The Wolf Den #597 - Mixed Signals
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In This Issue:
Mixed Signals
Bitcoin Thoughts And Analysis
Legacy Markets
The Fed Goes Red
Cathie Woods Is Fed Up
Google Chooses Coinbase
My Recommended Platforms And Tools
Mixed Signals
Crypto conferences used to be epic.
At Bitcoin 2021, El Salvador announced their plans for Bitcoin, Max Keiser cursed out Elon Musk, Tony Hawk shredded a half pipe, and men snuck into the women's restroom to avoid a 45-minute line. The excitement was palpable.
Top signals were prevalent.
I bring these moments up because they stand in stark contrast to the current conference scene. I am currently writing this intro from Las Vegas at W3BX, after visiting Singapore for TOKEN2049 and going to Mainnet in NYC the week before that.
Let's compare and contrast.
The 2021 bull market inspired massive and wild conferences. Finding a seat was a luxury, especially after waiting for hours just to get in. The parking lot was full of exotic cars and the mood was up only.
Token2049 in Singapore captured a bit of this vibe, partially because of the incredible venue (Marina Bay Sands) and the F1 race that was happening in plain view from the Convention Center. The Asian crypto community is still extremely passionate and excited.
The same can’t be said today in the United States.
The mood at conferences in the US is dampened. It's hard to put a finger on, but my assumption is that the projects sharing their ideas and promoting their products are wary of impending regulation and that they could violate a future law by promoting an unregistered security. Further, the get rich quick meme trading crowd is completely gone, only leaving the most hardcore believers.
Mainnet was crowded but a bit uninspired, through no fault of the organizers. They put together a great conference.
W3BX clearly has brought in some amazing speakers, but the participation here simply does not match bull market levels. This is a direct byproduct of the bear market. If you are here, you feel it. If you are sitting at home and are not feeling FOMO, then you also understand as well.
The core convictions and ethos of crypto have not changed. What has changed is mainstream interest. The tourists are gone.
Bottom signals come in all shapes and sizes.
In 2017, EVERY Bitcoin meetup - be it at your local bar, school club, or conference meetup - was overbooked. The same was true in the 2020/2021 bull market and will eventually repeat once again when prices go up.
Conference attendance, like the volume on a chart, speaks to our current market situation..
To make a long story short... buy when the room is empty and sell when you can't find a seat.
Bitcoin Thoughts And Analysis
4-HOUR CHART
For traders only... RSI is once again oversold on the 4-hour chart, after making the inevitable trip from overbought after printing bearish divergence.
There's nothing to see here yet, but I will be watching for oversold bullish divergence with RSI, meaning that price makes a lower low while RSI makes a higher low. This is confirmed when RSI makes a clear "elbow up."
That would be a signal that price is ready to head back up again, likely just chopping through this same range.
Again, nothing is confirmed.
Legacy Markets
"US stocks fell in early trading as investors weighed how inflation and hawkish central bank policy will erode corporate earnings and economic growth.
The slide in equities sent the S&P 500 down as much as 0.8% to the lowest intraday level since November 2020, surpassing the previous low reached in September. Meta Platforms Inc. dropped with other big tech names sensitive to rising rates. In Europe, the Stoxx 600 index fell for the fifth day, with energy and tech stocks underperforming.
Treasuries were mixed, with yields backing off from multiyear highs. The dollar was little changed.
The mood remains fragile after a four-day losing streak wiped $1.6 trillion off the value of the S&P 500 Index. US inflation data, due Thursday, could seal the case for another 75 basis-point interest rate increase, should it come in higher than expected. Nor have Federal Reserve officials shown any inclination to pause their rate-hiking cycle in the near future."
Key events this week:
Earnings this week include: JPMorgan Chase & Co., Citigroup Inc., Morgan Stanley, BlackRock Inc., Delta Air Lines Inc., UnitedHealth Group Inc., U.S. Bancorp, Wells Fargo & Co.
Fed’s Loretta Mester speaks, Tuesday
BOE’s Andrew Bailey speaks, Tuesday
FOMC minutes for September meeting, Wednesday
US PPI, mortgage applications, Wednesday
OPEC Monthly Oil Market Report, Wednesday
Fed’s Michelle Bowman and Neel Kashkari speak
ECB’s Christine Lagarde speaks
US CPI, initial jobless claims, Thursday
G-20 finance ministers and central bankers meet, Thursday
China CPI, PPI, trade, Friday
US retail sales, business inventories, University of Michigan consumer sentiment, Friday
BOE emergency bond buying is set to end, Friday
Some of the main moves in markets:
Stocks
The S&P 500 fell 0.7% as of 9:44 a.m. New York time
The Nasdaq 100 fell 1%
The Dow Jones Industrial Average fell 0.2%
The Stoxx Europe 600 fell 0.9%
The MSCI World index fell 1%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro rose 0.1% to $0.9712
The British pound rose 0.2% to $1.1072
The Japanese yen was little changed at 145.69 per dollar
Cryptocurrencies
Bitcoin fell 0.7% to $19,100.26
Ether fell 2% to $1,280.91
Bonds
The yield on 10-year Treasuries advanced five basis points to 3.93%
Germany’s 10-year yield declined one basis point to 2.33%
Britain’s 10-year yield declined two basis points to 4.45%
Commodities
West Texas Intermediate crude fell 1.8% to $89.46 a barrel
Gold futures were little changed
The Fed Goes Red
TradFi was already broken enough, but we now have a new item to add to our list. It only seems fair that the entity that broke everything is also breaking. A bit of poetic justice, am I right?
For the first time in 10 years, the Fed has raised rates enough to effect its own bottom line. They will officially operate at a loss for the year.
The straw that broke the came's back was the recent 75bps hike. Considering the Fed’s “higher for longer” mantra, the bleeding likely won't stop until the Fed's philosophy changes. Since the Fed is, well, the Fed, it won't go bankrupt. But the optics of the situation are horrible. Luckily for the Fed, the inevitable decision to taper or lower rates will fix the issue.
For the rest of the world, it may not be that easy.
Cathie Wood Is Fed Up
Cathie Wood has been warning investors for ages about the possibility of a deflationary doomsday if the Fed continues to aggressively raise rates.
According to Wood, the inflation numbers being reported today are lagging indicators and inflation has likely topped. While the world is concerned with the possibility of runaway inflation, Woods is predicting a deflationary collapse.
She extended a letter to the Fed backing up her beliefs with data points. You can't call the market's manager when something breaks, but when your name is Cathie Wood you can write a letter to get the Fed's attention.
Time will tell if she is right, but I am hearing echoes of the same sentiment around the halls of Wall Street.
One things we can all agree on? The macro looks awful.
Google Chooses Coinbase
The tech giant will also use Coinbase's custody service, Coinbase Prime.
"Google (GOOGL) will start accepting crypto payments for cloud services early next year, according to a press release.
Announced Tuesday at Google’s Cloud Next conference, the tech giant said it will receive crypto payment via an integration with crypto exchange Coinbase (COIN).
Crypto payments will initially be rolled out to a handful of customers involved in the Web3 industry. Google will also user Coinbase's custody service, Coinbase Prime.
"We want to make building in Web3 faster and easier, and this partnership with Coinbase helps developers get one step closer to that goal," said Thomas Kurian, CEO of Google Cloud."
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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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