The Wolf Den #712 - Everyone Is A Genius In A Bull Market 2.0
It's easy when the number goes up.
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In This Issue:
Everyone Is A Genius In A Bull Market 2.0
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Another Day, Another Raise
Spoilers From ‘State of Crypto’ Report
Michael Saylor Is Now A Genius
$100,000 Bitcoin, $10 Trillion Crypto Market Cap | Dan Tapiero
EVERYONE IS A GENIUS IN A BULL MARKET 2.0
In early 2021, I crafted a captivating introduction for our newsletter, examining prevalent behaviors during a bull market. While the market landscape has evolved since then, the core principles remain relevant. With that in mind, I've decided to revisit and update this concept to align with today's market conditions. I hope you find it both engaging and insightful.
EVERYONE IS A GENIUS IN A BULL MARKET 2.0
In an upward-trending market, it's relatively easy to be right and profitable. Even a poorly timed buy order at a local peak may yield gains if a trader is patient. But is trading through a bull market truly worth it? That depends.
Before you begin trading, ask yourself if you believe in crypto as a whole, and if you believe in the specific asset you want to trade. If your answer is 'no' to both questions and you aim to capture quick profits without the systemic risk investors face, then trading might be for you. If you believe in crypto overall, but not in the coin long-term, trading can also be suitable, provided you consider the following strategies. These apply to individuals who answered 'no' to either or both questions.
(If you answer ‘yes’ to both questions, assess your skills honestly to determine if you're better off as an investor rather than a trader. But that's a topic for another day; let's focus on trading.)
Here are the three most common trading strategies:
A. Accumulating more of the coin in question
B. Focusing on USD gains from the coin
C. Seeking to increase BTC holdings from the coin's profits
None of the options A, B, or C is inherently superior; each has its own set of considerations. If you're pursuing option A, you must assess both your trading skills and the current coin's momentum. For instance, Ethereum has been appreciating more slowly than Bitcoin. Thus, buying dips and selling peaks could potentially help you accumulate coins. However, stacking ETH isn't as straightforward as it seems; you may end up sidelined or repurchasing at a higher price, resulting in a smaller stack. Selling and then experiencing a price increase means missing out on gains you could have realized by exercising patience and avoiding trades. Generally, option A is high-risk and often frustratingly futile. It also involves risks from both anticipated and unanticipated narratives impacting prices. For example, the market may or may not have factored in today's Ethereum upgrade, leaving uncertainties about stakers' and price reactions.
Options B and C are more appropriate if you don't foresee long-term potential in the coin you're trading. If you think the digital asset you want to trade lacks inherent value, strategy B aligns with your beliefs. While you might not outperform the market, you can rest easy, executing specific trades with predetermined exit plans. Option C, although more complex, is arguably the most popular among crypto traders. This strategy demands tracking both the asset and Bitcoin's movements. The funds invested in the altcoin, along with the net return, must surpass the outcome of an equivalent Bitcoin trade.
In a momentum-driven market, this challenge intensifies as Bitcoin's upward trajectory raises the benchmark to overcome. Strategy C shines when Bitcoin moves sideways and alts perform well, but achieving this is easier said than done. Rarely do altcoins consistently outpace Bitcoin. For example, with the current ETH/BTC chart, Bitcoin enthusiasts are celebrating, while Ethereum investors are left observing. Those who intended to trade Ethereum profits for Bitcoin would have been better off sticking with Bitcoin, as their stack is now smaller than it could have been.
The above exercise should help you determine your trading approach and goals. Repeated small gains across rising assets can give new traders the false impression of consecutive profitability and trading skill. More likely, they are in the right place at the right time and underperforming the market. Thus, for the majority, holding through a bull run is more profitable.
Michael Saylor exemplifies this. As a Bitcoin holder, he stands to benefit tremendously as its value increases. He doesn't need to worry about taxes from trades, altcoin performance, or fiat conversions. His strategy underperformed in the bear market (which is why he accumulated) and will likely over-perform in the bull market while he does nothing. He's a simple genius, and most investors would benefit from doing less, like him.
Bitcoin Thoughts And Analysis
While Bitcoin continues to look undeniably bullish on larger time frames, it is time for a bit of caution. We have overbought bearish divergence with RSI, which preceded the drop.
That does not mean that we go to new lows, have a bear trend or market… LOL. What it does mean is that I would look for dips to buy. We could easily get one more push up to confirm a larger divergence before seeing a correction… I just don’t see a reason as a trader to buy at this exact moment.
CPI data just came in and is giving us that push.
Bitcoin does what it wants, charts don’t always work. But these are the signals I watch. Ideally, if anyone missed the move, they are now looking to buy support at $28,600… or even $25,212, which would get people in a panic once again. Otherwise, see you at 32K.
Altcoin Charts
This is an update to yesterday’s idea. Price just retested the descending resistance as support, which is the ideal entry for those looking to trade this.
You can revisit yesterday’s newsletter for the full analysis, but a successful retest at the daily close would make this even stronger.
Legacy Markets
NOTE - CPI JUST CAME IN AT 5%< BEATING THE 5.2% EXPECTATION
US equity futures remain steady as investors await US inflation data that could influence the Federal Reserve's next policy move. The S&P 500 contracts traded flat before the crucial report, which may trigger market volatility. Treasury two-year yields stayed above 4%, while the dollar weakened. US headline inflation is expected to slow, with the core reading forecast to ease on a monthly and yearly basis. This supports the market's expectation of one more rate hike before the Fed pauses and pivots to a more relaxed policy in H2. The Fed faces a delicate balancing act in curbing inflation while stabilizing banks. The dollar weakened against most G10 peers, while Bitcoin dipped below $30,000 after reaching a 10-month high.
Key events this week:
Richmond Fed’s Thomas Barkin speaks, Wednesday
China trade, Thursday
US PPI, initial jobless claim, Thursday
US retail sales, business inventories, industrial production, University of Michigan consumer sentiment, Friday
Major US banks JPMorgan Chase, Wells Fargo and Citigroup report earnings, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 8:12 a.m. New York time
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average rose 0.2%
The Stoxx Europe 600 rose 0.2%
The MSCI World index was little changed
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0920
The British pound fell 0.2% to $1.2404
The Japanese yen was little changed at 133.76 per dollar
Cryptocurrencies
Bitcoin fell 0.6% to $29,999.25
Ether fell 1.2% to $1,871.41
Bonds
The yield on 10-year Treasuries advanced two basis points to 3.45%
Germany’s 10-year yield advanced two basis points to 2.33%
Britain’s 10-year yield was little changed at 3.54%
Commodities
West Texas Intermediate crude fell 0.1% to $81.43 a barrel
Gold futures rose 0.2% to $2,023.30 an ounce
Another Day, Another Raise
The recent fundraising by Xclaim is not as worrisome as CryptoGPT or OPNX (Kyle Davies and Su Zhu's new project). According to press releases, Xclaim, a bankruptcy claims trading platform, has just closed a $7 million Series A funding round. In essence, Xclaim and similar platforms enable creditors to transfer their owed debts at a fraction of the original value for trading on the platform. For those interested, Xclaim's rates can be found in the linked image above.
Spoilers From A16z ‘State of Crypto’ Report
Spoiler Alert - Below is a collection of my favorite graphics from the A16z crypto report linked above. Upon reading the report, it's hard not to feel optimistic as nearly every metric exhibits growth over time. The spoilers below merely offer a glimpse; I still recommend reading the full report for a comprehensive understanding. Enjoy.
Michael Saylor Is Now A Genius
It's only a matter of time before skeptics scramble to rejoin the Michael Saylor bandwagon, now that Bitcoin has surpassed $30,000. MicroStrategy's purchase price of $29,803 per bitcoin means that its 140,000 Bitcoin, worth over $4.2 billion, are now finally in the green. In other MicroStrategy-related news, the company owns 1 out of every 150 BTC that will ever exist. Considering that perhaps 4 million of the 21 million BTC may be permanently lost, MicroStrategy effectively controls about 1% of the actual circulating supply. It will be fascinating to see if these funds are put to good use, such as supporting the network, as Bitcoin's value continues to rise.
$100,000 Bitcoin, $10 Trillion Crypto Market Cap | Dan Tapiero
In this episode of The Wolf Of All Streets podcast, Dan Tapiero, a global macro investor and entrepreneur, shares his insights on the current state of the banking crisis, the future of cryptocurrency, and his experience as the founder of DTAP Capital and co-founder of 10T Holdings. Dan believes that the cryptocurrency industry will reach a market capitalization of $10 trillion and shares his Bitcoin price forecast with the audience. He also discusses some of the projects that his investment firm has backed in the digital assets space. Join us for an informative and thought-provoking conversation with one of the leading voices in global macro investing and cryptocurrency.
In this episode with Dan, we discussed:
Do you trust your bank?
Backstop = QE?
The rise of Bitcoin & Ethereum
The selling is finished
How will markets end 2023?
Bitcoin will reach over $100K
Where Dan Tapiero invests in?
Stablecoins is a thriving business
Ledger
Regulation
FTX
Crypto is huge
10 trillion ecosystem
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.