The Wolf Den #428 - Stocks Take a Nosedive
Bitcoin Thoughts And Analysis
Bitcoin is nearly impossible to analyze at the moment. It's up, it's down, it's all around. Once again, we find ourselves searching for meaning in small moves, knowing that we are trading below resistance and likely need a catalyst to send price and interest skyrocketing.
WEEKLY CHART
We have not seen consecutive bullish weekly candles since the beginning of November. Each potentially bullish candle has been followed by more downside. This week is not closed, but for now we have yet another beautiful candle followed by an uglier one. Let's hope we see some upside to close out the week.
It could not be more clear that the $39,600 area (and slightly below) is strong resistance here, which is why I keep cautioning against being bullish at resistance.
DAILY CHART
The move from the lows seems increasingly more likely to be a simple relief bounce. With price trading below the Bollinger Bands, a move to the centerline as mean reversion was somewhat inevitable. Now we are seeing a rejection there and more downside. I'm not saying we are going lower, I am just saying bulls will need real ammo to push through all of the resistance.
The NFT Uptrend Continues - 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.
The NFT Uptrend Continues
Although speculation in ERC-20 tokens might be taking a break given the recent price action, volumes for NFTs continue to boom. NFT volumes reached a monthly high in January of over $5 billion traded.
Interest in NFTs continues to rise as large companies and celebrities continue to embrace them.
Twitter released the verification of NFT profile pictures after months of teasing the feature.
Social media rival Meta is moving forward with NFTs for Facebook and Instagram, reportedly helping users display and mint NFTs for their profiles.
Celebrities such as Snoop Dogg, Justin Bieber, Reese Witherspoon have recently shown support for NFT collections; meanwhile Tom Brady raised $170M for an NFT platform.
The hype in NFTs is reflected in constant interest from the retail side, as the Google search trends for “NFTs” surpassed “Crypto” for the first time a few weeks ago, highlighting their vast popularity.
NFTs are bringing more adoption to the space, as for many of these users, this is their first interaction with crypto. And the attention is focussed on recently launched NFT collections, while older collections have not been doing so well.
IntoTheBlock’s CryptoPunk NFTX vault indicators
CryptoPunks have dropped 57% in dollar terms and 52% in Ether terms since their peak in August 2021.
Bored Ape Yacht Club has surpassed CryptoPunks as the most expensive 10,000 piece collection, with the latter falling off of the top 10 most traded in the past week.
Overall, as NFTs bring new people in, the broader crypto space benefits as more learn the basics of using a wallet and experiment with other use-cases.
Chart Requests
Here is yesterday's chart request stream. Not much to see, frankly. The charts were looking a bit ugly, in advance of the dip we are seeing now.
Fidelity Is A Bitcoin OG
It turns out that Fidelity has been accumulating Bitcoin since 2014. In a recent interview with the head of sales, Christine Sandler revealed that Fidelity “started mining cryptocurrency in 2014.” She elaborated by adding, “as part of our exploration of that foundational level technology, we started to mine cryptocurrency. We started accumulating in 2014. We looked at the ecosystem and noticed nobody looks like us.” How many other institutions have taken a similar path, and how many other institutions now feel a mounting pressure to keep up with Fidelity?
Fidelity was early and remained committed, and has now solidified their spot as the world's leading institution in crypto.
Grayscale Launches Crypto ETF
All the latests news on Crypto, Blockchain, Bitcoin, Ethereum, Tokens, ICOs, Fintech, and more.
The SEC has greenlighted Grayscale’s Future of Finance ETF (GFOF), meaning it is now publicly trading on the NYSE. The ETF doesn’t directly hold crypto. Instead, it holds crypto infrastructure stocks such as Argo, Hive, Coinbase, and PayPal. About the listing, David LaValle, the Global Head of ETFs at Grayscale Investments said, “the approval is a first step in what will be an ongoing strategic expansion of Grayscale’s investment offerings that leverage the ETF wrapper. Through GFOF, investors now have the opportunity to receive exposure to the companies that are pivotal to the evolution of the global financial system.”
Texan Miners Shutting Down To Help Power Grid
Texas's power grid is apparently built primarily out of Lincoln Logs and Scotch Tape, as was proven by the rolling blackouts during the unexpected winter blast last year.
Showing their commitment to helping the grid and the people of Texas, Riot Blockchain has wound down 99% of their activities, with plans to help further if things get ugly.
“Just as important as the positive market signals we send to generators is our unique ability to immediately shed load when ERCOT demands it. This sort of demand response has and should continue to be a powerful tool in any grid management strategy.”
Good on them for doing the right thing, even at their own economic peril. This will certainly set a positive example and likely make more states and regulators look kindly on our industry.
IRS Will Not Tax Unsold Staked Crypto As Income
This could be huge news, but we are still awaiting further clarity.
A Nashville couple’s lawsuit over taxes they paid on unclaimed and unsold Tezos staking rewards is ending, and they are getting a refund from the IRS.
"Tokens attained through proof-of-stake protocols are taxpayer-created property and should not be taxed until sold or exchanged"
I don't want to overanalyze this until we have more info, but keep an eye out.
The Wolf Of All Streets Podcast Ft. Payal Shah
The CME has played a pivotal role in ensuring that institutions have access to the cryptocurrency futures market. Payal Shah, the Director of Equity & Cryptocurrency Products at CME Group, came on the show to help our listeners better understand how the derivatives marketplace functions in our nascent sector. This episode covers a number of topics, including the CME’s customers, how futures contracts work and are used, miners hedging, institutions trading Ethereum, and more. You can’t miss it.
In this episode with Payal, we discussed:
The CME Journey
How Does The CME Help Markets?
MicroFutures Are The Future
Who Are The CME Customers?
How Do Miners Hedge?
How Big Is The CME?
How Are Institutions Trading Ethereum?
CME And The Futures ETF
Regulation Is A Feature
The CME’s Future Outlook
Perpetual Swaps And DeFi
This episode is sponsored by: ARCULUS and BULLISH.
My Recommended Platforms And Tools
This is where I trade with leverage and can also trade spot with no fees.
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.
Subscribe to my YouTube channel for free daily content.
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.