The Wolf Den #43 - Bitcoin, Oil, Stocks, Trade Ideas And More
thewolfden.substack.com
A MAJOR THANK YOU AS ALWAYS to my sponsors: VOYAGER and PHEMEX.Please make sure to read about them below and sign up for an account! I use Voyager for my spot trading and investing (and to compound interest) and I use Phemex for trading with leverage. Sign up to both with the links above and get some free Bitcoin.Bitcoin has retraced the majority of the dramatic crash that occurred on March 12th - over 80%. There are a number of theories for why price dropped so hard. The most logical and the one supported by those in the know is that Bitcoin dropped because it is a liquid asset - easy to sell. I have spoken to hedge fund managers and exchange owners for the podcast and privately, and this seems to be the consensus.Certain people needed cash to cover losses in other markets, the bond market book was empty and stocks were dropping dramatically. The Fed actually had to step in to provide liquidity to the buy side of the bond market, which is astounding to consider. You could not sell bonds if you wanted to without them participating. It stands to reason that large players exposed to Bitcoin would risk-off. That said, 70% of Bitcoin did not move, and we know that a small percentage of all Bitcoin has been lost, so a small percentage of the existing Bitcoin is being traded and moves the price. That remaining percentage is largely controlled by a select few whales in the market who are speculating. Fine.The second leg of that crash was clearly a result of inefficient liquidation engines (namely on Bitmex) liquidating over-leveraged longs into an empty order book. We can effectively disregard the second half of the crash (from $5,000 to $3,800 or so), because it was unintentional selling triggered by the large players selling at higher prices. This is clear - Bitmex went down for "maintenance" and price jumped 50% in a single 12-hour candle, back to almost $6,000. It's fair to assume the meaningful drop, then, was from 8K to 6K.If you are confused as to what happened on Bitmex, here's the TLDR. Price moved too quickly for their system to handle, so it started liquidating 10M + positions into a nearly empty order book. When there are no bids on the book, it has to sell down to the next available buy prices, regardless how low they are. At one point there was only 15M TOTAL buy orders down to 0, at which point Bitmex went offline. If they had not done this, the price of Bitcoin on Bitmex would have been ZERO.Assuming these theories are correct, we can assume that those who had the Bitcoin to sell and needed to sell it have already done so. They liquidated their holdings to raise cash to cover losses elsewhere. If you are still bearish and think lower lows are coming (possible), you have to believe that there are still many players in the market who are looking to liquidate their assets that did not do so on March 12th. For me, that is a stretch, supported by the knowledge that the biggest holders (70%) have never sold anything. Following this, it is my OPINION that the large players who needed to sell have already done so, hence the sustained rise of Bitcoin since that day and on lower volume than the crash, which we can view as a black swan event.It would take a tremendous amount of Bitcoin being sold to drive price down there again. I have been bullish since that day, because it looks like a technical and fundamental bottom to me. None of us expected a move to the $3,000s with that velocity - and that's because the back end of that move was not intentional. The easiest trade in years on Bitcoin has been longing every dip in the last month - period.As a result, the past month has been the most profitable I have ever had trading Bitcoin. I am in no way advising a trade here, or saying to buy Bitcoin today. I am actually short Bitcoin on Phemex at the moment with a small hedge position against my holdings.This is just my thinking on the recent drop and subsequent bottom. I will discuss the idea of Bitcoin and it's correlation (or lack thereof) later in the newsletter. Also included today is a thorough analysis and explanation of what happened in the oil market yesterday from a man who knows quite a bit about West Texas... my mentor, Christopher Inks, owner of TexasWest Capital. This is an absolute MUST READ.To my free members (I love you!) - paid members receive emails like this at least 2 times a week - sometimes up to 5. Every Thursday I chart any request sent by my paid members, often over 30 or 40 charts. It's a ridiculous amount of work, but I do my best to add real value to anyone who subscribes. If you would like to join the paid side, you can do so for $15 a month here.https://www.getrevue.co/profile/TheWolfDen/membersThis will give you access to everything that I have ever written. If you cannot use a credit card, please contact me directly to pay with crypto.What’s in this issue?Bitcoin Thoughts And AnalysisDid Oil Really Drop Below $0 On Monday?Investing During A Financial CrisisThe Wolf Of All Streets Podcast Ft. Ed FeltenHedging During Times Of High Volatility On PhemexAre Bitcoin And Stocks Correlated?Altcoin ChartsLegacy MarketsSmall Business Loans In The USA - A DisasterWin $1000 On Voyager's Bitcoin Halving PageHow To Trade the Bitcoin Halving: Whales Vs. TradersStart Small
The Wolf Den #43 - Bitcoin, Oil, Stocks, Trade Ideas And More
The Wolf Den #43 - Bitcoin, Oil, Stocks…
The Wolf Den #43 - Bitcoin, Oil, Stocks, Trade Ideas And More
A MAJOR THANK YOU AS ALWAYS to my sponsors: VOYAGER and PHEMEX.Please make sure to read about them below and sign up for an account! I use Voyager for my spot trading and investing (and to compound interest) and I use Phemex for trading with leverage. Sign up to both with the links above and get some free Bitcoin.Bitcoin has retraced the majority of the dramatic crash that occurred on March 12th - over 80%. There are a number of theories for why price dropped so hard. The most logical and the one supported by those in the know is that Bitcoin dropped because it is a liquid asset - easy to sell. I have spoken to hedge fund managers and exchange owners for the podcast and privately, and this seems to be the consensus.Certain people needed cash to cover losses in other markets, the bond market book was empty and stocks were dropping dramatically. The Fed actually had to step in to provide liquidity to the buy side of the bond market, which is astounding to consider. You could not sell bonds if you wanted to without them participating. It stands to reason that large players exposed to Bitcoin would risk-off. That said, 70% of Bitcoin did not move, and we know that a small percentage of all Bitcoin has been lost, so a small percentage of the existing Bitcoin is being traded and moves the price. That remaining percentage is largely controlled by a select few whales in the market who are speculating. Fine.The second leg of that crash was clearly a result of inefficient liquidation engines (namely on Bitmex) liquidating over-leveraged longs into an empty order book. We can effectively disregard the second half of the crash (from $5,000 to $3,800 or so), because it was unintentional selling triggered by the large players selling at higher prices. This is clear - Bitmex went down for "maintenance" and price jumped 50% in a single 12-hour candle, back to almost $6,000. It's fair to assume the meaningful drop, then, was from 8K to 6K.If you are confused as to what happened on Bitmex, here's the TLDR. Price moved too quickly for their system to handle, so it started liquidating 10M + positions into a nearly empty order book. When there are no bids on the book, it has to sell down to the next available buy prices, regardless how low they are. At one point there was only 15M TOTAL buy orders down to 0, at which point Bitmex went offline. If they had not done this, the price of Bitcoin on Bitmex would have been ZERO.Assuming these theories are correct, we can assume that those who had the Bitcoin to sell and needed to sell it have already done so. They liquidated their holdings to raise cash to cover losses elsewhere. If you are still bearish and think lower lows are coming (possible), you have to believe that there are still many players in the market who are looking to liquidate their assets that did not do so on March 12th. For me, that is a stretch, supported by the knowledge that the biggest holders (70%) have never sold anything. Following this, it is my OPINION that the large players who needed to sell have already done so, hence the sustained rise of Bitcoin since that day and on lower volume than the crash, which we can view as a black swan event.It would take a tremendous amount of Bitcoin being sold to drive price down there again. I have been bullish since that day, because it looks like a technical and fundamental bottom to me. None of us expected a move to the $3,000s with that velocity - and that's because the back end of that move was not intentional. The easiest trade in years on Bitcoin has been longing every dip in the last month - period.As a result, the past month has been the most profitable I have ever had trading Bitcoin. I am in no way advising a trade here, or saying to buy Bitcoin today. I am actually short Bitcoin on Phemex at the moment with a small hedge position against my holdings.This is just my thinking on the recent drop and subsequent bottom. I will discuss the idea of Bitcoin and it's correlation (or lack thereof) later in the newsletter. Also included today is a thorough analysis and explanation of what happened in the oil market yesterday from a man who knows quite a bit about West Texas... my mentor, Christopher Inks, owner of TexasWest Capital. This is an absolute MUST READ.To my free members (I love you!) - paid members receive emails like this at least 2 times a week - sometimes up to 5. Every Thursday I chart any request sent by my paid members, often over 30 or 40 charts. It's a ridiculous amount of work, but I do my best to add real value to anyone who subscribes. If you would like to join the paid side, you can do so for $15 a month here.https://www.getrevue.co/profile/TheWolfDen/membersThis will give you access to everything that I have ever written. If you cannot use a credit card, please contact me directly to pay with crypto.What’s in this issue?Bitcoin Thoughts And AnalysisDid Oil Really Drop Below $0 On Monday?Investing During A Financial CrisisThe Wolf Of All Streets Podcast Ft. Ed FeltenHedging During Times Of High Volatility On PhemexAre Bitcoin And Stocks Correlated?Altcoin ChartsLegacy MarketsSmall Business Loans In The USA - A DisasterWin $1000 On Voyager's Bitcoin Halving PageHow To Trade the Bitcoin Halving: Whales Vs. TradersStart Small