The Wolf Den #599 - Get On The Bus
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In This Issue:
Get On The Bus
Bitcoin Thoughts And Analysis
Legacy Markets
Inflation Came In Hot
Coin Center Is Suing The Treasury
Hacks, Hacks And More Hacks
My Recommended Platforms And Tools
Get On The Bus
I have spent the past 3 days at W3BX, a Web3 crypto conference in Las Vegas. I have only been here for about 72 hours, and roughly 30 have been spent discussing financial markets with industry experts.
I have basically gone through a semester of college.
Despite the attendance being a bit thinner than expected, the conference goers have been rabid about sharing and discussing crypto. Not even the elevator is a safe space, as I have been constantly pitched and questioned literally everywhere I go.
I've learned a lot.
While it hard to process everything, there are a few consistent themes and lessons about markets that have resonated. Here's a quick summary.
Deflation Is Coming
There’s a growing consensus that the concern shouldn't be inflation anymore, but rather deflation or disinflation. Tomato/Toe-Mah-Toe. Both are describing the same inevitable issue. The Fed went too far with its addiction to QE, so QT rehab is causing painful market withdrawals.
As asset prices rapidly drop, the dollar becomes more attractive to hold. This puts the pain in overdrive. The Fed can’t just ease off the drugs. Rehab is hard.
The Bottom Is Near
There is a growing consensus that the crypto market bottom is close. Some believe that it is already in.
Unfortunately, everyone seems to agree that this bottom will be defined by the action of the Fed, so they continue to watch for the eventual "pivot." It is sad to see Bitcoin so dependent on global markets.
The crowd is rarely right, so they may not be correct.
Bonds Are Sexy
Bonds have temporarily killed the “yield case” for crypto, which is a blessing in disguise. Crypto yield isn’t objectively bad, but we need a breather to rebuild and to improve PR. With short-term bonds yielding returns close to 4%, smart investors are simply not going to touch crypto to earn interest.
I expect Ethereum staking to boom when the bond market corrects and crypto returns to a healthy state.
The Next Bull Market Is Inevitable
Kevin O’Leary made some strong points as to why a future bull market is guaranteed. According to Mr. Wonderful, “30% of MIT grads want to work in blockchain. They don't want to work in any other sector of the financial industry and they don't care about the 50 other job offers that offer guaranteed lifetime stability and wealth. They want to contribute to this technology. And they are the smartest minds in the world with the hottest hands. So I chose to follow them, it's an investor's path of least resistance.”
Hard to disagree.
Crypto is the future.
It is difficult to pick winners and losers, but investing in crypto during the bear market with patience is a great bet.
You have until the end of the bear market to board the bus.
So get on or jog behind. I am choosing the option with air conditioning.
Bitcoin Thoughts And Analysis
DAILY CHART
Bitcoin dropped on inflation numbers, alongside stocks and other hard assets.
Sad but true.
There's nothing particularly meaningful in the charts, as this continues to be sideways chop below resistance. That said, today's low matched the September low almost to the dollar, leaving the door open for an eventual double bottom. Not worth discussing for now, as confirmation would require a break above the high between the two bottoms - around $20,500.
The market tends to react aggressively to inflation news and then calm down.
Low time frames are massively oversold, so we could see some relief.
Legacy Markets
"US stocks pared losses and Treasury yields fell back from highs, as investors assessed the impact of the latest hot inflation reading on the Federal Reserve’s policy path.
A gauge of consumer price growth rose to a 40-year high last month, sealing the case for the Fed to deliver a large rate hike in November. Stocks have plunged more than 25% this year as the central bank began tightening policy to curb inflation, leaving investors to weigh how much damage is left for share prices."
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.
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 1% as of 10:45 a.m. New York time
The Nasdaq 100 fell 1.7%
The Dow Jones Industrial Average fell 0.4%
The Stoxx Europe 600 fell 0.1%
The MSCI World index fell 1%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro was little changed at $0.9695
The British pound rose 0.8% to $1.1194
The Japanese yen fell 0.3% to 147.35 per dollar
Cryptocurrencies
Bitcoin fell 3.9% to $18,428.97
Ether fell 5.9% to $1,222.38
Bonds
The yield on 10-year Treasuries advanced seven basis points to 3.97%
Germany’s 10-year yield declined one basis point to 2.30%
Britain’s 10-year yield declined 24 basis points to 4.20%
Commodities
West Texas Intermediate crude fell 0.1% to $87.17 a barrel
Gold futures fell 1.5% to $1,652.80 an ounce
Inflation Came In Hot
"A closely watched measure of US consumer prices rose by more than forecast to a 40-year high in September, pressuring the Federal Reserve to raise interest rates even more aggressively to stamp out persistent inflation.
The core consumer price index, which excludes food and energy, increased 6.6% from a year ago, the highest level since 1982, Labor Department data showed Thursday. From a month earlier, the core CPI climbed 0.6% for a second month.
The overall CPI increased 0.4% last month, and was up 8.2% from a year earlier."
The Fed is likely to continue its path of pain.
Coin Center Is Suing The Treasury
It's refreshing to see the crypto industry fighting back. According to Coin Center, the Treasury’s recent sanctioning of Tornado Cash is a major overstep of the regulator's authority. This marks the second lawsuit against the agency. Coinbase and Coin Center are both taking action.
I like this excerpt.
Americans use Tornado Cash unilaterally to protect their own property. And the Treasury’s defiance of this statutory element assumes an authority that would give them virtually unlimited control to regulate the American economy. If a user doesn’t take proactive steps to protect his privacy, the ledger’s transparency allows strangers to track his private associations and stalk his intimate relations.
The Treasury Department has a fight on its hands.
Hacks, Hacks And More Hacks
Tuesday saw three small(ish) hacks and one large hack.
Just another day in crypto.
The Mango hack resulted in the loss of roughly $100m. And the story surrounding it is absolutely absurd.
After stealing the funds, the hacker chose to play the community like a fiddle, forcing them to comply with his demands. He demanded that the team repay bad debts. He also offered to return a portion of the funds on the condition that they not pursue a criminal investigation against him. The icing on the cake? A vote was presented to the community... and the hacker used the stolen funds to place a very large number of "yes" votes on his own proposal.
What sort of simulation is this?
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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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