The Wolf Den #70 - Bitcoin Drop, Trades, Requests and Markets
Bitcoin Thoughts And Analysis
Very little has changed since the analysis on Tuesday. Price failed to close the monthly candle above $9,243, which is less than ideal. That means we should be looking for lower targets in the coming month. Price just dropped with meaningful volume on the hourly chart, which closed all of my longs. I am now flat. I am very uncertain about future short term direction from here, but nothing has changed on the larger time frames. This could just be a liquidity grab for more movement up. But my bias is down. That looked like an exit.
Just an update to the daily chart, since you can see price was once again rejected at the black line. As I said a week ago, a break down below that and retest is a textbook short. I did not take it, rather my longs were closed on the drop. If you did short that line, you should feel comfortable.
Please revisit Tuesday's analysis!
The Wolf Of All Streets Podcast Ft. Jack O'Holleran
Jack O’Holleran, CEO of Skale Network graduated from the University of Nebraska where he was a starting wide receiver. Only months after leaving the field, he worked his way deep into the tech sector, starting his own business and living a new lifestyle that took him around the world. A self taught coder, Jack now leads a team solving crypto’s scalability issues, all while securing the blockchain in a reliable, cost effective and safe way.
Jack and I further discuss our experiences living in Japan, leather helmets in football, learning about Bitcoin at a 2013 bachelor party, what it's like to leave the field for deep tech, Ethereum dominating the crypto development sector, concussions in football, bad actors dumping on retail markets and compounding interest in sports, business and life for the best return on effort.
Altcoin Trades
Be careful. When I was posting these trades, Bitcoin was moving nicely. Now that it nuked a bit, it's hard to know if alts are going to suffer.
BTT/USDT
Like HOT below, I trade this on the USDT pair because it's easier to get "in between" the huge buy and sell walls on the BTC pair, where available. I already have a sizable bag of this. This is at resistance, so no trade at the moment. It needs to break and close above the descending white line, as well as the horizontal resistance at 3396. If those things happen, areas of interest as likely resistance are shown by the white lines. This would be a massive macro break out of the entire downtrend from the all time high, so I am very interested in getting in if it breaks out. Assuming that happens, I will personally have my stops on these new buys below 2830, the last area where price consolidated.
HOT/USDT
Yes, I am still in this trade. I only trade HOT now on the USDT pair, because it is nearly impossible to fill order on the BTC pair with the massive buy and sell walls. I am down on this position, but added more in the past few days. It is still holding descending support and is forming a clear bull flag on the weekly chart. This is going to be slow and require tremendous patience, but if it breaks up this has massive potential. Key areas are marked, but the break of the blue descending line should eventually target the top of that line. Hopium, of course. But everything about this setup looks bullish for now.
MATIC/BTC
I love MATIC here. I bought yesterday at 203. Price tested the bottom of the range a few times, wicking below and closing back inside. Those are multiple bullish SFPs, indicating that there's a lot of liquidity and buying interest below the range. As long as candles are closing above 203, this continues to look likely to reverse. The true test now is the descending black line. It needs to break that to truly start an uptrend and not just be a dead cat bounce. Realistic initial targets are the top of the range at 225 and the top of the black line around 242.
WRX/BTC
Finally? Maybe? I posted this again last week, but price was rejected at resistance dropped. Good news, because it gave a lower entry when price finally broke the blue line. You should be following the old trades I post, because they are often still valid, like this. Nothing has changed with my plan. Key levels are marked. At this point, stops below that big demand zone seem reasonable. We should not visit those lows again if this is truly breaking out.
Voyager Enables 2FA
Ladies and gentlemen - the moment you have all been waiting for... Voyager has added 2FA! This was one of my biggest issues with the broker and one that I have been pushing them to change for ages. I am really excited to see this come to fruition. They are always on top of security, so this added layer gives me even greater confidence having my money on the app.
Manny's Point Of View - A Great Conversation
I was recently interviewed and really enjoyed the chat. Manny asked some great questions that allowed me to dive deep into my theories on what's happening in the crypto world and markets as a whole. Check it out!
Federal Reserve Is Helping The Wealthiest People
The wealthiest people and companies on Wall Street are getting an unnecessary bailout from the Fed, months into the coronavirus crisis with much of the stock market having recovered. As my friend Sahil Bloom put it on Twitter - "Inflationary monetary policy is designed for wealth redistribution. It takes from disciplined savers and gives to borrowers and asset owners. It creates disincentives to save (your cash is devalued over time) and incentives to borrow and spend (your debts are inflated away)."
Warren Buffet is getting some free money...
Apple, a company with hundreds of billions IN CASH, has the federal reserve buying its bonds.
They have a larger cash reserve than most countries.
On Sunday the Fed identified a total of 794 companies whose bonds it will buy directly to support the market for investment-grade corporate debt, The Wall Street Journal reported.
WHAT IS GOING ON?
The greatest wealth transfer of our lifetime is taking place and most people are caught up in other political distractions and don’t even realize what’s happening. Stealing from the poor to give to the rich. Welcome to Hooverville.
Introduction To Ichimoku Cloud
I have shared a few lessons and primers on trading with the Ichimoku Cloud, which is one of my favorite indicators that I come back to often. Josh Olszewicz is a master of using the cloud - this video is from 4 years ago and still is a great introduction to the main concepts. Why write a while lesson when someone else has already done it better?
Here is another great written guide that I have shared before.
Senate Hearing Review - The Digitization Of Money
Written By Adam Tarlowski:
On Tuesday, 6-30-20, the U.S Senate held a hearing titled, “The Digitization of Money and Payments.” The Committee on Banking, Housing and Urban Affairs met to discuss the future possibility and role of a U.S. CBDC (Central Bank Digital Currencies.) The talk of a digital dollar has been thrown around for a while with concerns mounting as China is beginning to explore the digital Yuan.
The hearing began on a bullish note as all experts unanimously agreed that a U.S digital dollar would benefit both the people and overall strength of the world reserve currency. Different arguments were brought to the table such as increased inclusion, instantaneous transactions, reduced fees, new technological transparency etc. Even more bullish was the two Senators at the top of the committee of different parties agreeing to an extent with the experts that a CBDC should be explored and financial infrastructure upgrade is overdue.
U.S. Senator Mike Crapo (R-Idaho), Chairman of the U.S. Senate Committee said in his opening statement:
“And as I said in our last digital currency hearing, it seems to me that these and similar innovations (stable coins and cryptocurrencies) are inevitable, beneficial, and the U.S. should lead in their development."
U.S. Sen. Sherrod Brown (D-OH) – ranking member of the U.S. Senate Banking Committee said this:
“For rich people with money in the bank, the bank pays you. For everyone else, you pay the bank.”
The tide turned as other Senators on the committee had their chance to speak. Their concerns and questions missed the mark and were off topic to say the least. It was continuously brought up that a digital dollar can't succeed because of poor internet across the country. Rather than derail the digital dollar argument, it proved their ignorance on the subject. It was apparent that some of these Senators struggled with their smartphones as one waved his in front of the camera complaining about his service and another had an early 2000s landline sitting right behind him. The highlight was one Senator asking for a letter to be mailed to him with more information about blockchain technology. The irony was at an all-time high.
If the very people voting on our laws can't comprehend what is in front of them, our country has an even bigger problem at hand. On the bright side, momentum is growing stronger for the digital dollar, exploration of stable coins, and cryptocurrencies. The momentum is bi-partisan and motivated by a fear of falling behind - a common insecurity of the U.S. In the digital age, the race isn't to space but to digitization and the U.S sounds like it's starting to get the hint. Overall, it will take a collective effort to uproot the failing financial system that many are still strongly clinging to. It is bullish that many people are starting to wake up and consider change, but that isn't enough. Let's hope slow and steady will win this race.
Hedge Funds Are Raising Money While They Lose
Hedge Funds have largely gotten destroyed during the pandemic, even as stocks have risen tremendously in price.
Some well-known fund managers, sensing the moment, began accepting new capital for the first time in years, including D.E. Shaw & Co. and Seth Klarman’s Baupost Group. Twenty-five of these funds, have pulled in about $15 billion this year, according to one prime broker. A Credit Suisse Group AG survey released this week highlighted the shift: Investors are more interested in hedge funds than any other major asset class going into the second half of the year.
The trend is nascent and tepid -- some analysts still project net outflows from hedge funds this year -- and could fade as quickly as it appeared. But it is an encouraging sign for an industry that has been mired in a long and relentless slide since its peak during the 2008 financial crisis.
Even with this newfound optimism from some investors, net redemptions could continue this year, especially if stock markets start to tumble and investors need cash. A few institutions have already redeemed to raise money to run their operations or boost charitable giving.
Stock Market Recovery Or Inflation?
This is a witty tweet from Tuur Demeester. While it is a bit tongue in cheek, it does illustrate the point that the stock market is valued in dollars, which are an inflationary asset. If you denominate the market in gold (or Bitcoin), it does not appear that there is any recovery.
Legacy Markets
My stock picks are few and far between, but the ones that I have shared in the past few weeks have all done exceptionally well.
CRON (CRONOS)
This is a speculative play. Marijuana stocks pumped hard and then dropped hard - much like alt coins in 2018. If Biden wins the election, this should be an exceptionally good play as one of the stronger companies in the space. Price is currently depressed - if you look at where this was trading over the past few years, you can see the potential.
As far as the chart goes, it's a clear ascending channel and is currently tested a key support at $6.04. There's also a nice descending wedge which price is testing today - a break above that descending black line should send price to the top of the wedge and ascending channel - around $8. That's a 25% gain. If you are looking to speculate and hold for a long time, price could go far further. I am buying this largely as an invesment - it's a risky one.
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. I use both the virtual card online and the physical black card at actual retail (I will do this more after COVID!). They offer 6.38% cash back in crypto, which is really astounding.
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
AGI/BTC
I'm not sure with this one at the moment. It seems to have reversed course and is trying to find support at 190. It's formed a descending broadening wedge, which does not tell us much for now. It should eventually break to the upside, but hard to trade on that for the moment. Sorry, not much to see here for now.
ARK/BTC
Not much to see here, pretty gross price action the past few days. I would look for a bounce around the trading range EQ (dashed line) and top of the Ichi cloud, if you are bullish on the pair. I see no reason to trade this.
ATOM/BTC
Breaking through descending resistance which is good. I would watch the 4 hour chart closely - right now there's a bearish SFP with an ugly candle above the previous swing high. Don't want to see that if you are bullish. You can see there was a beautiful bullish SFP at the lows a few days back. At this point you want to see 3001 flipped to support.
CKB/BTC
Trading sideways but approaching macro resistance. I would wait for a break of the blue line and potential retest as support to enter. It appears to be consolidation for a move up.
COTI/BTC
Large ascending channel, but presently trading below the EQ (dashed center line). 276 appears to be a key level for this to firmly turn to support. This is a tough read, like most alts right now, but I don't see anything really compelling here. If it drops, I would look for the bottom of the channel or the black line below.
HBAR/BTC
Nothing to see here. Price is doing absolutely nothing, hugging the pink line. I can't see any reason to trade this at the moment. Sorry for the brief analysis, but sometimes there's nothing to see.
NEXO/BTC
This is in price discovery now (unless you count the big wick from when it hit the exchange), so hard to know what is up above. I can say that this has been overbought on RSI on the daily for a long time and is building further bearish divergence. Charts may not matter in the new DeFi paradigm, but if you are trading the chart, I would look for some retracement soon. That top zone could be a nice buy if price does get back there.
QLC/BTC
This has looked amazing so it's hard to be "negative," but this does seem like a spot for a retracement. The last two daily candles closed with large wicks to the upside, usually a sign that there is a lot of selling pressure. Yesterday's candle was a shooting star, which signifies a top if today's candle is red. Also, RSI is overbought with bearish divergence. I would look to catch this below on a retrace if you are bullish longer term.
REN/BTC
I have been in this again since the green zone below, which I shared multiple times in the newsletter. I only have 20% of my position left. At this point, a retest of the previous all time high at 1396 is the entry that most traders would be looking for. That would have a high risk/reward, because the ascending channel support is right below that and could be another place to look at a trade. If price does not drop that far, look for a break of the descending white line. If that happens, it's hard to discern a target, because it's price discovery.
STEEM/BTC
I stared at this chart for 5 minutes and see absolutely nothing. This had a ridiculous pump and dump. Outside of that , this is sideways and maybe forming a bottom. Honestly, nothing I can say here.
VET/BTC
Still looks good, nothing has changed. Want to see 100 as support to enter at this point.
XTZ/USD
This chart is all over the place, but it's clear that price has been ranging like BTC for the past few weeks. Since this is a USD pair, that's not a surprise at all. That's why I trade BTC pairs. I would want to see a break above the red trading range and that descending black line, personally. If that happens, all time highs should be targeted. A drop and close below the red range would be a bad sign.
Zooming into the 4 hour, it's hard to tell if price is in an ascending wedge (bearish) or ascending triangle (bullish). This is where TA becomes completely subjective. Regardless, that horizontal line is clear resistance. If you are trying to take a lower time frame trade, looks for a break above that.
XVG/BTC
This is a tough read after the huge move up, but technically it seems to have found support and be moving up once again. 71 was the spot where a long would have been more wise. Now, I would want to see the black descending line broken. 78 does looks like it has been flipped back to support here as well, so anything above that looks decent. This could make another sizable move up and volume does appear to be rising once again. Key levels are marked.
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.