heading to 850 for a small move. You are likely more interested in the USDT pair below, so this chart adds confluence to the idea that this is bouncing. This looks bad below 671, not much support if it drops again.
XLM/USDT
XLM bounced beautifully off of support and is testing descending resistance for a breakout. This is not confirmed until the candle close, so currently this would be buying resistance unless you are a "breakout trader" and like the risk. A clean breakout and ideally retest of the blue line should theoretically target the top of descending blue line for a 2x move. Key levels are marked.
This depends almost ENTIRELY on Bitcoin going up.
Legacy Markets
DXY (DOLLAR INDEX)
I rarely bother to zoom in on the DXY chart, but it's movement has massive effects on other markets. I have shared the macro view countless times, with the monthly channel breakdown. Recently, we had a local bullish move, with an exit of the blue descending channel. That said, even more zoomed in, we can see an ascending wedge with a rejection at the top resistance. Technically, this pattern should break to the downside, targeting the lows of the pattern. That would be short term good for stocks, metals and potentially bitcoin.
Ascending wedges are not the most reliable patterns - we have seen Bitcoin break them to the upside countless times. But this is still worth watching.
A break of 93.437 would confirm a double bottom, which does not exist yet. We don't want to see that.
Chart Requests
Yesterday's chart request stream was a lightening round! I chose to go live 30 minutes early to avoid streaming during the Elon Musk panel. Here are your requests, enjoy!
Tip: Take a 3% Profit On Every Trade for A Month
I shared this lesson many newsletters ago, but I think it is REALLY important! I did this for a while and it made a huge difference in my trading. You need to learn to SELL - it’s far harder than figuring out when to buy.
Taking losses is difficult. One of the hardest things to learn as a trader is how to set a stop loss and accept the hit to their portfolio when it fires. We have all experienced it.
What few traders talk about is how difficult it is to SELL. I would argue that taking profit is far more difficult than taking a loss. How many times have you watched an asset’s price rise, failed to take profit, and then been paralyzed as the price dropped and turned into a realized loss? Should you have sold before your target and locked in profit? Should you have moved your stop loss up to breakeven? And how many times have you seen price reach your target – but you decide that price can go even higher and choose not to sell, only to see price drop once again.
Selling is hard. My mentor Christopher Inks once taught me a valuable tactic – he told to take profit at a 3% gain on every trade (when possible) for an entire month, no matter what. I thought he was absolutely crazy considering the opportunities in the crypto market at the time. However, I vowed to test it myself and found it to be an extremely valuable exercise. First, consistent small gains compound very quickly and can result in tremendous profit over a relatively short period of time. More importantly, this exercise teaches traders the value and importance of taking profit, regardless of FUTURE PRICE ACTION. It kills FOMO (fear of missing out) and eliminates the greed that is inherent in the human psyche – the urge to squeeze a bit more profit out of an already successful trade.
Try it and let me know how it goes!
Bitcoin Mining ETF Set To Launch
Viridi Funds, an investment advisor, has launched the first Bitcoin mining focused ETF - the Viridi Cleaner Energy Crypto Mining & Semiconductor ETF (RIGZ). Set to launch on the NYSE, the ETF will balance 80% of its funds in mining companies and 20% in semiconductor companies. Since the timeline on a Bitcoin ETF is unknown, this serves as an excellent alternative for institutions looking to gain indirect exposure to Bitcoin. Furthermore, as the name implies, the allocation of funds is focused on clean companies that are working to offset their emissions - a win-win for concerned investors and the environment.
71% Of Institutional Investors Plan To Buy Or Invest In Digital Assets
In a new research study from Fidelity Digital Assets, it was found that “71% of institutional investors surveyed in Fidelity Digital Assets' 2021 Institutional Investor Digital Assets Study plan to invest in digital assets in the future, & more than 90% of investors who expressed an interest expect to have an allocation within 5 years.” The institutions surveyed were from all around the world, including Asia, Europe, and the US. Participants in the survey were asked to name the largest barrier to their entry, and volatility was found to be the greatest concern, followed by a “lack of fundamentals to gauge value and concerns around market manipulation.” Given the passage of time, a stabler price, and stronger infrastructure, it seems obvious that everyone will eventually jump on board.
The Wolf Of All Streets Podcast Ft. Sam Bankman-Fried
Sam Bankman-Fried is leading the charge towards mainstream adoption of crypto, seemingly single handedly marketing to the masses. He has put the name FTX on a stadium, MLB, Tom Brady and others, bringing more new eyes to Bitcoin than ever before. He believes that crypto is in the early innings and that the future is bright. Perhaps most importantly, he asserts that institutional adoption has just begun, and that a flood of money is soon to enter the space.
Sam Bankman-Fried: https://twitter.com/SBF_Alameda
Sam and I discussed the following:
Sam’s bean bag chair
Putting crypto in front of the masses
Tom Brady and crypto
Building the value of FTX
Decreasing trading volume
What caused the recent drop
Is regulation a threat?
The caveats of regulation
The truth of hyperbolic narratives
How do we go back up?
What is Sam’s plan?
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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.