The Wolf Den #403 - Does Bitcoin Appreciate 200% A Year?
Bitcoin Thoughts And Analysis
Not much to see here, as Bitcoin had another down day on minimal volume. The selling was a bit relentless yesterday, pushing through thin holiday order books and largely in the leverage markets. Bitmex seemed to be leading the charge yesterday, which has not been the case in ages. I saw multiple 10-40M market sell orders going through. Someone was seemingly trying to trigger a liquidation cascade.
After all of that selling and incredible bearishness across the community, Bitcoin is down roughly 1.4% since this time yesterday. Literally a normal day's volatility.
The sentiment does not add up to the price action. Bitcoin is ranging between, 42K and 52K, with 53K being the more meaningful level above. Sentiment should be neutral and bored. Instead we have this...
Extreme fear. On low volume during the holidays when price is effectively sideways. Humans are gonna human!
WEEKLY CHART
Price has been battling the 50 MA for the past 5 weeks. trading very closely around it for the last 3. It will be interesting to see where this weekly candle closes. Other than that, nothing has changed here at all.
4-HOUR CHART
Bitcoin once again hit oversold on the 4-hour chart. After confirming bullish divergence on the hourly, I was looking for it to happen on the 4-hour. It was not to be. While the idea was in play, price and RSI both ended up making lower low. Still, RSI has hit oversold twice here, and will inevitably make the trip back to overbought. That can happen without price rising too much, so it does not necessarily mean this is the bottom. I will still be watching for another drop and a bullish divergence to form.
I shared this trade idea on my livestream yesterday. As you can see, you would have come very close to being stopped out, but would be currently back in profit. The idea here was to take a trade right at the range EQ, because the upside is much larger than the downside. That's what you look for as a trader - a tight stop and a large potential gain, even if you think you will lose. We have seen price lose the EQ temporarily quite a few times already in the past few weeks before heading back up. Let's see if it happens again.
As you can see, price is right at local resistance now, basically the bottom of the area that it was consolidating before the drop yesterday.
Chart Requests
More Predictions For 2022
Eric Wall, a popular crypto commentator and hedge fund CIO, came out with a list of 27 predictions for 2022 and did so with little regard for anyone's feelings. The list includes a number of hot takes that are likely to draw some strong disagreements, but generally speaking, his list looks strong. I copied a few below that I either strongly agreed with or felt you should see. Be warned, they are hot takes! At the end of the day, this is just one man’s opinion. The odds of him being right on 27/27 are slim to none - and slim just walked out the door.
Ethereum (ETH) won't flip bitcoin (BTC)
But no Ethereum killer (SOL, AVAX, LUNA, ADA etc.) will flip ETH either.
There will be new signs of institutional bitcoin adoption. A very large pension fund investment or something along those lines--something that kickstarts the MicroStrategy narrative again which mostly fizzled out in 2021.
Question: Do you think ETH2 will merge and will it be successful?
His Prediction: Yes, the Merge will happen and it will be successful. There may be some resistance from PoW miners, but any remaining PoW-chainsplit of Ethereum will swiftly fall into irrelevance. No catastrophic attacks on ETH2 PoS occur.
Question: Extended multi-year bear market, or narrative-driven turn-based supercycle? (Where ultimately quality only prevails?
His Prediction: Something in between. No mega bear market, no supercycle.
Sber Bank Launches Blockchain ETF
In the midst of rumors that Russia will ban crypto, government backed Sber Bank launched an ETF that tracks companies with exposure to the asset class. We have a number of ETFs like this in the US and beyond, but it's interesting to see arguably the world's most successful bank in a country where mutual funds and institutions are largely not allowed to own Bitcoin putting forth a product like this. It doesn't square with the idea of a ban, and could be a sign that Russia is more crypto friendly than it seems.
The Wolf Of All Streets Podcast Ft. Max Boonen
Market makers in crypto are wildly misunderstood, as is the manner in which huge players trade. In this episode, Max Boonen, the founder of B2C2, explained the importance of market makers, and how their services and liquidity make the market more efficient. He broke down the reality of how whales trade, their actual impact, and how they are making money. Max also shared an incredible story on how whales once moved the market, one of my favorite anecdotes ever shared on the show. This conversation sheds a positive light on a powerful force in crypto that makes our market efficient for all players and offers a glimpse of what is to come.
In this episode with Max Boonen, we discussed:
What Is A Market Maker?
Profit Lies In The Spread
The Importance Of Market Efficiency
How Does Big Money Move In Crypto?
Is Michael Saylor A Whale?
What Is A Big Order?
DeFi And AMM In The Market
Finding Your Niche In DeFi
Max’s Involvement With The CME
A Government Auction Tanks BTC Price
Expectations For 2022
Max’s Genesis Story
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.