The Wolf Den #639 - The Grand Finale
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In This Issue:
The Grand Finale
Bitcoin Thoughts And Analysis
Legacy Markets
Are You Being Spied On?
Does Binance Owe FTX $2.1 Billion?
Coinbase Creates Asset Recovery Tool
The Simulation Is Broken - Trump Shilled An NFT
SBF In Jail | Next Crypto Exchange To Collapse? Raoul Pal, Mike Alfred, Lex Sokolin
My Recommended Platforms And Tools
The Grand Finale
In Bitcoin cycles, it is common to see a key event that signals the "top" or "bottom" of the market. Some notable examples from the past include the launch of CME Bitcoin futures trading in December 2017, the ICO bubble burst and Bitcoin fork wars in November 2018, and the launch of the ProShares Bitcoin Futures ETF in October 2021. However, it can be difficult to discern these key signals in real-time due to the abundance of market noise.
Let's take a look at our current situation.
Bitcoin has been trading in the $20,000 range after losing nearly 50% of its value in June 2021. June was when LUNA collapsed, which then triggered 3AC, which then triggered Celsius, Voyager, Vauld, FTX, Alameda, Genesis, and Gemini Earn. You know the story.
Contagion.
Amidst all of these collapses, Bitcoin has bounced between $24,000 and $15,000, trading generally around $20,000. It’s actually quite impressive.
Not impressed? Bitcoin is still worth $17,000 while miners are being stress tested, Meta is failing in epic fashion, Binance FUD is at an all-time high, hedge funds are being forced to sell, GBTC is approaching a 50% discount, and proof-of-reserves are all anyone cares to talk about.
How about the fact that the Fed is coming off of their most aggressive series of rate hikes in 40 years? Inflation hasn't been this high since the ’80s, COVID is still a political issue, a recession lingers, Ukraine is at war, energy crises are popping up, the housing market is collapsing, global supply chains are broken, and we have a non-zero chance of nuclear war.
I’m exhausted.
And Bitcoin is still worth $17,000.
We are okay.
It is difficult to predict the future of the Bitcoin market, but it is worth considering that the current market conditions may already be the "grand finale" of this cycle. While setbacks and temporary drops in value may occur, it is likely that any further downward movement in the market will continue to be met with aggressive buying.
We will see, but I am a buyer here with a long time horizon in mind.
Enjoy the holidays. I will be taking a break from the letter and working on finding a new newsletter provider. Take some time away from crypto and hug your family - it's the bullish thing to do.
See you next Friday.
Bitcoin Thoughts And Analysis
DAILY CHART
Thank you, Jerome Powell.
Bitcoin was looking bullish before it, once again, correlated to the stock market and reacted like everything else in the face of a hawkish Fed.
You can see that price was horribly rejected at the 50 MA, even after closing back above the key resistance at $17,592.
I can't imagine trying to trade this.
Legacy Markets
"U.S. equity-index futures dropped with European stocks amid concern the resolve of central banks to continue their fight against inflation will tip the economy into a recession.
An index of global stocks headed for a weekly slide as the Federal Reserve and the European Central Bank reaffirmed rates will go higher for longer until inflation fell back to their targets. While that belied market expectations for a lower peak rate and potential rate cuts in 2023, it also clouded the growth outlook. Economists now see a 60% probability of recession in the US and an 80% chance in Europe. Equity analysts have cut 12-month earnings estimates for the regions to the lowest levels since March and July, respectively.
“The worrying aspect for markets is the rate hike finishing lines are still unknown, and we have the two most dominant central banks in the world climbing the mountain into very restrictive territory,” Stephen Innes, managing partner at SPI Asset Management, wrote in a note. “Hiking interest rates into a dimming macro environment will undoubtedly trigger a recession. The question is just how profound.”
Key events this week:
Eurozone S&P Global PMI, CPI, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 1.1% as of 10:26 a.m. London time
Futures on the S&P 500 fell 1.3%
Futures on the Nasdaq 100 fell 1.1%
Futures on the Dow Jones Industrial Average fell 1.2%
The MSCI Asia Pacific Index fell 0.7%
The MSCI Emerging Markets Index fell 0.4%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0618
The Japanese yen rose 0.5% to 137.12 per dollar
The offshore yuan was little changed at 6.9852 per dollar
The British pound fell 0.2% to $1.2157
Cryptocurrencies
Bitcoin fell 2.2% to $17,015.5
Ether fell 4.1% to $1,212.98
Bonds
The yield on 10-year Treasuries advanced five basis points to 3.50%
Germany’s 10-year yield advanced 12 basis points to 2.21%
Britain’s 10-year yield advanced 13 basis points to 3.37%
Commodities
Brent crude fell 2.6% to $79.11 a barrel
Spot gold rose 0.2% to $1,780.05 an ounce"
Are You Being Spied On?
My friends at Efani wrote a comprehensive blog post on spying. This is important, read it through and take the steps necessary to protect yourself.
Does Binance Owe FTX $2.1 Billion?
There has been a new development in the ongoing drama between Binance and FTX that raises the question of whether Binance owes FTX a clawback of $2.1 billion. In order to clarify the situation, we've put together a timeline of relevant events:
May 2019 - FTX is founded.
December 2019 - Binance invests an undisclosed amount of money into FTX (see HERE). This is likely a seed round investment, with the payment being made in $BUSD, $BNB, or another cryptocurrency.
July 2021 - Binance announces that it is selling its stake in FTX. The payment for the stake is said to have been a combination of $BUSD, $BNB, and $FTT, with $FTT making up a large portion. The reasons for the sale are unclear, with speculation ranging from a longstanding feud between the two companies' founders to CZ doing FTX a favor by helping it avoid regulatory hurdles.
November 2,6,8 - CoinDesk releases leaked Alameda balance sheets, and Binance threatens to liquidate $FTT publicly. There is also a report of a possible acquisition deal between Binance and FTX that falls through.
The question now is whether Binance will be required to pay the clawback. The $2.1 billion figure comes from the fact that the FTX stake was worth that much at its peak, taking into account the value of $FTT at the time. It's not clear how the judge will determine the value of $FTT if Binance is ordered to pay, whether it will be the value at the time of the peak, the current value, or a value at some other point in time.
If Binance is required to pay the clawback, it would be a significant blow to the company and could lead to further market uncertainty. While it's hard to take a side in the legal proceedings, it's important to stick to the facts and let the legal system determine the outcome. Regardless of the outcome, the fees from the clawback would be split between FTX's lawyers, employees, and creditors, with only a small portion going to creditors. Kevin O'Leary has expressed his desire for the clawback to happen, but only time will tell what the final result will be.
Coinbase Creates Asset Recovery Tool
Coinbase has made a groundbreaking announcement with the launch of its new ERC-20 asset recovery tool, which allows users to recover almost 4,000 different unsupported ERC-20 tokens. One of the most common mistakes that users make when sending cryptocurrency is sending unsupported tokens to the wrong address, resulting in the assets being either lost forever or recovered through a costly service.
Coinbase's new tool changes this by only requiring an Ethereum TXID and contract address of the lost asset, along with proof of ownership, to return the assets to the user. Coinbase is the first exchange to offer such a tool on a large scale while maintaining the security of user deposits, and plans to add more support following the successful rollout.
If you're planning on using this service, please note that Coinbase does not charge a recovery fee for recoveries estimated to be worth less than $100. For recoveries estimated to be worth more than $100, there is a small recovery fee of 5% to cover development and maintenance costs for the service. This fee is significantly lower than what other recovery companies charge.
The Simulation Is Broken - Trump Shilled An NFT
I'm dumbfounded by this news and can't stomach the idea of writing more than a couple of sentences on it. But if you want a chance to meet Trump and pay your own travel expenses to do so, then I guess you should consider buying this NFT. I wish I had a 3rd hand to face-palm myself while I am writing this.
Check out the video in the tweet below. I just can't believe this is real.
Also, this is not an anti-Trump segment. It would be equally cringeworthy if we saw NFTs of George Bush's paintings or Bill Clinton's cigars.
“Donald Trump announced his new NFT collection with a commercial. Here it is:”
In case you were wondering, the collection immediately sold out and raked in $4.45 million.
SBF In Jail | Next Crypto Exchange To Collapse? Raoul Pal, Mike Alfred, Lex Sokolin
Sam Bankman-Fried was finally arrested. Can we calm down and move forward or should we still worry about the solvency of other crypto exchanges and projects? Joined by Crypto A Team Raoul Pal (RealVision), Lex Sokolin (ConsenSys), and Mike Alfred (Investor).
Raoul Pal: https://twitter.com/RaoulGMI
Lex Sokolin: https://twitter.com/LexSokolin
Mike Alfred: https://twitter.com/mikealfred
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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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