The Wolf Den #355 - All Time High!
Bitcoin Thoughts And Analysis
We made it! Price finally made a new all time high after 189 days of fear, uncertainty and doubt. Give yourself a pat on the back if you are still here and held through the entire drop - you deserve it. It was awesome that the all time high was broken during my livestream yesterday morning - it was fun to celebrate with all of you.
There's not much to look at technically - we are literally in "uncharted" territory.
MONTHLY CHART
Epic monthly candle so far, bouncing perfectly off of the EQ of the channel as support for the 6th month in a row. This candle is not closed, too early to judge, but price should be headed to the channel highs. 6 figures.
WEEKLY CHART
We ideally want to see a weekly close above the previous all time high to eliminate the idea of a bearish weekly SFP, or swing failure pattern. This occurs when a candle wick above a key swing high and closes below, and is a sign of engineered liquidity. That means a whale pushes prices to that level to fill their sell orders by triggering breakout longs and stop losses on shorts, which become buy orders and liquidity for selling.
Even if price closes below the previous high, it's not a big deal. Just something to watch for.
DAILY CHART
If Bitcoin closes the day above the previous all time high, then we will already technically have a successful daily retest of that line as support, which happened already today.
Bollinger Bands have been extremely useful during this run, and I have posted this over and over again. As predicted, price has taken a ride along the top band as it has expanded upward. When we see that band start to flatten, it will be a good sign that consolidation is likely. For now, it is still seemingly heading up and price is glued to it. Beautiful. If we get a retrace, look to the centerline (blue) as the first key support.
Altcoin Charts
I do NOT share signals in this section. I share setups and charts that I am watching, in an effort to help show you how I view a chart and what criteria would be necessary for me to consider taking a trade. NEVER blindly buy something because it is listed in a newsletter or posted on twitter. You need to have a plan when you enter a trade. These are just ideas, and are almost always “if, then” scenarios. If a certain set of things happen, then I would consider a trade.
I have been holding off on altcoin setups during the last leg of the Bitcoin run, watching them fall hard on their Bitcoin pairs. After looking at quite a few on the stream yesterday, I saw that many were about to break out, meaning they have likely bottomed. Here are a few of the charts that look good, based on alarms going off from levels that I set. These are straightforward - when coins drop, they generally form a descending resistance. When that breaks, consolidation "should" be over and they should continue up. TA is not certain, so always manage risk and realize that if Bitcoin pumps again, these could all invalidate quickly.
The ideal trade is always a break of resistance and then retest as support, if you can get it.
These are just a few of many. I could post 10-20 just based on what I saw this morning, quickly scanning charts. You can look for similar setups on your own, preferably ones that have not broken out yet.
1INCH/USDT
This is an update on previous charts on 1INCH and endless discussion about the coin on YouTube. As you can see, we had previous entries in the black circles, and the breakout of blue resistance and retest of the channel EQ as support. Those are already well in profit. Now we have a confirmed inverse head and shoulders, if you believe that it is valid in this position. This is a reversal pattern and has to happen at a bottom. Price was dropping into it, so it is valid in my opinion.
We also have a break of the trading range and accumulation after the drop from the highs.
The red target is shown based on the depth of the inverse head and shouldrs - a retest of the blue neck line as support would be a great entry, if it happens. Otherwise, you can use the other lines as targets. I would consider this invalid if 1INCH falls back in the blue range and trades there for an extended period of time. A wick or two or a candle or two is fine to retest the blue line.
ALGO/USDT
ALGO appears ready to take a trip back to the recent all time high. As with many coins right now, it has broken descending resistance, signaling a likely end to consolidation. If you consider this a bull pennant, then the target is shown in red, based on the length of the flagpole. The more conservative target is the recent all time high. Right now, you want to see $1.84 hold as support and not to end up with a wick above that level and close below.
Depending on your risk tolerance, stops can be below the ascending black line or and number of lower local supports you can draw. Always leave a little room for a wick that sweeps your stops.
FTT/BTC
Break of descending blue resistance and horizontal resistance. Once a candle closes above, look for a retest if you can get it. Easy.
HNT/USDT
I have been stalking this HNT setup for quite a while. It has broken descending resistance and now is at resistance at $22.87. I need to see this level as support, because I never want to buy resistance, especially when price has been rejected there a few times. Either way, this should be returning to the recent all time high, based solely on the break of the blue line. Higher targets are in play (red) if you view this as a bull flag. It is not exactly parallel, but is close enough to be considered.
LTC/BTC
Litecoin is literally sitting on the last support on the weekly Binance chart. If this breaks, it would be in price discovery for an all time low. It actually closed below the level last week, but looks like it could be a fake out.
I like this setup because it's easy to exit for a small loss if it goes wrong. Trading is about taking positions where you lose a little when you are wrong. This has literally endless upside if support holds.
I am NOT saying it will go up, I am saying it has very good risk reward.
NEXO/BTC
NEXO looks great against Bitcoin, likely to reverse. This was earmarked yesterday during the stream, where I showed the large grey demand zone on the daily, a very likely area for a bounce. Not only has price bounced, but now it has broken both descending and horizontal resistance. We technically need to see the candle close above both of those levels. Target are shown above, although really, the top of the blue line around 5055 is most likely.
SAND/USDT
SAND has broken descending resistance and nearly retested it as support. This is a confirmed breakout. Key horizontal support and resistance levels are marked and can be used as targets and for setting stops or invalidation. This should technically return to the all time high based on this breakout.
Bitcoin ATH And Why This Time Is Different - IntoTheBlock
In this report, we bring to you the latest in on-chain cryptocurrency analysis. We look at the blockchain directly and analyze balances, transactions, and the overall activity of market participants. This gives us a unique insight into the future of the market.
This section is written in conjunction with IntoTheBlock (ITB). ITB is an intelligence company that leverages machine learning and advanced statistics to extract intelligent signals tailored to crypto-assets. IntoTheBlock tackles one of the hardest problems in crypto: to provide investors with a view of a crypto asset that goes beyond price and volume data.
The Wolf Den research team uses IntoTheBlock to dig deeper and get the most important insights about the crypto market.
Bitcoin ATH And Why This Time Is Different
It took 189 days, but Bitcoin has now maden a new all-time high. The latest rally that pushed Bitcoin above $66,000 was fueled by the approval of the ProShares Bitcoin Strategy ETF, the regulator’s first approval of an ETF linked to Bitcoin futures contracts.
After years of rejected ETFs, Bitcoin and its community finally got one approved in the U.S. This should bring institutional participants and may also make investors feel more comfortable, as this could be a regulatory stamp of approval and a sign that crypto is not going away. And what’s more impressive is that since the ProShares Bitcoin Strategy ETF started trading this week, it has become the fastest fund ever to reach $1 billion in assets under management (AUM).
As Bitcoin blows past $66,000, it’s worth analyzing what’s different between the April all-time high and the one recorded this week. By leveraging IntoTheBlock’s indicators, we can paint a narrative to explain it.
1. Transactional Volume and Institutional Appetite.
Bitcoin has recorded a record of $700b in daily on-chain volume this week. In April, Bitcoin was averaging roughly $100 billion in daily transactional volume. As can be seen in the graph below, the recent rally increased the volume by 7 times. This growth in volume can be interpreted as a sign of confidence in the current break-out.
As of October 21, 2021 through IntoTheBlock’s Bitcoin Network Indicators
More interestingly, 99.7% of that volume comes from transactions greater than $100k, which, means that the majority of the volume is not coming from retail participants, but rather from institutional investors.
2. Less Speculation
IntoTheBlock’s Traders indicator quantifies the number of buyers that have been holding for under a month. While some of these addresses will continue to hold for longer periods of time, changes in the number of traders point to the level of speculative activity taking place.
As of October 21, 2021 through IntoTheBlock’s Bitcoin Ownership Indicators
In the graph above we can see that the number of traders for Bitcoin was reduced by almost 40% since April. Less speculative activity is bullish for Bitcoin, as the majority of the addresses are holding Bitcoin for the long term. Traders only represent 7.97% of the total concentration.
3. Less overheated markets
Even as we are seeing positive funding rates across major exchanges, they are not nearly as high as the ones experienced throughout the first 4 months of 2021.
As of October 21, 2021 through IntoTheBlock’s Bitcoin Derivatives Indicators
As can be seen in the graph above, funding rates on exchanges like Binance or FTX are 50% below February and April numbers. Over time these premiums are corrected as the funding rate creates a financial incentive for long holders to close their positions (to avoid paying funding fees) or for traders to short sell (and receive the funding fees).
Chart Requests
Every Wednesday, I take chart requests from paid newsletter subscribers and look at them live on YouTube. There were quite a few setups yesterday that were looking likely to break out that are following through today. Give this a watch!
It’s Time To Secure Those Bags
It’s time to enable whitelisting on all of your exchanges, whether you hold crypto there or not. If you are unfamiliar with the concept of whitelisting, click the blog above for a complete breakdown of what it is and how it works.
Whitelisting on one platform does not protect your entire portfolio. You need to make sure to secure each and every off ramp, guaranteeing that no hacker or bad actor has an avenue to send your funds to their own wallet. Being your own bank is hard - make sure to take every precaution possible to secure your accounts.
$1 Million Tether Bounty Causes Controversy
A $1 million dollar bounty has been announced for anyone willing to come forward with new information regarding Tether’s reserve backing. Hindenburg, the firm behind the bounty, has a history of taking on short positions in companies they believe will crash (Hindenburg currently doesn’t have any position in Tether).
In their press release, they stated that it is their belief that Tether has reached a size of “systemic risk” and that the public deserves to know the contents of their reserves. Tether responded to the news, calling the bounty a “pathetic bid for attention” and a “scheme in pursuit of profit.”
I use Tether and believe that they have done enough to settle the endless FUD. Realistically, Tether probably has better backing than most of the junk bonds floating around legacy finance and probably has a healthier balance sheet than most listed companies. Time will tell, but this feels like yet another attempt at FUD.
Facebook is Changing Its Name
According to an inside source, Facebook is revealing a new name and direction next week, a huge step for a company that has become a household name. There is little information beyond this small breadcrumb, More should all be revealed next week during the company’s major annual conference, happening on October 28th.
Regardless of the new name, the compelling story here is the commitment of the world's largest social platform to the metaverse.
Bitcoin Run Driven By Inflation
Surprisingly, this is coming from JPMorgan, who's CEO Jamie Dimon is a notorious Bitcoin hater to the Nth degree.
Here is what the article says. "Inflation concerns rather than exuberance about the first U.S. Bitcoin futures ETF is driving the digital currency to record highs, according to JPMorgan Chase & Co. strategists.
“By itself, the launch of BITO is unlikely to trigger a new phase of significantly more fresh capital entering Bitcoin,” wrote strategists including Nikolaos Panigirtzoglou, referring to the ProShares Bitcoin Strategy ETF. “Instead, we believe the perception of Bitcoin as a better inflation hedge than gold is the main reason for the current upswing, triggering a shift away from gold ETFs into Bitcoin funds since September.”"
The Wolf Of All Streets Podcast Ft. Eswar Prasad
The world is rapidly going digital, and different forms of digital money are competing for adoption. Eswar Prasad is a prestigious professor and prolific author known for his thoughtful considerations on the future of money. As an economist, Eswar hopes for a competitive future in which money is more accessible, transferable, stable, private, and digital.
In this episode, Eswar Prasad and I discussed:
The digital revolution is here
Criminals enjoy the USD
Is money already digital?
Bitcoin’s role in a digital landscape
How long can our broken system last?
Is there systemic risk in crypto?
Will regulation be reasonable?
Can Bitcoin be a global reserve currency?
El Salvador’s Bitcoin decision
What is the best money?
This episode is sponsored by ARCULUS and KAVA.
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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.