The Wolf Den #504 - The Distribution Of Crypto
New Bonus! Get up to a $4,163 in USDT when you sign up using my link to Bitget! Bitget is the best crypto exchange for both spot and leverage, world’s largest crypto copy trading platform, and the official partner of Juventus Football Club. They are also offering a 15% discount on trading fees!
In This Issue:
The Distribution Of Crypto
Contest Winners!
Bitcoin Thoughts And Analysis
Legacy Markets
Take A Walk
The Merge Is Still Coming
Do Kwan's Taxes
FTX.US Adds Stocks
Is Bitcoin A Liability For El Salvador?
My Recommended Platforms And Tools
The Distribution Of Crypto
The total market cap for the entire cryptocurrency ecosystem is roughly $1.3 trillion. Of the $1.3 trillion, 45% is concentrated in Bitcoin and 19% in Ethereum.
There are over 20,000 different coins, which may lead one to reasonably believe that the market cap is spread out across the industry.
Wrong.
64% of the entire market is represented by Bitcoin and Ethereum. When you add up the collective market caps of the top 10 coins, you will find that about 85% of the entire crypto ecosystem lives at the top of the food chain.
The wealth is not evenly distributed.
Investors should consider this fact when they are weighing the risk vs. reward of buying different assets. Many coins that fall below the top 50 are irrelevant, and most (not all) below the top 100 are effectively worthless. A majority of these coins merely exist because of a small, passionate community or because an entrepreneur had an idea that failed.
Institutional money is concentrated in Bitcoin, Ethereum, and a few select other assets. The rest of the market is fueled largely by retail. For a majority of investors, it is probably wise to focus on the larger coins by market capitalization.
Here's a rule of thumb: 85% of investors should be where 85% of the value is: the top 10.
Predictions of a massive culling have existed for a long time, along with what these coins going to zero would do to the market cap structure. Flushing out 19,900 of the 20,000 cryptos would hardly make a dent in the overall market cap. Even if that money were to pour into Bitcoin, it would be irrelevant. The majority of cryptocurrencies will probably be worthless in the long term. The current bear market is already making this extremely apparent, as a majority of coins are more than 90% off of their all time highs.
This isn't a bad thing. The money will stay in the larger projects that are far more likely to succeed and push the industry forward.
There are some amazing and likely groundbreaking projects being built that are represented by coins with smaller market caps - they are just diamonds in the rough. I also do not see this culling as a bad thing - the Dotcom bubble burst, but gave us Amazon, Google, and the other most important companies in the world. The moral of the story - choose wisely and invest appropriately.
Contest Winners!
Congrats to the following subscribers!
andrew@tempch**********.com
unknownstrang*********@gmail.com
cryptooni*****@gmail.com
djayni****@yahoo.com
pkha****@gmail.com
rahim.ahsanul*******@gmail.com
jamaral****@hotmail.com
cre**@hotmail.fr
golfers-sla*****@icloud.com
natashaoklo******@gmail.com
Each of you are the winners of the $500 giveaway. Please check your inbox for an additional email covering detailed instructions on how I will send the prize.
IMPORTANT - If you don't respond to the email by Monday, I will draw new winners and your prize will be forfeited to the next person.
Bitcoin Thoughts And Analysis
I am trying something new... having a guest analyze Bitcoin for you guys. Today, it's my friend Fibo Swanny, who takes a completely different approach to technical analysis and can offer a new perspective. So without further adieu...
Don't be afraid to look at the current primary wave patterns.
I use wave analysis as a validator against many of my Fibonacci analyses, and I do not trade directly from the wave analysis. However, this chart is a great tool for informational and supportive purposes.
Of course you and everyone's brother is looking at critical support here as the $28.8k low on the weekly chart is tested.
This critical support on the wave chart comes from a few observed reasons.
1. The blue Fibonacci extension zone marked between the 127% and the 141% levels is where the buying should be heaviest to hold this critical level from breaking down. Zone is between $26596.37 and $28.769.92.
2. Wave C of the current red (A) (B) (C) flat correction should end around this price point. Also, with the rule of alternation, where wave 2 and wave 4 should alternate, this current corrective flat pattern alternates with the corrective zig-zag pattern we witnessed back in 2019 and 2020 (marked and highlighted in green).
3. Primary wave 4 (blue circle 4) is also ending near wave 4 of one lesser degree, which is the black wave (4) that also ended near $28.8k.
4. Lastly, the breakout of the zig-zag pattern back in 2020 had a target objective around $29k that hit as a resistance target and has since remained key support, and now critical support (red arrows and red trend line back in 2020).
I am saying critical support because if we get a weekly settlement underneath $28.8 this week we could easily break down this pattern and bring $17.6k into view as a possible new support target (The blue 200% Fibonacci extension level). The weekly settle under $28.8k could be used as a stopping point for longs. However, the main area for me to stop out my current longs, which are averaging $28k, is three consecutive 4hr candle settlements underneath $26,596.
If this critical support holds then what I am expecting to see is a face-melting motive wave 5 to bring in a new high target around Q1 of 2023 (earliest time being the end of November of 2022). The upside price range is rather wide and technically could hit $130k in the first quarter 2023, but I like the more conservative level for a high coming in near the mid $80k level based on my Fibonacci extension timing study (from another chart). Also, when wave 3 is the longest wave then wave 1 is used to measure the rate of change for wave 5 and that is where $100k+ could come to fruition.
So, will we see $80k by November 2022, or $17k on a break of critical support. I am playing the long side with stops posted.
Happy trading!
Thanks,
Legacy Markets
DXY (DOLLAR INDEX)
I keep talking about the dollar and it's relationship to a basket of other currencies, represented by the DXY.
Why? Because most assets trade inversely to the dollar. Dollar strength means stock weakness. Dollar weakness means stock strength.
And the dollar is arguably at the most key level on the chart, even though there's a LOT more to the DXY than technical analysis!
Highest level in 20 years.
Monthly RSI is overbought for the first time since November, 2015.
Currently a bearish monthly SFP through 2017 high, not confirmed until candle close.
Currently a shooting star, not confirmed until candle close.
Looks a bit toppy...
And in other news:
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 1.4% as of 9:44 a.m. London time
Futures on the S&P 500 rose 1.2%
Futures on the Nasdaq 100 rose 1.8%
Futures on the Dow Jones Industrial Average rose 1%
The MSCI Asia Pacific Index rose 1.6%
The MSCI Emerging Markets Index rose 1.9%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.1% to $1.0575
The Japanese yen fell 0.2% to 128.04 per dollar
The offshore yuan rose 0.6% to 6.6866 per dollar
The British pound rose 0.1% to $1.2481
Bonds
The yield on 10-year Treasuries advanced three basis points to 2.87%
Germany’s 10-year yield advanced three basis points to 0.98%
Britain’s 10-year yield advanced four basis points to 1.91%
Commodities
Brent crude fell 0.3% to $111.65 a barrel
Spot gold rose 0.2% to $1,846.30 an ounce
Take A Walk
Even if it’s just for a minute.
Given the fast and furious nature of trading, it is too easy to get trapped in the sea of emotions.
Walking away from your screen is a deliberate break in your trading tempo. It is a physical action that you take to control your trading tempo. This simple act clears your mind and reminds you that you are in control.
Listening to music also helps to detach you from the market. Pushups are also a great alternative. If you feel the need to make a trade, make yourself hit a certain number of pushups first. This could work wonders.
The market does not drag you into a trade. Quite the opposite. You can walk away from the market any time you want. You are in control.
The Merge Is Still Coming
Just a friendly reminder that the merge is still coming. It should bring more value to the network with time, regardless of the market reaction at the merge itself. The Ropsten testnet still needs to go off without a hitch. As far as the chatter around it happening in August, we shall see. It's going to take a lot more than one researcher/developer saying August is the major delivery date for the community to be on board.
Do Kwan's Taxes
Do Kwan reportedly has a massive tax bill to pay - $78M according to the South Korean National Tax Service. He is facing tax evasion charges, is being sued to have his property seized and is still facing the fallout from the Luna collapse. Yikes.
FTX.US Adds Stocks
From the article:
"Crypto exchange FTX will let customers trade stocks and exchange-traded funds on its popular trading app alongside bitcoin and dogecoin.
FTX said Thursday that it opened access to its new stock-trading service for a limited number of U.S. users, It plans to expand the functionality to all American customers in the next few months, the head of the crypto exchange’s U.S. arm said in an interview.
The app could ultimately offer trading in other asset classes, such as futures, all within the same interface, said FTX.US President Brett Harrison. “What we eventually want to offer is an everything app for financial services,” he said.
FTX plans to offer commission-free stock trading, like most major U.S. online brokerage firms. But it won’t route customer orders to high-speed traders in exchange for cash, a controversial practice known as payment for order flow, Mr. Harrison said. Payment for order flow has come under increased scrutiny by lawmakers and regulators since last year’s frenzied trading in GameStop Corp. and other meme stocks."
Another huge milestone for FTX.
Is Bitcoin A Liability For El Salvador?
"The government’s financial problems are not because of bitcoin, but they have gotten worse because of bitcoin. For the government, bitcoin ceased to be a solution and has become part of the problem." - Ricardo Castaneda, senior economist and country coordinator for El Salvador and Honduras.
The government of El Salvador is estimated to be down roughly $36M on it's purchase of $104.2M worth of Bitcoin. While this does not seem like much money for a government, it is currently adding to existing stress and debt that El Salvador has been unable to mitigate. Their adoption of Bitcoin has currently put them on the wrong side of popular with the IMF, who was considering a loan to the country.
To be clear, IMF loans are predatory, and are intentionally impossible to pay back, putting small countries permanently under IMF control. El Salvador wants to avoid this.
We recently saw a major move towards Bitcoin adoption in Argentina crushed in one fell swoop by the IMF, who made a ban of Bitcoin services a condition of their loan to the nation.
Regardless, the bear market is taking a toll on El Salvador, exacerbated by the fact that lower Bitcoin prices means that the Bitcoin Bond is off the table for the moment - which was effectively going to replace the IMF loan and make El Salvador self sustaining.
All eyes are still on this nation and their Bitcoin experiment.
My Recommended Platforms, Tools And Podcast Sponsors
Proud sponsor of The Wolf Den Newsletter. The world's biggest crypto copy trading platform, up to a $3000 bonus for signing up.
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.
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 most comfortable clothing on the planet, so much so that I went out of my way to ask them to be a sponsor after pushing them endlessly on my YouTube streams! Seriously, these are my favorite clothes. Whatever you are wearing right now is less comfortable than Vuori.
I have chosen Bullish as a sponsor for both my podcast and livestreams! They are an awesome exchange that incorporates all of the benefits of both centralized and decentralized exchanges. Your keys, your coins, but with a robust order book, complex orders and deep liquidity.
Vauld are sponsoring both my podcast and livestreams and have become my personal platform of choice for holding coins and earning yield. I love their rates (12.68% on Stables and 6.7% on BTC and ETH) and their buy the dip feature that automatically buys for me when price drops.
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.
IF YOU HAVE ANY ISSUE WITH THE NEWSLETTER OR YOUR SUBSCRIPTION, PLEASE CONTACT: PREMIUMSUPPORT@GETREVUE.CO