The Wolf Den #533 - All Markets Correct
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In This Issue:
All Markets Correct
Bitcoin Thoughts And Analysis
Legacy Markets
EU Regulates Crypto, Passes MiCA
Will Michael Saylor Have The Last Laugh?
Your Solana Phone Is Calling
Bitcoin Millionaires On The Sharp Decline
My Recommended Platforms And Tools
All Markets Correct
When gold corrects, we hear economists talking about a “healthy correction,” that gold has been around since the beginning of humanity and is a great store of value, regardless of price.
When stocks drop, Wall Street screams to buy the dip, it’s just normal price action and that price will inevitably rise again.
They are all correct.
When Bitcoin drops, we hear that “it’s a scam,” “it is going to zero,” "it has no value besides speculation," and… "I TOLD YOU SO!"
There’s nothing more frustrating than an I told you so from someone who has been doubting Bitcoin since the beginning, every single time it corrects a few percentage points (Peter Schiff?) Bitcoin could be $50,000, but if it dropped 10%, the haters would be out in droves using the small drop as evidence that they were "right,” even if Bitcoin was up 10,000%.
Screw them.
Bitcoin is no different than any of these other markets at the most basic level. It is an asset that has risen in price over time with healthy corrections. It has done that better than any other asset in history! No asset has performed better since Bitcoin was conceived, so the negativity and doubt are purely emotional and are misplaced.
And we haven’t even talked about its fundamental value. We can leave that for another day (or just read any of a number of newsletters from the past).
Ignore the naysayers, the emotional haters who just want to finally be right, and the skeptics who claim that Bitcoin has no value. They are wrong.
This market will correct like any other. When it is done correcting, it is likely to continue to soar to new heights, as it always has.
Bitcoin Thoughts And Analysis
WEEKLY CHART
Another day, another dip. Yesterday saw Bitcoin breaking below 20K and back into the 18ks before seeing a slight bounce. Nothing to see here, honestly. Traders will be watching the 2017 ATH around $19,666 going into the weekend to see if it holds to close the week.
Legacy Markets
It's bad news bears everywhere for markets, as the stock market closed it's worst first 2 yearly quarters in roughly 50 years.
In the first six months of 2022, the SPX500 fell 20.8% while the DJ30 is 15.39% down and the tech-heavy NASDAQ100 was off by 29.72%.
How you like them apples? Misery loves company, and it's clear that crypto traders are not alone in their pain during this bear market, as everything is seemingly losing value everywhere.
The story of the year is obviously inflation, with cost of living in the US opening the year at levels not seen since the 80s. It has only gotten worse. And this is a world wide problem, with the Eurozone reporting record high inflation as well.
Scorching rise continues to be primarily driven by energy prices.
Central Bank tightening has clearly done little thus far to combat the effects of reckless money printing, supply issues and the tail end of lockdowns and other global narratives. And they can't stop now, as there has been little indication that inflation is topped.
It's been a rough ride.
That said, there's plenty of historical precedence for similar situations. I have referenced the article below many times already, but tightening cycles tend to end well for assets (11 out of 12 times since the 50s), especially in election years. 9 months of pain, then market rise to close the year. This does not mean it will be the same on this round.
Also, as pointed out by CNBC at the top, there is some cause for hope. When the S&P 500 plunged 21% in the first half of 1970, it promptly reversed those losses to gain 26.5% in the second half.
While everything seems bad (spoiler, it actually is), nothing that is happening now is abnormal, and the market always recovers. It is not a matter of if, but rather when... make sure you remain solvent, no matter how long that process takes.
Here is your market wrap.
What to watch this week:
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 rose 0.1% as of 10:33 a.m. London time
Futures on the S&P 500 fell 0.2%
Futures on the Nasdaq 100 fell 0.2%
Futures on the Dow Jones Industrial Average fell 0.2%
The MSCI Asia Pacific Index fell 1%
The MSCI Emerging Markets Index fell 0.7%
Currencies
The Bloomberg Dollar Spot Index rose 0.3%
The euro fell 0.2% to $1.0462
The Japanese yen rose 0.1% to 135.55 per dollar
The offshore yuan fell 0.1% to 6.7034 per dollar
The British pound fell 0.8% to $1.2082
Bonds
The yield on 10-year Treasuries declined three basis points to 2.99%
Germany’s 10-year yield advanced five basis points to 1.39%
Britain’s 10-year yield advanced three basis points to 2.26%
Commodities
Brent crude rose 2% to $111.18 a barrel
Spot gold fell 0.7% to $1,795.28 an ounce
EU Regulates Crypto, Passes MiCA
While the United States and UK have been slow to pass meaningful crypto regulation, the EU has finalized their plan which has been 2 years in the making.
The key legislation will regulate the crypto sector with common rules across all 27 member states, marking the first time globally that lawmakers have attempted to supervise the sector on such a scale.
The European Securities and Markets Authority, or ESMA, will be responsible for oversight of the industry, while a new legal framework will seek to regulate public offers of cryptoassets to protect market integrity.
"In the Wild West of the crypto-world, MiCA will be a global standard setter," said Germany's MEP Stefan Berger in a statement. "MiCA will ensure a harmonised market, provide legal certainty for crypto-asset issuers, guarantee a level playing field for service providers and ensure high standards for consumer protection."
I am yet to find a comprehensive review of the laws, so it is hard for now to offer a true appraisal.
What I have surmised so far.
NFTs are generally safe, but may be legislated later.
Environmental impact is at the forefront. Companies will have to report on this regularly, which seems impossible.
The proof of work mining ban was NOT included.
Stablecoin laws are very strict. They will have to be fully backed, eliminating algorithmic stable entirely. Issuers may need to have offices in the EU and will be limited to 200M in transactions per day. Tether does $50.4B in transactions a day, so this is highly problematic.
"Consumer protections" were a main focus. Crypto companies will have to have countless disclosures and risk warnings and can be held liable if they lose investors' assets. This also seems unsustainable.
I will share more info as I have it.
Will Michael Saylor Have The Last Laugh?
To answer this segment's title, CZ seems to think so. "Many may laugh at him now, but Saylor will get the last laugh in time."
In case you missed the news, MicroStrategy just bought 480 more bitcoins for a combined sum of $10 million with a cost basis of $20,817.
480 sounds like a lot, but MicroStrategy has over 120,00 coins. This was just a drop in the bucket, probably a few million in change that Saylor found in his yacht's couch cushion. This certainly puts to rest any rumors that Saylor will be liquidated any time soon, with conjecture stating previously that he would go broke at 21K.
If you think Michael Saylor is a genius trader, don't be fooled. He is simply dollar cost averaging and buying dips, like any savvy investor. His average price is still over $30,000 per coin and it's going to take a lot of work to bring that number down.
We are all feeling it right now, you are not alone.
Your Solana Phone Is Calling
This news is about a week old, but I’ll give it a little attention. The official press release reads, “Solana Mobile, a subsidiary of Solana Labs, introduced Saga, a flagship Android mobile phone with unique functionality and features tightly integrated with the Solana blockchain making it easy and secure to transact in web3 and manage digital assets, such as tokens and NFTs.”
This is an ambitious project. Let's hope that, unlike the Solana blockchain thus far, it can stay online at all times and function according to plan. I will be cheering for it's success - we certainly don't need another reason for critics to dunk on us.
Bitcoin Millionaires On the Sharp Decline
Last November there were 108,996 "Bitcoin millionaires. These were individual wallets that held over $1m worth of Bitcoin. This number has since dropped to 25,432 addresses... yikes.
The glass half full view - a million dollars can now get you 50 coins and it is a great time to accumulate to become a millionaire in the next bull run. Glass half empty view - your 50 coins only add up to a million dollars.
*The same logic applies regardless of where you are at accumulation-wise.*
It's all about perspective.
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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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