The Wolf Den #657 - I Can't Believe This
The Wolf Den #657 - I Can't Believe This
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In This Issue:
I Can't Believe This
Important Notice - This Is Our Last Revue Post
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Ethereum Went Ultrasound
Solana Is Clawing Back
I Can't Believe This
Please don't skip the important announcement below this section.
Crypto Twitter has once again left me at a loss for words. It's only the third week of January and I can't believe what I'm about to report on. One would think that after a few years of participating in this circus, there could be no such thing as "shocking news," but nope - I'm once again in utter disbelief.
Nobody is immune to the nonsense of Crypto Twitter.
So, here it is. Yesterday morning, the world woke up to a bombardment of headlines that read something like, "3AC Founders to Build a New Crypto Exchange, GTX, Seeks to Raise $25M." Thank God I wasn't sipping coffee at the time, or it would have ended up on my computer screen.
They are partnering with the founders of CoinFlex, another somewhat defunct exchange that had a massive outstanding loan to Roger Ver (allegedly).
I guess we now can identify the third arrow.
Let's quickly recap the 3AC story, in case anyone managed to forget or is new here.
Co-founders Su Zhu and Kyle Davies founded the crypto hedge fund Three Arrows Capital in 2012
3AC became known around the world as one of the most prominent hedge funds, growing from $1.2m to billions in AUM
Kyle and Su were often referred to as the “adults in the room”
Greed got the best of 3AC and Luna's collapse initiated their downfall
Now the bankrupt firm owes a list of creditors over $10b, the funds may never be paid back, and Kyle and Su are in hiding
Considering the damage dealt by these two men, one would assume they would hang it up and move on. But no. They've once again come up with a "brilliant idea." So without further ado, I present to you GTX.
Before I delve deeper into this news, let's cover some initial thoughts.
“GTX” is one letter off from “FTX” and “GOX"
What if these men are arrested for 3AC? Then who will run the company?
And who the hell is going to give these guys money?
But let's not judge an exchange by its headlines and instead take a look at what the product really is. According to the pitchbook, which is available online, GTX offers "cross-asset trading on a public marketplace." Below is the premise, copied verbatim.
Why GTX?
Thesis: The $20 billion crypto claims market should trade on a public market
“We can dominate the crypto-claims market within 2-3 months of go-live. FTX users are selling claims at ≈ 10% face value for immediate liquidity or waiting 10+ years for the bankruptcy to process the disbursements. GTX unlocks FTX, Celsius, etc creditor claims for immediate trading. Unleash the debt capital. Creditors may continue to hold their claims to maturity or elect to sell them to crypto while using claims as margin capital.”
I want you to imagine two men named "Syle" and "Ku." They are raising funds for a new security business they named "Racket." The strategy is simple: Syle and Ku sneak into your neighborhood at night, burglarize a few homes, fire off a couple of gunshots, and then tiptoe away before being caught. The following morning, Syle and Ku put on their best suits and go door-to-door selling state-of-the-art security systems designed to ward off crime.
The end.
Do you see a resemblance?
Assuming this isn't just an elaborate prank, the men responsible for creating a multi-billion dollar hole in crypto are literally preying on trapped creditors by offering them a new and bigger hole to jump into. They are replacing stolen credit with a fresh batch of credit. GTX is a casino designed to gamble on a casino, built for the victims of criminal casinos.
And here’s what I want to know:
Can 3AC creditors trade on GTX?
What if GTX is shut down and GTX now has ownership of your claim?
How is it determined how much GTX offers on a claim?
If GTX goes bankrupt, is this the perfect opportunity to just try again?
Will this exchange be legal in the jurisdiction of affected investors?
These questions only scratch the surface, but I think I've made my point - this is the dumbest announcement I've ever heard... and I still wouldn't be surprised if the $25m is raised.
If you do wish to read the pitchbook, I suggest you search for images on Twitter instead of downloading a PDF.
Important Notice - This Is Our Last Revue Post
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The migration to Substack is complete, so expect an email from me on their platform first thing tomorrow morning. You don’t need to do anything! There will be a few bumps in the road as we learn the new platform, so bear with us. Things may look a bit different, but the content will remain the same. Again, thank you for being a subscriber, I will see you over there.
Bitcoin Thoughts And Analysis
DAILY CHART
Daily RSI is chilling at just under 90.
We have hit 90 a few times, often followed by a correction before a push up and bear div.
Last time it was noticeably higher (94) was the 20K top in 2017.
Last time it hit 90, price dropped from 40K to 30K before pushing to 65K.
I would anticipate some correction sooner than later. I like a pull back to the $19,500 area as a buying opportunity, if we get it.
Here is that idea, based on a retest of the 200 MA as support. This would give RSI a chance to cool off a bit.
Altcoin Charts
I do NOT share signals in this section. I share setups and charts that I am watching, in an effort to help show you how I view a chart and what criteria would be necessary for me to consider taking a trade. NEVER blindly buy something because it is listed in a newsletter or posted on twitter. You need to have a plan when you enter a trade. These are just ideas, and are almost always “if, then” scenarios. If a certain set of things happen, then I would consider a trade.
GMT/USDT
This is just an idea, nothing to do as of yet. This coin has already made a huge move. As you can see, price is consolidating on the 4-hour chart. It is currently a pennant (not shown), which is a triangle at the top of a flag pole. I believe it is likely to consolidate more and form a flag (descending parallel). That would mean breaking pennant support and making a lower local low.
What matters is not the shape it takes, but a break of the upper resistance.
You can judge the flag pole from many places, I am showing the most aggressive view, which would give a target of around $1.16.
Here is the idea zoomed out on the daily.
I have an alarm set for the resistance, or top of the flag. We will see what happens.
As you can see, there was MAJOR volume on the push up, which confirms the move as truly bullish. Now volume is dropping as price slowly drifts down and consolidates. That is what you want to see before another push.
There will be plenty of stops on the way if we get this move, including the red 200 MA.
I am currently holding GMT.
MATIC/USDT
Polygon has continued to show relative strength through the bear market. This is one of my larger holdings, and has been now for years.
Price is currently attempting a flip of the weekly 50 MA to support, a line that was lost in April of 2022. It is also trading above the key psychological $1 level. As you can see, there was a futile attempt to break the 50 MA back in October/November, which gave tweezer tops on the weekly and a clear resistance and target of $1.30.
That is my target for the current move.
This is a weekly chart - I like to zoom out.
Legacy Markets
US stock-index futures fell as Wall Street banks posted disappointing results and signs emerged that central banks may become more hawkish. Contracts on the S&P 500 and Nasdaq 100 indexes slipped at least 0.2% each as US traders returned from a holiday. Goldman Sachs and Morgan Stanley both posted net revenue below expectations, while Whirlpool Corp. and Freeport-McMoRan Inc. also saw sales numbers miss. Earnings are becoming a challenge for investors who had expected a pause in central-bank tightening.
Key events this week:
Earnings to include: Charles Schwab, Discover Financial, Goldman Sachs, Interactive Brokers, Investor AB, Morgan Stanley, Netflix, Procter & Gamble, Prologis, State Street
US Empire State manufacturing survey, Tuesday
Fed’s John Williams to speak, Tuesday
Euro-zone CPI, Wednesday
US retail sales, PPI, industrial production, business inventories, MBA mortgage applications, cross-border investment, Wednesday
Bank of Japan rate decision, Wednesday
Federal Reserve releases Beige Book, Wednesday
Fed speakers include Raphael Bostic, Lorie Logan and Patrick Harker, Wednesday
US housing starts, initial jobless claims, Philadelphia Fed index, Thursday
ECB account of its December policy meeting and President Christine Lagarde on a panel in Davos, Thursday
Fed speakers include Susan Collins and John Williams, Thursday
Japan CPI, Friday
China loan prime rates, Friday
US existing home sales, Friday
IMF’s Kristalina Georgieva and ECB’s Lagarde speak in Davos, Friday
Stocks
S&P 500 futures fell 0.2% as of 7:40 a.m. New York time
Nasdaq 100 futures fell 0.3%
Futures on the Dow Jones Industrial Average fell 0.3%
The Stoxx Europe 600 fell 0.1%
The MSCI World index was little changed
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro rose 0.2% to $1.0842
The British pound rose 0.6% to $1.2262
The Japanese yen rose 0.1% to 128.43 per dollar
Cryptocurrencies
Bitcoin rose 0.6% to $21,265.38
Ether fell 0.6% to $1,570.54
Bonds
The yield on 10-year Treasuries advanced four basis points to 3.54%
Germany’s 10-year yield was little changed at 2.18%
Britain’s 10-year yield advanced five basis points to 3.43%
Commodities
West Texas Intermediate crude rose 0.8% to $80.47 a barrel
Gold futures fell 0.4% to $1,914 an ounce
Ethereum Went Ultrasound
watch ETH become ultra sound money
For the second time since the implementation of the Proof-of-Stake (POS) consensus mechanism in September of last year, Ethereum's supply has temporarily become deflationary, sparking the ongoing debate between Bitcoin and Ethereum. As Ethereum supporters celebrated the success of negative issuance, Bitcoin proponents criticized the volatility surrounding Ethereum's "changing monetary policy."
According to Ultrasound Money, a free-to-use tool that tracks Ethereum, the supply change is -281 ETH since the merge 124 days ago. If the Proof-of-Work (POW) consensus mechanism was still in place, then 1.45 million ETH would have been added to the supply. It's worth noting that it is difficult to claim that Ethereum is anywhere close to being at risk for a "deflationary spiral."
Both supply models for these currencies are working, and it's important to avoid creating unnecessary controversy.
Solana Is Clawing Back
Despite the skepticism of some investors, Solana continues to demonstrate its resilience and the market is responding positively. Austin Federa of the Solana Foundation recently highlighted several major developments, including the community's adoption of Sam and FTX's Serum, which has been rebranded as "Open Book" and has the backing of the Solana Foundation. Additionally, the foundation has committed to investing in the development of a new validator client to address the persistent issues of outages. This will ensure that in the event of a system failure, there will be a secondary system in place to take over.
Furthermore, it's worth noting the mathematical principle of recovery. From Solana's peak value of $260 to its lowest point of $8.2, the price experienced a decline of 96.8%. A 100% increase in price from the low would only bring it to $16.4, still 93.6% away from its all-time high. For Solana to fully recover to its highest point, it would require a 3,070.7% increase from its bottom, or a 1,000% increase from its current price. While nothing is impossible in the realm of cryptocurrency, some challenges are undoubtedly more formidable than others, and Solana has a significant uphill climb ahead in order to fully recover.
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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