The Wolf Den #501 - The Retail Herd
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Clues hinting at current market sentiment are everywhere. Some of the best market insight that I have gotten over the years has come from observing retail traders and "the herd." It didn’t come from eager investors ready to share an edge. It didn’t come from insiders, hedge fund traders, or whales.
The retail herd has been notoriously wrong at the worst times.
On occasion, a retail trader is right and scores big. Sometimes they even make a bad decision and are rewarded for their misguided but lucky choice. More often than not, retail is wrong, and they are usually wrong at the worst times. Recognizing this and taking the opposite side of their bet can pay big dividends.
Paying attention to all market participants is essential, including your “normie” friend, neighbor, taxi driver, or hairdresser. As much as we may hate to admit it, we all have people in our lives that are seemingly wrong about everything.
We all know a person who works hard but always comes up short, or an acquaintance that loses faith in his investment, usually a week or month before things start to turn around. This person has the gift of poor timing.
In a set of measurements, accuracy is closeness of the measurements to a specific value, while precision is the closeness of the measurements to each other.
It is better to be roughly right than precisely wrong. — John Maynard Keynes
These people are rarely accurate, but their decisions are almost always precise - but precisely wrong. That is where the value lies. The trader or investor who is talented at timing the tops and bottoms of a market is accurate. That is rarely retail.
The person who is repeatedly early or late, impatient and wrong is precise, always missing the target completely. Use their precision to your advantage. This person can be your signal to act or quickly stay put. Use their lack of insight to your advantage, as they are actually unwittingly pointing you in the right direction.
I often have a good sense that the market is ready to turn around when retail traders I use as a counter signal air their pent-up frustrations with the market. This can be seen in the fear and greed index. The moment the herd becomes fed up with the choppiness of Bitcoin, it always seems to wake up.
Knowledge is everywhere. Insight is rarely presented on a silver platter, but when you do a little digging you can find actionable intelligence from unexpected sources. Master this and you can master nearly any market.
As an aside, the crypto fear and greed index is currently at 8 - extreme fear. This is the lowest that it has been since March, 2020, even after the bounce that we just experienced. Retail is becoming more fearful, even as the market shows potential reversal signs.
In This Issue:
Retail Is Wrong At The Worst Times
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
A Few Trading Tips
Is SBF Leaving Crypto?
Coinbase Slows Hiring
The Wolf Of All Streets Podcast Ft. Chris Briseno
My Recommended Platforms And Tools
Bitcoin Thoughts And Analysis
DAILY CHART
Not much has changed since yesterday, so you can revisit the longer analysis there. Price is still trading well above the key level at $28,600, which is the line to watch for now. At the moment, all signals show that we have a nice bounce and reversal. That can change quickly, as you know.
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.
GMT/USDT
I remain extremely hesitant to share altcoins charts and trade ideas so it is important to understand that any chart setup should be taken with a grain of salt. The risk of any trade right now is increased by the uncertainty surrounding Bitcoin and markets. If Bitcoin drops, altcoins will likely drop harder en masse,
GMT has been one of the strongest coins during the bear market, managing a massive run even in the face of a global meltdown, and also bouncing the hardest after the Bitcoin drop. Focusing on stronger new coins is a decent strategy when things are rocky.
As you can see, we have a clear bull pennant that is actively breaking out. The measured target based on the length of the flagpole is right around a key resistance at $3.36, which is roughly a 2x from here. The pennant is confirmed by 2 alternating touches on the upper resistance and lower support.
The thing that is lacking on the current breakout is volume, so I would really like to see a nice spike for further confirmation.
Additional key targets and levels of resistance are marked.
This is also one of the few coins that is showing signs of a V shaped reversal after the bottom, and also has formed a bit of a complex inverse head and shoulders.
I am invested in GMT, as I have stated before, but am not actively trading the coin.
Legacy Markets
Here's what is happening in markets right now, from Yahoo.
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 1.5% as of 9:54 a.m. London time
Futures on the S&P 500 rose 1.5%
Futures on the Nasdaq 100 rose 2.2%
Futures on the Dow Jones Industrial Average rose 1.1%
The MSCI Asia Pacific Index rose 1.5%
The MSCI Emerging Markets Index rose 2%
Currencies
The Bloomberg Dollar Spot Index fell 0.4%
The euro rose 0.5% to $1.0489
The Japanese yen fell 0.2% to 129.39 per dollar
The offshore yuan rose 0.6% to 6.7570 per dollar
The British pound rose 1.2% to $1.2468
Bonds
The yield on 10-year Treasuries advanced three basis points to 2.91%
Germany’s 10-year yield advanced five basis points to 0.99%
Britain’s 10-year yield advanced eight basis points to 1.81%
Commodities
Brent crude rose 0.2% to $114.51 a barrel
Spot gold rose 0.2% to $1,827.43 an ounce
DXY (DOLLAR INDEX)
Did I just write about this yesterday? Yes. Am I still watching it like a hawk? Yes.
As you can see, the dollar is struggling at the most important level on the chart, 103.82. Rejection here, which would be confirmed with a candle close below that level on the weekly for me would indicate that the dollar has potentially topped for now and other markets can go back to partying like it's 1999.
A Few Trading Tips
Set stop losses using USDT or USD instead of BTC. I rarely do this, but it is a technique that many utilize if they are concerned about a BTC drop. If your stop is in BTC, then when your stop triggers, you effectively sell your alt to buy BTC when it is dropping. If your stop is in USDT then you do not lose on BTC dropping as well.
ALWAYS scale out of positions. I draw a number of targets on the chart, and set my sell orders right when I enter at each of these targets. Depending on the chart, I sell between 20-25% at each target. I NEVER catch the huge pumps with a full position, but always try to keep 15-25% of my bag in case the coin goes absolutely crazy. You will reduce stress tremendously if you just take profits on the way instead of trying to time the market for your sell order. You can always buy back in when another key level is flipped from resistance back to support.
Is SBF Leaving Crypto?
News, analysis and comment from the Financial Times, the worldʼs leading global business publication
There’s a rumor circulating that Sam-Bankman Fried will be leaving the crypto space.
How absurd.
It started with an interview from the Financial Times in which Sam talked honestly about Bitcoin.
"The bitcoin network is not a payments network and it is not a scaling network."
"Things that you’re doing millions of transactions a second with have to be extremely efficient and lightweight and lower energy costs. Proof of stake networks are."
"It has to be the case that we don’t scale this up to the point where we’re spending 100 times as much eventually as we are today on energy costs for mining."
Bitcoin maxis upset by the comments, which were largely taken out of context, with other comments conveniently left out of the article.
Speculators used these his comments and his new stake in Robinhood to start a rumor that Sam would depart when FTX can no longer extract value.
Are we forgetting that Sam is the guy that has testified in Congress, launched crypto into the mainstream by putting FTX on arenas, and lives by the ethos of effective altruism? SBF is not leaving us. Plus he said this at the end of the article which was seemingly ignored.
“I don’t think that means bitcoin has to go,” he said, adding that the token may still have a future as “an asset, a commodity and a store of value” akin to gold.”
Coinbase Slows Hiring
The crypto exchange giant has pared back a plan to triple its headcount this year.
The best-laid plans in a bull market need to be adjusted when the bear market strikes. Coinbase was planning to triple their workforce and is not scaling back those plans to weather the current storm and focus on more important things like... saving money.
The crypto industry has been hiring at an astonishing rate, so it's not surprise to see this slowdown. Let's just hope it doesn't last too long.
The Wolf Of All Streets Podcast Ft. Chris Briseno
From doorman/club promoter to Bloomberg to Bullish. Our guest today left the financial powerhouse Bloomberg to be on the cutting edge of tech and crypto at Bullish. Now the Global Head of Marketing, Chris Briseno explains how Bullish is bridging the gap between centralized and decentralized exchanges. Learn from Chris himself about the advantages of using Bullish and why he calls Bullish the Google of the crypto world.
In this episode with Chris Briseno, we discussed:
What to expect with our guest Chris Briseno from Bullish
Chris explains the launch of Bullish
Institutions and Chris’s path from Bloomberg to Bullish
From Doorman/Club Promotor to Head of Marketing at a crypto firm
Limelight
Bloomberg and other institutions joining the space
Coinbase, FTX, and Bullish: here’s how they stack up
Bullish: The perfect mix of centralized and decentralized functionality
The advantages of using Bullish
Other advantages: market maturity and deep liquidity
The Miami 2022 Bullish party
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