The Wolf Den #68 - Unemployment, Adoption, Trades, Requests
Bitcoin Thoughts And Analysis
I stopped out of my Bitcoin longs for a 1% portfolio loss. Everything went according to plan, I exited when my idea as invalidated. It happens. I consider that a good trade, even though I lost money. Now I am flat, but learning more bearish than I was on Tuesday. Things change, roll with it.
Since Tuesday, we have seen another rejection at the ascending wedge bottom, a failure to hold the descending blue line, failure to hold the 50 MA, and a break below the bottom black line on the daily. Gross. The last two daily candles are also definitively bearish. That said, that's all meaningless if today can close above that bottom black line with a nice hammer. We want to see a small body or for it to turn green with this long wick down. That sould be a good sign of a potential reversal.
I don't like this much. The reaction at the bottom feels more like a relief bounce than reversal for now, since the range low broke again and has been clearly retested for now as resistance. I want to see price back in that range and moving up before I am interested in longs again.
The hourly does show a potential inverse head and shoulders, which could take price up to 9500-9700 if it happens. I could easily see a move back up to the area in general, but would expect a drop after that.
Bitcoin Dominance
Bitcoin Dominance is finally dropping, with a clear break of support and multiple candle closes below. Technically, a move up to retest support as resistance would not be a surprise, which would be temporarily bad for altcoins. Regardless, if you believe in charting Dominance, this is what you wanted to see for a possible alt season. Let's keep our fingers crossed - alts don't look great today.
Collective Intelligence Summit TODAY
I am speaking on a panel TODAY at 1:30 EST alongside my friends Mati Greenspan and CryptoBirb. Tickets for today are free - I believe there's a VIP ticket for more access which you can buy at the link above.
You can use code: GENIUSMELKER25 to get 25% off of that ticket. This is not a ref link, just them promoting the event. Tune in!
The Wolf Of All Streets Podcast - Soravis Srinawakoon
Soravis Srinawakoon, CEO of Band Protocol has recognized a missing link in the connection of real-world data and blockchain applications. His goal is to ensure the accessibility to the truth for everyone from the largest financial players to people fleeing dangerous governments by solving "The Oracle Problem."
Soravis and I further discuss the fear of watching the price of Ethereum go from $10 to $5, an incentivized economy for good behavior, early ICO investing, what it's like to secure millions in funding, growing a company through a crypto winter and the pursuit to restore the crypto community to what it once was.
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The Digital Dollar Is Back Again
The digital dollar is back on the floor of the US Senate Banking Committee. After becoming a crypto legend as the former Chairman of the CFTC, J. Christopher Giancarlo is now leading the charge for the digital dollar, alongside David Treat, who happens to be one of my college fraternity brothers. It is encouraging to see the idea of the digital dollar being floated by the US Government once again. It is my opinion that, while this would be a "competitor" to Bitcoin, the idea of digitizing money can only bring awareness to the crypto space and is therefore bullish.
Tax Time (Again) In The United States
The tax deadline was extended a few months in the United States and is rapidly approaching once again. This is something that I am expanding on from an earlier newsletter with this in mind.
The United States has become one of the least crypto friendly countries in the world. The IRS views crypto currency as property, not as money, stock or a security. This is bad for people that actually use Bitcoin or other crypto on a regular basis to transact, because it means that every single time you use it you are “selling” Bitcoin and it is a taxable transaction. It is absurd, especially considering that much of the initial appeal of Bitcoin was that the tax laws were liberal or altogether undefined. Now, if you buy a cup of coffee with your Bitcoin, you are technically “selling” it, and have to calculate your cost basis of the purchase and pay taxes on the “profit.” This makes using crypto for transactions unattractive and effectively pointless.
Further, when you buy an altcoin with Bitcoin, you are “selling” Bitcoin, which is taxable. You are taxed once again when you sell that altcoin back to Bitcoin, creating a seemingly endless series of taxable transactions to calculate. More importantly, you can lose Bitcoin on the altcoin trade, but still owe taxes on the “profit” because of the price of Bitcoin Vs. USD. A friend of mine took a sizable loss trading crypto in 2018, but still found out that he owed tens of thousand of dollars in taxes. Insane.
Using crypto as a method of payment on a daily basis is a complete disaster for taxes. Let's hope we see some sensible legislation in the future that solves this.
Is The Stock Market a Bubble?
This is a great thread on whether the stock market is currently in a bubble and ready to pop, based on Ray Dalio's 7 classic signs of a bubble. You should be following Sahil - he has a knack for explaining complicated topics in a way that everyone can understand. Give this thread a read, he explains it better than I can here.
Altcoin Trades
ARN/BTC
I am only interested in this if it flips the top of this range to support. What got my intention was the volume coming in. Again, close above, retest as support would be ideal. If it fails, tight stop.
QTUM/BTC
I like the potential here a lot. Price did a prolonged fakeout below the range but has since flipped it back to support. That should mean an eventual trip to the top of the range. It is also currently retested the EQ of a smaller range.
Zooming in, price is forming a descending wedge, which should break to the upside. Targets here are somewhat simple. Top of the smaller range, EQ of the bigger range, top of the bigger range.
A break of the descending blue line would also confirm a massive inverse head and shoulders - a true reversal pattern. We would want to see major volume through that neckline.
Traits Shared By Successful Traders
These are a few key traits that are shared by successful traders. I think the hardest for me to learn was patience - waiting endlessly for a trade idea to confirm was always very difficult. This caused me to enter to early because I was impatient, only to see my original plan often come to fruition.
The important part is understanding which are your strengths and which are your weaknesses. Learn to fix the weaknesses and you will become a better trader.
New York Easing Crypto Rules?
The United States is notoriously unfriendly to crypto and arguably the most unfriendly state in the union is New York. An easing of crypto rules and regulations would be welcome news for traders and entrepreneurs in the crypto space that are living or operating in NY.
"New York’s proposed framework would allow companies that want to engage in virtual currency business activity in the state to obtain a conditional license, through which they would collaborate with fully licensed companies, NYDFS said.
The regulator on Wednesday also made it easier for companies to offer and use new coins. The regulator will provide a list of pre-approved coins from which licensees can select and then self-certify they are using without having to get additional approval."
Fidelity Continues To Lead Institutional Adoption
Fidelity has been notoriously crypto friendly and continues to innovate in the space. They are now looking to introduce funds that are structured for big investors like endowments, pensions and companies. It's become crystal clear that institutional money is either in the space already or is interested in investing.
Quick Take
Fidelity Digital Assets has seen its book of business for its custody and execution offerings grow since the beginning of the year
At the same time, the firm has been talking to hedge funds about a new service that would introduce them to big capital allocators
Meanwhile, the firm has made two key hires, including a new CTO
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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.
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BlockFi
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Chart Requests
AERGO/BTC
Rejected hard at resistance. This is not interesting anywhere below 320. Look how many candles wicked above that line and failed to close there. I would not even consider this until that lines is clearly broken with candles closing above. Otherwise, I would look for lower entries, at the 50 MA or the bottom of the channel perhaps.
ALGO/BTC
Tough read, as it's been moving sideways for a while. Hard to tell if it is in accumulation for another move up, or distribution. It's basically ranging. That said, it's clear that the 61.8% Fibonacci level has been a tough nut to crack, and that would be a common place for the upward momentum to end. At this point, you really want to see price above that level and the slightly descending black line, or look for an entry lower if you are confident in the coin. The 200 MA has been strong support on this time frame and price is consolidating around the 50% retracement level. No idea which way this will go.
BAT/BTC
I am always drawn to the weekly chart on this, because there was such a clear breakdown of that ascending black support ages ago. Since then, price bottomed and has been moving sideways. It does look like it's ranging and accumulating for a major move up, but it's hard to see an immediate entry for me at this level. The better entries were below over the past few weeks. Key levels are marked, and the descending black line needs to be broken to confirm an uptrend, in my mind.
CMT/BTC
Moving very well - breakout from the descending black line signaling and end of the downtrend. Nice volume on that break. Bullish. Right now the key seems to be 150 sats, which is a strong area of resistance. I would want to see candles closing above that and flipping it to support. If that does not happen, watch for bullish consolidation and an entry a bit lower before another move up.
CTSI/BTC
I am not sure if this is bullish consolidation or if it's a descending triangle with the bottom around the blue line. Tough to gauge from here, so I would watch for a break of the descending black line. That's the only trade I would take on this, ideally with a retest as support.
EVX/BTC
This looks decent here, breaking through descending resistance with a strong spike in volume. The 2728 area is a tough nut to crack, lots of resistance around that line. Above that with a retest as support could be a really nice entry, since that has broken that descending black line and retested it as support. Areas of interest are marked in blue.
EXY/BTC
Interesting chart. There was a clear head and shoulders ages ago that broke down. Price is currently trying to recapture a key level, but is struggling with the old neckline (red) of that head and shoulders. That has been very strong resistance. I would want to see candles closing above that red line, personally. There is an argument for taking a position in the current area based on that purple box holding as support.
GO/BTC
There is a lot to like on this chart. Clear break of the downtrend (black line) and flipping key levels of resistance to support along the way. Volume also looks decent, which confirms the new uptrend. Anything above 167 should target 201. Kind of in no man's land for an entry at this exact level.
HBAR/BTC
Sideways, presently testing support on the blue line. I don't really see anything here, to be honest. All of the moves up with volume spikes have basically been rejected. This could go either way, but I am not interested at these levels.
INS/BTC
Interesting spot here, consolidating above support. Really nice volume uptick over the past few weeks, steady interest. That's a good sign that this is accumulating for further movement up. I could see taking an entry here and exiting if it clearly fails to hold support. Key levels are all marked.
IOST/BTC
I posted this break through the descending line ages ago around 41 sats and it has continued up nicely from there - over 50%. You want to see 61-63 hold as support now - the blue line down to the top of the range. That's the entry I would personally be looking for now.
KNC/BTC
There's a lot to like here, but hard to buy at this second after such a strong move. It is currently holding a very key level as support, and forming a bull pennant on the daily at that. Ideal entry here is a break of the top blue line. Remember, a pennant often loses the bottom support and become a flag, with a descending support line. A really awesome entry would be a retest of the top purple box as support - I am going to put bids there.
MCO/BTC
Not a good chart. I have shared this weekly view a number of times and showed the breakdown of the ascending channel. Now it is also breaking horizontal support and being rejected by the descending blue line. It needs to break that line first to show any sign of reversing.
NEXO/BTC
That played out nicely! Last I charted this, price was breaking out and flipping the blue area to support. It took a moon shot from there, right into a key level of resistance. Now we wait and see if this is bullish consolidation below for a move up, or if it is rejected and that's the end. Can't really enter here. Either below at support, or above when it flips that huge area of resistance. That would have been my exit from the bulk of my position if I had been trading it. For now, this looks good.
QLC/BTC
Huge move by this one, really bullish. That said, it is currently failing to hold a key resistance as support at 211, with time still to go. Bulls want to see that level hold, in my opinion. This also retraced 70.5% of the last move down, which is considered by many to be an optimal entry for a short. I would personally expect some retracement after such a bullish move, but you certainly never know. 178 was never retested as support - that would be an area of interest if this drops.
QNT/BTC
Nice moves up after breaking out of the huge descending wedge (blue). This wedge was also retested in epic fashion as support. Price is currently attempting to flip 84643, a key resistance, to support. This is likely to consolidate bullishly here before another move up. There's a lot to like here.
RDN/BTC
This is a tough one for me. I have heard rumors of RDN hitting Coinbase eventually, I think that has sparked some movement up. What I don't love is that price is rising on decreasing volume and there was clear bearish divergence with RSI on the daily, overbought. Also, price is in an ascending wedge, which generally should break down. I would look to the blue zone if that break down does happen. For now, hard to see an entry here for a position up - strange price action since the pump.
SC/USD (POLONIEX)
As you mentioned, this looks almost exactly like the silver chart on the monthly. Cool observation! The 405720 level looks like $18 on silver, and at this point I would want to see that flipped to support. Either that, or enter at the lower black line. You want to see the ascending blue line hold as support here, in general.
SHLO
Zooming way out, we can see that price is at a key level, around the purple box. This has been the bottom historically on all of the huge drops.
Zooming in, there's a potential inverse head and shoulders forming, which is a reversal pattern. This is utterly meaningless unless it breaks the blue neckline above, so just an idea. For now, this could also be a bear flag or some sort of bearish consolidation after the drop. Hard to know what to do with this one here.
SLV
I believe that silver found a bottom a few weeks ago. At the moment it's found resistance on the XUG chart (not shown) at $18. This seems to align with the slight descending black resistance drawn here, which is the line I would want to see broken to enter at this point. The 50 MA is screaming straight up, which is a good sign. Likely golden cross coming in a few days.
STX/BTC
This is ranging, not much to see here. It's in the bottom half of the range so a trip down to the bottom and the P (pivot) seems likely. I wish I had more to say here, but it's just sideways.
ZEC/USDT
This has been pretty darn strong and is attempting to flip a very key level to support. I am always wary of moves this strong without a major retrace, but in this case it could keep going. Holding 53.36 would be very encouraging here.
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.