The Wolf Den #628 - ECB Provides Bottom Signal
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In This Issue:
ECB Provides Bottom Signal
Bitcoin Thoughts And Analysis
Legacy Markets
Kraken Fires 30% Of Workforce
INX Bids For Voyager
Powell Remains Hopeful For A Soft Landing
Casa Adds Ethereum Support
The Perfect Use Case For Crypto | James Altucher
My Recommended Platforms And Tools
ECB Provides Bottom Signal
I love it when this happens.
In yesterday's newsletter intro, I presented the idea that Bitcoin is an existential threat to the existing system. Because it is a threat, my expectation was that we would see institutions spreading FUD in an attempt to dismiss and minimize the importance of the asset class. We are already starting to see a number of mainstream media stories claiming that Bitcoin is dead.
So I went fishing. I hooked my bait, cast out my line, and prepared for a bite on the other end. I anticipated a long wait... and then hooked a monster in a matter of hours.
Let’s see what we caught.
Yesterday morning, the European Central Bank published a blog titled, “Bitcoin’s Last Stand.” Whether price has bottomed or not, this piece of central bank garbage was exactly the type the major bottom signal that we look for. Nothing says bottom like comments that an asset is "dead" or "going to 0."
It absolutely reeks of fear.
Here is the tweet that captured my attention.
L - O - Freaking - L.
The implication here is that Bitcoin is being artificially propped up before it's inevitable fall to 0.
Whatever the ECB is smoking, pass it my way.
Here are some other quotes:
“For bitcoin proponents, the seeming stabilization signals a breather on the way to new heights. More likely, however, it is an artificially induced last gasp before the road to irrelevance – and this was already foreseeable before FTX went bust and sent the bitcoin price to well below USD16,000.”
The went on to say that “this was already foreseeable before FTX?”
Easy to say in hindsight, right?
So what exactly was their reasoning as to why Bitcoin is dead?
“Bitcoin is rarely used for legal transactions.”
“Bitcoin has never been used to any significant extent for legal real-world transactions.”
“The risks of crypto assets are undisputed among regulators.”
“The Bitcoin system is an unprecedented polluter.”
These statements are blatantly false. Even if they were true, are these legitimate criticisms? Or are these statements just the flimsy cover story presented by an institution that is threatened by the existence of Bitcoin? There is nothing new here - these narratives have been repeated ad nauseam since Bitcoin came to prominence.
But the timing of this particular statement is incredible.
Earlier this year the IMF vocally held back loans to El Salvador because of the country's decision to make Bitcoin legal tender. The UN also called for action to “curb cryptocurrencies in developing nations.”
At this point, you can search the name of your favorite global organization that is “dedicated to making the world a better place” and then search the word “Bitcoin." You're bound to reel in a historic haul.
For bonus points, search “Greenpeace” and “Bitcoin” to learn how XRP is the solution to all of the world's problems.
THE FUD IS EVERYWHERE.
And yesterday's announcement came right as Brazil passed sweeping laws to adopt crypto.
They're not even trying to hide it anymore.
I don't expect the ECB’s comments to mark the exact bottom in price. But their statements are typical of the signals we see at the dead bottom of markets, and come from the largest institution possible.
The world's central banks are terrified.
For the sheep, the ECB is giving reasons not to believe in Bitcoin.
For the wolves, this is further evidence that we are close to landing a kill.
Be a wolf.
I purposely did not discuss SBF's conversation with Andrew Ross Sorkin yesterday, or his continuing appearances in the media and attempted redemption tour. Why? Because I am hosting a live panel today for this very topic, joined by Tiffany Fong, the citizen journalist who secured the first phone and DM interviews with SBF after the crash. She can offer more insight than me, so I suggest that you tune in at 9:30 AM EST.
Bitcoin Thoughts And Analysis
WEEKLY CHART
This weekly candle is promising, but it is too early to celebrate. As you can see, Bitcoin has printed 4 consecutive candles with wicks below the $16,218 support.
The higher this candle closes, the more bullish it will look. Let's hope that price does not drop and give us a big wick to the upside.
Otherwise, there's still not much happening here. As I discussed yesterday, the $17,600 area right now is the key - price is still below the June lows.
Legacy Markets
"The dollar plumbed a three-month low on Thursday, while US stock futures steadied after hefty index gains fueled by China’s softer stance on Covid and confirmation of a slower US rate-hiking pace from Federal Reserve Chair Jerome Powell.
Sentiment got an extra boost after China’s top official in charge of the fight against the coronavirus, Vice Premier Sun Chunlan, said the response was entering a new phase, with the omicron variant weakening and more Chinese getting vaccinated. Beijing also indicated some Covid patients could isolate at home.
The buoyant mood knocked the dollar lower against its Group-of-10 counterparts for the third straight day, while Treasury 10-year yields stayed just off two-month lows hit in the wake of Powell’s comments. The yen advanced more than 1% and the euro touched a five-month peak.
“There is no one-way bet any more on dollar strength,” said Sarah Hewin, senior economist at Standard Chartered in London. “We had a good signal about a pivot from Powell, so the market has dialed back its expectations on peak rates.”
Powell’s remarks confirmed expectations the Federal Reserve will raise interest rates 50 basis points this month in a departure from a run of four 75 basis point hikes. Pricing in the swaps market indicates the Fed funds rate will peak below 5% in May. Prior to Powell’s comments, the market anticipated a peak above that level occurring in June.
Key events this week:
S&P Global PMIs, Thursday
US construction spending, consumer income, initial jobless claims, ISM Manufacturing, Thursday
BOJ’s Haruhiko Kuroda speaks, Thursday
US unemployment, nonfarm payrolls, Friday
ECB’s Christine Lagarde speaks, Friday
Some of the main moves in markets:
Stocks
Futures on the S&P 500 rose 0.2% as of 8:13 a.m. New York time
Futures on the Nasdaq 100 rose 0.1%
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 rose 1.1%
The MSCI World index rose 0.7%
Currencies
The Bloomberg Dollar Spot Index fell 0.5%
The euro rose 0.4% to $1.0452
The British pound rose 1.1% to $1.2190
The Japanese yen rose 1.3% to 136.24 per dollar
Cryptocurrencies
Bitcoin rose 0.2% to $17,136.81
Ether fell 0.7% to $1,287.21
Bonds
The yield on 10-year Treasuries declined one basis point to 3.59%
Germany’s 10-year yield declined 12 basis points to 1.81%
Britain’s 10-year yield declined eight basis points to 3.08%
Commodities
West Texas Intermediate crude rose 1.4% to $81.65 a barrel
Gold futures rose 2.2% to $1,799.40 an ounce"
Kraken Fires 30% Of Workforce
Kraken is laying off 1,100 employees, citing “lower trading volumes and fewer client sign-ups” as the reason. This is roughly 30% of their employees. In the announcement, Kraken explained that due to unprecedented growth in the previous bull market, Kraken had no choice but to rapidly expand and is now forced to trim down.
Tale as old as time.
The pullback returns Kraken to the same size that it was one year ago. Not that bad. This is only a small setback, for now, when put into perspective.
Jesse Powell concluded that he, “remains extremely bullish on crypto and Kraken.” Although this sucks, this is normal, even outside of the crypto industry.
INX Bids For Voyager
INX has joined the list of companies seeking to acquire Voyager's assets via submission of a non-binding letter of intent (LOI). Other notable bidders include Binance.US, CrossTowe, and Wave Financial. Aside from the bid itself, there is little news regarding the progress of the auction and Voyager’s proceedings.
Powell Remains Hopeful For A Soft Landing
Markets boomed after Jerome Powell’s speech yesterday, largely because of his comments regarding the plausibility of a soft landing.
“I do continue to believe there is a path to a soft or softish landing where unemployment goes up a little and we don't see a severe recession. Labor market conditions soften and then goods inflation along with housing inflation improves and inflation comes down. History may say this is an unlikely outcome, but this is a different set of circumstances.”
Powell remains optimistic and the market likes it.
We will see if he is actually right. I have my doubts.
Casa Adds Ethereum Support
The addition is part of a major overhaul of the Casa app, which will be relaunched in January.
This is great.
Many of you know that the holy grail for self-custody is multisig, a strategy championed by Casa and Jameson Lopp. While Lopp is known as a Bitcoin maximalist, it is great to see them listening to their customers and adding Ethereum to the mix.
I am a Casa user and have been for years, so I will definitely be utilizing this additional service.
If you are serious about self custody, then you will applaud any improvement.
The Perfect Use Case For Crypto | James Altucher
James Altucher is an American hedge-fund manager, author of over 20 books, entrepreneur, and a stand-up comedian. In this episode, James presents his use case for crypto and NFTs and explains the best way to invest in crypto and any other asset. James is a fantastic speaker, don’t miss this episode!
In this episode with James, we discussed:
Building website for American Express in 1995
Crypto
Bitget ad
Crypto will continue to develop
How to pick a winner
How not to sell
Dollar cost averaging
The use case for crypto
When people will start using crypto
NFTs
Wrap up
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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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