The Wolf Den #65 - Bitcoin, Alts, Robinhood Suicide And More
Bitcoin Thoughts And Analysis
I took profit on my short yesterday and am currently flat. This is an absolute no trade zone for me - I can see arguments for both directions and price is currently chopping sideways as I said on Tuesday.
DAILY CHART
This looks to finally be breaking down from the ascending wedge, which is not ideal. That said, it's also still holding the 50 MA on this time frame. If it loses that, I think more downside is in store. Still, price is between the two black lines - long is safer above the top line, short is safer below the bottom line. Real bullish case starts again with a break of the descending blue line.
4-HOUR CHART
Price is still well back in the range, although finding stiff resistance at the EQ. Price also bounced off of the top of the recent descending channel, which is nice to see that as support. There's also a potential inverse head and shoulders forming, but you can't trade that unless it breaks above the black line.
No trades here, as I said. We just need to wait and see.
It's worth checking the GBTC chart in the "Chart Requests" section - it looks a bit more bearish than the spot BTC chart.
Bitcoin Dominance
Bitcoin Dominance is an important factor in determining when alt coins are likely to do well against Bitcoin. When it's dropping, alts are generally performing better. When it's rising, get out of the way.
That said, I am wishy washy at best on doing TA on the Dominance chart. A LOT of people do it, so I choose to share the ideas with you.
As you can see, Dominance is hanging it's toes over the edge of the bottomless pit. For now, it continues to hold ascending support. If that breaks down, alts should do exceptionally well, with real "alt season" potential. If it holds support and continues up, then alts will likely suffer. Keep an eye on this chart.
Security Audit - Do It Now!
As you know, I have ordered an NGRAVE hardware wallet from their Indiegogo campaign (9 more days). They sent me this security audit, which I think is worth everyone here taking the time to complete. It takes about 5 minutes to answer a few simple questions about your security and will give you an honest, third party appraisal of how well you are securing your crypto assets. This is basically a hard look in the mirror! Do it now, because I bet you are not nearly as secure as you think.
The Fed Is Buying Everything!
The Fed has moved on from creating a backstop for the entire market to fluffing up a nice comfortable pillow for individual companies that are too big to fail. In a move that is not surprising but still appalling, Powell announced that the Fed will buy corporate bonds and debt.
"However, the moves have come under some criticism for including speculative-grade, or junk, debt, particularly companies that were still investment grade before the coronavirus pandemic but have since been downgraded."
The government is buying junk bonds and debt of dying companies. It's a Zombie Company Apocalpyse.
Buy Bitcoin.
Here are a few hot takes.
The Wolf Of All Streets Podcast Ft. Ruben Merre
Ruben Merre, CEO and Co-Founder of NGRAVE has recognized a dire need for people to safely protect their cryptocurrency. Stemming from a passion to help people and prevent million dollar hacks like the ones his team has experienced in the past, NGRAVE has set out to correct the shortcomings of human error and fallibility. Ruben and I further discuss what it is like to lose millions of dollars worth of cryptocurrency, demystifying the private key, the emotional journey of launching a business against all odds, and Bitcoin’s unique value thesis.
Americans Can't Pay Their Loans
"Americans have skipped payments on more than 100 million student loans, auto loans and other forms of debt since the coronavirus hit the U.S., the latest sign of the toll the pandemic is taking on people’s finances.
The number of accounts that enrolled in deferment, forbearance or some other type of relief since March 1 and remain in such a state rose to 106 million at the end of May, triple the number at the end of April, according to credit-reporting firm TransUnion. The largest increase occurred for student loans, with 79 million accounts in deferment or other relief status, up from 18 million a month earlier. Auto loans in some type of deferment doubled to 7.3 million accounts. Personal loans in deferment doubled to 1.3 million accounts.
The surge in missed payments suggests that the flood of layoffs related to the coronavirus has left many Americans without the means to keep up with their debts. Many people have used up their stimulus checks, and unemployment benefits in high-cost areas aren’t enough to replace paychecks or to help debt-laden borrowers pay down their bills."
How do you think this ends?
The economy is in shambles.
Betting On The Election
The upcoming Presidential election will have a ripple effect on markets for years to come, so it's worth tracking sentiment. I have to admit that I found this interesting and surprising. This is America, so you can place a Vegas bet on literally anything - that's not the surprising part. My thought was that Trump was definitely the favorite in the election. More shocking is that odds are in favor of a Democratic majority in the Senate, which I viewed as extremely unlikely.
Putting on my tin foil hat, I have to imagine that a Democratic victory would cause a negative reaction in markets, at least in the short term. That would be an ideal time to pull the rug, so it bears watching the process unfold.
Trump Wanted To Go After Bitcoin
This is an interesting story, not one that is altogether surprising. Governments are justified in their fear of Bitcoin. I am only posting this as a reminder that regulation and government intervention remain the single biggest threat to the crypto space. Bitcoin remains a risky investment who's value could be greatly diminished by strong legislation against it.
Altcoin Trades
AGI, ERD and CHZ have seen monster gains since the past few newsletter where I shared them. ENG is starting to ramp up, and SC has broken the resistance level that I discussed. XTZ has finally broken the resistance I drew, and is a trade that I have currently entered. I also shared WAN, which is yet to trigger.
See POLY, NEXO, NULS and WRX in the chart requests for other ideas that really jumped out at me.
A ton of alts have made nice moves and are currently at resistance - hard to find any setups I love at the moment, although everything I have posted before is still valid. Here are a couple with potential.
AMB/BTC
I have shared this before for members and it still looks great. Clear break of the downtrend with sustained movement up in an ascending channel. What's notable is that it clearly held the channel bottom as support and has bounced beautifully. That's what you want to see. Also, volume has generally been somewhat solid. At this point, it's testing a key level at 163. I would buy a retest of that from above as support. Macro targets are Fibonacci levels.
CELR/BTC
This has continued to look good for weeks - we have had a few solid trades on this pair already. Now it appears to be consolidating above former resistance. I want to see a break of that slightly descending black line and flip to support.
You can get a better look at how bullish this is on the daily chart above. Clear breakout from the down trend and nice movement up.
IOTA/BTC
The last setup I posted on this coin failed, so I am a bit wary. Price broke down from 2478. That said, it looks like it could be reversing. Simple setup - I would enter on a break of the black descending line, as this appears to be bullishly consolidating for another move up. Fibs are still really the targets after the macro reversal.
Bitcoin - An Abstraction Of Value And Freedom
Written by Adam Tarlowski
The abstraction of value isn't a recent phenomenon. In Earth’s earliest days, value was derived from a thing's ability to help someone survive winter, hunt for food, or start a fire. With the advent of society and goods produced en masse, there came a need for a universally accepted value of items to trade and exchange with people from all over the world. This first major abstraction required people to consider value in small increments of ore that didn't directly offer much more than their attractive shininess and supposed store of value. Gold was later determined to be extremely useful - it is still considered valuable to this day. A further yet similar abstraction came with national currencies - no longer shiny like gold, their only value being the oath, policy, and commitment of a country. The value was in the strength of those who backed it. Therefore, an further evolution of the financial sector would require a mass adoption of a new abstraction of money and value.
Bitcoin and the blockchain are today's newest abstraction of value. Their promise of privacy, speed, decentralization, and proof of work require someone to accept value in something non-existent in the physical world for the first time. Accepting bitcoin and the blockchain means an entire lack of commitment from a government. Owning Bitcoin offers the ability to store value digitally, behind a screen on a blockchain. Bitcoin frees is of the need to find a third part to store our money. If the new norm is accepting this abstraction for its own unique set of properties, the pendulum of power will swing from the few to the many. A currency made by the people for the people - freedom in the form of value.
My Recommended Platforms And Tools
Voyager
This is where I invest, commission-free. They now let you earn interest on your Bitcoin held in Voyager, so you can compound while trading. Not only that, you’ll get $25 in free BTC when you download & fund.
Rewards Code: Scott25
Phemex
This is where I trade with leverage and can also trade spot with no fees.
RoundlyX
I use RoundlyX to buy small amounts of Bitcoin every single day. They automatically round up my credit card purchases (with 10x multiplier) and invest them in crypto. Absolutely brilliant. Passively invest money you don’t need without a thought. Further, they have integrated with Voyager (see above) to offer commission-free purchases.
Rewards Code: WOLF
TexasWest Capital
This is where I spend my days teaching and learning! Our Discord group is a one stop shop for everything you need to learn to trade and control your emotions. Feel free to DM me on Twitter or respond to this email for questions.
Choice IRA by Kingdom Trust
Self-Directed IRA for Americans - allows you to invest in Bitcoin and any other asset for your retirement, with all of the tax benefits of a normal IRA.
Efani
Concierge Phone Service for Americans that protects your from SIM Swaps and other phone related hacks. I cannot stress enough how amazing this service is.
A new crypto rewards debit card that I have been testing and loving.
BlockFi
BlockFI is where I personally store part of my long holdings. They offer up to 8.6% annually, compounding, depending on the asset (BTC, ETH or GUSD), which is much better than any legacy savings account or investment.
Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
Chart Requests
CHR/BTC
I have mixed feelings about this chart. This was a clear bullish consolidation after that major move up, and price has broken resistance. That said, it is also flirting with breaking down from the blue support and has shown absolutely no strength or volume coming out of that "flag." I personally would stay away from this until there is some volume, but from a chart perspective it's at support and retesting the flag. That could be a nice entry.
CTSI/BTC
I don't like this chart at all. Clear head and shoulders that has broken down, although the volume pattern does NOT validate it. To confirm a real head and shoulders, you need to see strong volume on the right shoulder when it breaks down. Still, this pair is not showing much strength and looks like it's forming a bit of a bear pennant below the neckline of the H&S. I can't see much reason to enter this unless it moves back up with strength above that black line, or if it drops down to demand - the red zone.
ETHE
This is a bullish chart. Clear break of previous resistance and retest as support. Clear bullish consolidation with decreasing volume - you want to see strong volume when it exits the flag. There is a lot to like here, as long as it holds above that black line.
FET/BTC
This is between levels, but does look like it could consolidate below resistance - that clear area of supply in the red box. I would personally like to see price trading above that and buy it as support if I was looking for an entry now. This does look generally good - there's been volume coming in and the downtrend is clearly broken. Just a matter of finding a good entry, which I believe is either above or below current price.
GBTC
Worrisome chart. While Bitcoin made an ascending wedge, this made a clear ascending channel. The breakdown here is far more convincing than on the Bitcoin chart. This does not look good from a technical perspective, unless it can break that blue line with volume and make a strong move back up. This looks like a channel breakdown that should lead to bearish movement. That doesn't mean it will happen!
MATIC/BTC
Super sideways for now. I still have a significant position here, I see no reason to exit. I also don't see a clear entry right now if you were trying to get in. The downtrend is broken, but price really needs to get above the EQ of the range, if not the entire range to return to bullishness. I don't see a reason to jump in this for now.
NEXO/BTC
I wish I had shared this yesterday when I charted it - price was clearly retesting the descending resistance as support. It has taken off before I was able to get the newsletter out. That said. the blue boxes are clear areas of resistance and support on this chart, so a close above the current box and retest as support would be a text book entry. I would watch for that now, since the break from the descending line is already behind us.
NULS/BTC
This looked amazing when I charted it yesterday and still has potential. That said, it needs to really hold this support at 5196. All 3 EMAS are curling up - the 21 just golden crossed the 200 with the 50 soon to potentially follow. Lots of momentum in the right direction. This could be a really nice entry assuming the candle closes above that black line.
POLY/BTC
This looks really strong. Big move up, held support at 415 beautifully, and then consolidated bullishly. There was hidden bullish divergence with RSI, which signals continuation. Price is breaking out as I am typing this. Lots to like here. If I was not doing a newsletter I would buy this right now.
QLC/BTC
Another coin that has made a nice move but run into resistance. For that reason, I see no good entry at the moment. I would want to see 178 flipped to support, or buy the lower black line on a retest, which is also in confluence with the 200 MA. This looks generally bullish, but the best entries seem above or below price depending what it does.
SQ (SQUARE)
This is near a key level - the previous all time high. Not a place that you want to buy, as it's significant resistance. At this point, you want to see that flipped to support and then buy and ride it into price discovery, or find a lower entry based on the lines shown. $82 could be nice if it comes back there again.
UBT/BTC
It is nice to finally see some volume on this chart. Every time someone requested it a while back, I had to deal with strange candle and gaps all over the place. The levels are marked, this descending wedge is clearly the pattern to watch - and price was rejected recently as resistance. I would personally look to enter on a break of that descending line, or a break and retest as support to be safe. That would be a sign that this was bullish consolidation and price is ready to head back up.
VRA/BTC
So many coins have hit resistance and been rejected, like this. Price above 830 would be ideal, flipping that to support. Otherwise, check levels below if it drops. Once again, the best entries for this appear to be above and below the current price.
WRX/BTC
I am still in this and actually added a bit to my position, because it was not full. While this did look to be breaking support, I saw this potential large bullish divergence with RSI. It looks like it will confirm today, which should be a signal that this pair is bottomed out. Ideally, I want to see that blue line broken to give real confidence that this is a reversal and not a relief bounce.
Phemex Launches Fiat Support
"The day is finally here! We’ve heard much of your feedback and one of the most requested features, support for credit and debit card purchase of cryptocurrencies, is now live on our platform!"
Another great move from Phemex!
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.