The Wolf Den #531 - Bull Market Catalysts
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In This Issue:
Bull Market Catalysts
Polygon's Rebound Ahead Of Instagram NFTs - IntoTheBlock
Bitcoin Thoughts And Analysis
Legacy Markets
The Rainbow Chart
Did The Gold Supply Just Double?
FTX Won’t Buy Robinhood
Exchanges And Miners Insolvent
Roger Ver Owes CoinFlex $47M
My Recommended Platforms And Tools
Bull Market Catalysts
We are in the depths of a bear market with many predicting an extended crypto winter. Here is a good thread from a former Coinbase board member on the crypto winter thesis. Remember, this is simply one person's prediction.
When the market weather is frigid, the days are shorter and it seems that warm weather will never return, it's time to consider potential catalysts to push us back into bull territory.
There are a few potential catalysts for a broader market recovery. First and foremost is the Fed containing and minimizing inflation. Once inflation is under control, both the market and the economy should begin to resume their inevitable uptrend. Next is the announcement of a recession and our subsequent "official" exit. Many believe that we are already in a recession, or that this "announcement" will come by the end of the month.
In addition to these major hurdles, we want to see old narratives dying off for good. These would include Covid, war, supply chain shortages, and Evergrande defaults (is that still a thing?) just to name a few.
The housing market remains a significant question mark, with many predicting a cooling off or even crash. While that would be a negative catalyst, a reversal from the bottom would likely be a solid signal that markets are ready to rip again. Housing market concerns are still in the realm of speculation, so this one is likely not worth discussing... yet.
A major potential catalyst is political party change in the United States.
While the data is a bit iffy, many interpret statistics from the past 30 years to show that party change is often a catalyst to steer the market back to equilibrium. This is more pronounced when market are trading at extremes, which is clearly the case now.
Mean reversion.
If there really was a predictable trade to be had when a Republican is elected after a Democrat or vice-versa, everyone would know and we would all be rich. The truth is, with a party change comes both political and economic uncertainty, and during these times investors/traders are more likely to move money based on the present narrative. Markets hate uncertainty. These heightened emotions lead to strength in selling or buying at particular levels, causing timed market swings.
Regime change, if it happens, may lead to more volatility, but the direction will largely be determined by the economic climate in November.
What a time to be alive.
Polygon's Rebound Ahead Of Instagram NFTs - 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.
Polygon's Rebound Ahead Of Instagram NFTs
Polygon's MATIC token has outperformed most crypto-assets in the last week, increasing by over 50%. The price increase was preceded by a large increase in whales' holdings.
Via IntoTheBlock's MATIC ownership indicators=
Accumulation Resumes - Following a steep decline in the balance of addresses holding between 100M and 1B MATIC, this cohort appears to be adding to their positions
Previously these whales had accumulated in late November prior to a 30% increase in price
Then they began offloading their MATIC at the all-time high and consistently in the subsequent weeks
The recent 7.26% increase in their holdings is the largest since the one seen in November of last year
At the same time, we are seeing MATIC leaving exchanges.
Via IntoTheBlock's MATIC exchange flows
3-Month High - The amount of MATIC leaving centralized exchanges reached a three month high last week.
This pattern aligns with whales' accumulation of MATIC
It may also be linked to Meta's upcoming launch of NFTs on Instagram on top of the Polygon network
Overall, signs of progress and demand in Polygon continue to grow in spite of the short-term volatility. Just like with DeFi tokens, it is worth asking whether the recent rally is the beginning of the end of the bear market or if we are just in the end of the beginning.
Bitcoin Thoughts And Analysis
There is absolutely nothing new to discuss on the Bitcoin chart and no reason to spend time digging in at the moment. Those are my thoughts, and that is my analysis.
Legacy Markets
What to watch this week:
US GDP, Wednesday
ECB President Christine Lagarde, Federal Reserve Chair Jerome Powell, BOE Governor Andrew Bailey and Cleveland Fed President Loretta Mester due to speak at ECB event, Wednesday
St. Louis Fed President James Bullard speaks, Wednesday
China PMI, Thursday
US personal income, PCE deflator, initial jobless claims, Thursday
Eurozone CPI, Friday
US construction spending, ISM Manufacturing, Friday
This week’s MLIV Pulse survey looks at the outlook for earnings and stock prices. Click here to participate.
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.8% as of 9:49 a.m. London time
Futures on the S&P 500 were little changed
Futures on the Nasdaq 100 were little changed
Futures on the Dow Jones Industrial Average rose 0.1%
The MSCI Asia Pacific Index fell 1.3%
The MSCI Emerging Markets Index fell 1.6%
Currencies
The Bloomberg Dollar Spot Index rose 0.1%
The euro was little changed at $1.0510
The Japanese yen was little changed at 136.15 per dollar
The offshore yuan was little changed at 6.7034 per dollar
The British pound was little changed at $1.2179
Bonds
The yield on 10-year Treasuries declined two basis points to 3.15%
Germany’s 10-year yield declined four basis points to 1.59%
Britain’s 10-year yield declined two basis points to 2.44%
Commodities
Brent crude fell 0.4% to $117.46 a barrel
Spot gold fell 0.2% to $1,816.56 an ounce
The Rainbow Chart
I have mentioned this chart many times in the past, and now is a perfet time to revisit it. Created by Eric Wall, the chart follows Bitcoin’s price into colorful zones ranging from “maximum bubble territory” to “basically a fire sale.” There’s also an Ethereum chart you can check out HERE. Both of these charts have held up, but are very close to “breaking.” This is the moment that the Rainbow Charts are being tested.
Remember, charts are just predictive tools, there is no sense in betting on them to work or fail. At least this one has pretty colors.
Did The Gold Supply Just Double?
During Uganda’s State-Of-The-Nation address a few days ago, President Museveni broke the news of a major gold discovery, buried deep under the soil of the nation. The claim is that they found 31 million tonnes of gold ore, meaning that roughly 320,000 tonnes could be extracted and refined. This would be worth around $12T.
The news is difficult to verify, but being reported by mainstream news outlets. Also, the amount underground is almost impossible to accurately predict. So take this with a grain of salt. Or gold.
Currently, the total known gold supply in the world is somewhere just north of 200,000 refined tonnes, a number that is also debatable. This new discovery would increase supply by a factor of 2.6x.
Whether this news is true or not, we can be certain that Bitcoin’s total supply remains constant and halves every four years, while gold’s supply is unknown and will occasionally undergo large increases.
Bitcoin is a superior form of gold.
Even if the Ugandan news turns out to be wildly incorrect, the possibility of something like this is still very real.
I will stick to my 21 million.
FTX Won’t Buy Robinhood
FTX has officially put to rest the idea of buying out Robinhood, after rumors began circulating on Monday. Here’s what SBF had to say on the matter: “there are no active M&A conversations with Robinhood. We are excited about Robinhood's business prospects and potential ways we could partner with them.” As of right now, SBF has a 7.6% stake in the company,.
Exchanges And Miners Insolvent
In a recent interview with Forbes, SBF said the following: “There are some third-tier exchanges that are already secretly insolvent." He is not talking about the big names, but rather many of the 600 available exchanges where people can trade crypto. He also stated that many miners are likely insolvent and overleveraged.
Natural selection is happening in real time in the crypto industry.
Roger Ver Owes CoinFlex $47M
CoinFlex recently cut customer withdrawals completely, and stated that a single user was responsible for their liquidity issues. CEO Mark Lamb named this single user yesterday, and it is none other than Roger Ver, AKA Bitcoin Jesus.
The claim is that Ver owes the exchange 47M on a leveraged position. He has apparently topped off his margin repeatedly to avoid liquidation, but has refused to do so now.
Ver denies the accusation, so it will be interesting to see this play out.
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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.
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