The Wolf Den #451 - The Burden Is On Us
Bitcoin Thoughts And Analysis
DAILY CHART
Take a wild guess where yesterday's candle found resistance. $39,600. That is three days in a row that price has topped out at this key level, which I have been discussing for seemingly months.
That is really the story for now. Baby steps. First $39,600, then $42,000, then the real boss at $45,500. A break above that should send prices flying.
For now, the trend remains down.
4-HOUR CHART
Bull div, hidden bear div, bull div, potential hidden bear div. Price needs to get above $39,600 to invalidate hidden bearish divergence. If that does not happen, I would expect one more meaningful drop and a bigger bullish divergence.
This does look like it is "bottoming," but that can happen with price dropping quite a bit lower. I remain long for now.
Morgan Stanley Goes Risk-On
The GBTC discount/premium used to be one of the most talked-about trades in crypto. Now it has been almost entirely forgotten. That hasn’t stopped some giants from scooping up GBTC shares at a serious discount. Morgan Stanley has quietly been accumulating shares of GBTC, which now trades at a 29% discount to NAV. With GBTC, you don't own Bitcoin, but your shares represent Bitcoin held in Grayscale's custody. The discount means that shares are trading much cheaper than the value of the Bitcoin they represent. This is a higher-risk way to gain Bitcoin exposure, but the risk could be worth the reward. The hope is that the fund is converted into a spot ETF and the discount evaporates into a premium. Trade this one at your own risk.
Crypto Regulation Incoming!
The highly anticipated crypto executive order will be signed this week. The exact contents of the legislation are unknown, but the aim of the order is allegedly to organize oversight, assign authority, and initiate further inquisition into crypto. I'm expecting the market to emotionally react to the contents of the order. We saw a drop yesterday on the mention of Biden signing the order, even though we have known about it for weeks. Classic.
Short-term, the market could go haywire, especially if the regulation is harsh. I still think any clarity is better than uncertainty. We haven't heard the administration take a hard stance, so it would be out of the left-field for them to drop a surprise hammer.
My expectation is that this will simply be a call for more clarity from regulators, which is something that we sorely need.
The Wolf Of All Streets Podcast Ft. Sandeep Nailwal
Ethereum and other Layer 1 blockchains are not ready to scale for mass adoption. This usability problem stems from what is known as the blockchain trilemma - a problem in which a coin has to sacrifice either decentralization, scalability, or security. Layer 2s like Polygon play a pivotal role in solving this problem for good. Thanks to Polygon, Ethereum can potentially scale for the next billion users. According to Sandeep Nailwail, the founder of Polygon, it’s only a matter of time until layer 2s explode, ushering in the network of value.
In this episode with Sandeep, we discussed:
Why Improve Ethereum?
Are Layer 2s Enough?
How Do Zero-Knowledge Proofs Help?
The Story Of Sunflower Farmers
The Swings Of Polygon/Matic
Traders Driving The Market
Mark Cuban Invests In Polygon
Preparing For Billions Of Users
Crypto Relief Is Saving Lives
Crypto Creates Communities
This episode is sponsored by: 101 Management
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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.