The Wolf Den #78 - Trades, Chart Requests, Banks + Crypto, More
The Wolf Of All Streets Podcast Ft. Joe McCann
Joe McCann, Microsoft Strategist, Professional Algorithmic Trader, and Creative Technologist started his career working doubles in a pizza shop. After studying philosophy and logic in college, he went on to develop algorithmic trading systems and manage millions in other peoples' money. He has successfully beaten the odds due to his appetite for risk and his ability to manage it.
Joe and I further discuss being DJs, transitioning from odd jobs to deep tech and finance. why he has “risk” tattooed on his wrist, Russian Roulette and risk management, ‘The New, New World Order,’ the relationship between trading, gaming and competing, the speed of disinformation campaigns, why what doesn’t kill you makes you stronger, the shift from land jobs to cloud jobs and so much more.
Investing Tip - Compound Your Interest
Do you want to be rich? This is the proper way to invest your money so it grows while you sleep
I wrote the above piece for CoinTelegraph last year about investing. I wish students would learn more about the power of compound interest in school, but our children rarely learn to be financially literate. The combination of compound interest and a long period of time to let it work its magic is shocking.
Many young people don’t feel the need to save or invest because they think they’ll do those things when they’re older. But the reality is, the younger years are the best time to save because of compound interest.
$3,600 contributed to a 401(k) in your mid 20’s could turn into more than $78,000 in 40 years, assuming an 8% return.
But if you invest the same $3,600 and only have 10 years to let it grow, it will only amount to $7,772 at the same 8% interest rate.
Those numbers are based on only one year of conservative saving. Imagine what could happen with several years of an aggressive commitment to save in your 20’s or 30’s. You can see some more numbers in the article above.
The FED Is Hiring
It appears that the FED is hiring in the blockchain space. Each of the job openings listed above seems to be soliciting talent with experience in this arena. This would seem to indicate that a digital dollar is a serious consideration in the United States. This is something we monitor closely. And maybe the reason they are doing it is this next article...
US Banks Can Custody Crypto For Clients
Huge, huge news. The Office of the Comptroller of the Currency (OCC) is letting all nationally chartered banks in the U.S. provide custody services for cryptocurrencies.
In a public letter dated July 22, Senior Deputy Comptroller and Senior Counsel Jonathan Gould wrote that any national bank can hold onto the unique cryptographic keys for a cryptocurrency wallet, clearing the way for national banks to hold digital assets for their clients.
The letter marks a major development for the crypto industry. Previously, custody was the province of specialist firms, such as Coinbase, which typically needed a state license, such as a trust charter, to offer the service to large investors. Now, large, regulated financial companies that already provide similar safekeeping services for stock certificates and the like could enter the fray.
The irony here is that, for money, the true purpose of having Bitcoin is as a hedge against the banks. But that's a topic for another day. It's bullish that average people can buy Bitcoin and feel that it is safe.
Bitcoin Cash And Litecoin Traded On The Stock Market
GBTC and ETHE have been wildly successful products for Grayscale, who have been famously buying up every coin they can get their hands on. They have purchased enough to match almost all of the Bitcoin and Ethereum mined this year.
"Grayscale Investments, a New York firm that makes cryptocurrencies available in the form of stocks, announced on Monday that regulators have given the go-ahead for the sale of two new cryptocurrencies to the public.
One of the newly listed stocks will represent shares of Litecoin, one of the oldest cryptocurrencies after Bitcoin, and the other is Bitcoin Cash, a controversial spinoff to Bitcoin launched in 2017. They are respectively the eighth and fifth biggest cryptocurrencies by market cap, according to Coinmarketcap.
The new stocks, which will trade under the symbols LTCN and BCHG, will be available to the general public in the next two to four weeks.
While cryptocurrency enthusiasts typically purchase Litecoin and other digital currencies directly on dedicated crypto exchanges like Coinbase or Binance, Grayscale has found a niche selling them in the forms of shares.
The Grayscale crypto products amount to shares in a trust that holds the underlying asset. Even though the Grayscale shares trade at a premium to the price of the asset, they have found favor with some institutional investors concerned about investing in Bitcoin and other crypto assets directly."
Current Security Threats And How To Mitigate Them
From my friend Panama Crypto. Yet another great resource on current security threats in the crypto space and how to make sure that you are not a victim.
The "Fed Put" 101
By Sahil Bloom:
If you’ve been following the financial media, you may have heard Mark Cuban on CNBC referring to the “Fed put” in the markets and its impact on asset prices. But what is the “Fed put” and how does it work? Here’s “Fed Put” 101!
When people refer to the “Fed put” in the markets, they are making reference to a put option. As we covered in Options 101 (refresher here), a put option gives the buyer the right, but not the obligation, to sell an asset at a set price by a specific date.
In this context, the phrase “Fed put” is used to refer to the notion that stock buyers believe they have an ability to sell their assets to the Fed at a good price at any point in the future. The Fed has been clear it will support markets, so the notion isn’t without merit!
As Mark Cuban points out, this contributes to asset price inflation. Why? The Fed put acts as a hedge (downside protection!), allowing for more risk-taking to the upside. If you’re at the casino and your rich friend offers to cover your losses, you bet bigger!
The “Fed put” isn’t new. It was originally called the “Greenspan put” - a reference to former Fed chairman Alan Greenspan, who first engaged in expansive asset purchases during the 1987 market crash. I would argue it dates back further, to the “FEDerico put” of 1500s Italy!
Central bank market intervention is a controversial and highly-relevant topic. I hope this primer helps you feel more educated on the subject. With apologies to my Austrian economists, that was “Fed Put” 101! Please share and send any suggestions for future topics.
Tools Of The Trade - New Trading Curriculum
My friends Crypto Iso and Zoran Kole have launched their new trading course. Here are a few words from them on what to expect and why to check it out:
Have you ever wondered if the Holy Grail Trading System exists?
Well, we regret to inform you that it unfortunately does not. However, developing a sound trading system isn't as difficult as you might think... Coding knowledge not required!
The Tools of the Trade curriculum is everything successful traders wish they knew when they first started trading.
Have you ever found yourself second guessing your trade setups?
Have you ever watched a winning trade turn into a loser due to greed?
The biggest culprit for most retail traders boils down to a lack of confidence & discipline. This fundamental understanding is essential for learning to develop a sound trading system with strict risk management.
The Tools of the Trade curriculum is a 4 part journey designed to create self-sufficient traders who can build their own successful trading systems. You know how the old saying goes: Feed a man a fish, he eats for a day. Teach a man to fish, he eats for a lifetime. This couldn't be more true as it pertains to trading. The courses in the curriculum aim to teach you the tools you will need to become a confident and disciplined trader. Profitability is never guaranteed; however, with a sound trading system you are one step closer to becoming a consistently profitable trader.
Still skeptical? I had the pleasure of sitting down with @Captain_Kole1 (who I may or may not have interviewed as a future guest on the podcast) to hear first hand how he used his college friend, Teddy, as a beta tester for the curriculum.
Teddy is a 20-something year old college graduate who had recently been laid off of his job due to Covid-19. Since he had more time on his hands and was collecting generous unemployment, Teddy decided to try his hand in trading.
Having never looked at a chart before, he reached out to Captain Kole for guidance. Serendipitously, Kole told Teddy about how he had spent the last 6 months developing a curriculum aimed at both experienced traders and newcomers like him. So he decided to become his mentor and take him under his wing. 12 weeks later Teddy had finished the 14+ hours of video content and was off to the races.
Here's what Teddy had to say about the Tools of the Trade curriculum:
"Captain Kole and CryptoISO have built a true gem. As someone with zero prior trading experience I was able to easily digest all of the material and learn the necessary skills to become a successful trader. Since taking the courses I have been able to create my own system and become consistently profitable."
Do you find yourself in the same shoes as Teddy? Or are you just looking to fine-tune your trading system? Then the Tools of the Trade is definitely worth checking out!
Bitcoin Thoughts And Analysis
I don't want to be a downer, but Bitcoin is still... sideways. It was nice to see a bit of volatility and volume come in, but very little has changed from the standpoint of market structure or a clear cut breakout.
Here is the weekly chart. Again. Price is ranging between the blue lines. Really meaningless price action in between.
The black checks are the highs and lows on this chart since the most recent top at around $10,400. Each black check represents a lower high and a lower low. A clear downtrend in that regard. The first blue check shows what appears to be another lower high. However, this was never confirmed by a subsequent lower low, hence the question mark on the chart. While we did just see price make a higher high than that blue check, it's not REALLY a higher high from the standpoint of true market structure. The first blue check should have seen another lower low. So, for our purposes, the last black check is actually the higher that needs to be broken to make a true higher high. Confusing, I know. That means a break above $9,792 would be a higher high since the recent top. Breaking that recent top would be a macro higher high and would end all bear cases.
The red line at $9,792 also is in close confluence with the blue line discussed on the weekly chart.
So nothing has happened. Many see this as just another opportunity to short. I see it as an opportunity to keep trading alts like a madman.
If you want some real bullish hopium, here is a cool comparison of Silver and Bitcoin
Altcoin Charts
It is still alt season. Bitcoin Dominance actually dropped yesterday with Bitcoin price rising - a real dream for alt traders.
I am having trouble finding any clear actionable trades at this exact moment, because most have either already taken off or are dropping after their move. I charted quite a few requests, and none looked really compelling. Thursdays have been slow for alt charts in the morning every week - it is what it is.
I'm heavily in a ton of coins right now, so not much more "new trading" happening for me today.
COMP/BTC
I am still in this coin and a bit underwater. I added to the position near the recent bottom, because I saw confirmed bullish divergence with RSI coming out of oversold. That has lowered my cost basis and brought me closer to even. That's not a sure thing, but it's my favorite indicator. Further, we can see price once again trying to break the blue resistance and make a move back up. I would not hold this below the recent lows, if I am wrong, I am wrong. But this looks good for a reversal here for now.
XRP/BTC
I hesitate to post XRP setups, because they tend to fail when Ripple sells huge amounts into the order book. It is what it is. That said, I posted this bull flag a few newsletter back and it has broken out. Still under the larger resistance, but a break of that immediate descending black line should lead to further price movement to the upside. Up to you whether you want to risk trading this, but the chart looks good.
XTZ/BTC
This is approaching a potential breakout, as discussed in the last newsletter. The trigger here is a break of the descending white line. LINK already made its move, this seems to often follow.
Legacy Markets
Our trades are going nuts. DYNT broke out, CODX is absolutely pumping, APT continues to run like a crazy person, CRON is way up and TUP is breaking out today (see Tuesday's chart). Gold and Silver are both absolutely raging. If you have been with me a while, you know that we have been posting entries for both since earlier this year.
DYNT (DYNATRONICS)
I am posting this again, because it broke out and came down to nearly test resistance as support. It could come back down for a more perfect retest, but it may not and now looks like a decent entry still. I am expecting big moves here assuming the market remains stable.
My Recommended Platforms And Tools
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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.
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Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
Chart Requests
BAT/BTC
BAT is in an interesting spot, sitting on a major ascending support line while consolidating in a bit of a bull flag. Really good risk/reward for a trade here, because you can cut it if the blue line breaks down. That would not make it "bearish" because price is still in bullish consolidation. It just means that their might be better entries below. The safest trade here besides buying blue support would be a break of the bull flag.
COMP/USDT
I like the BTC pair, which I am sharing in the altcoin charts. That said, this looks fine. It's presently sideways in a trading range after breakout the downtrend (blue line). There's not much price history, so really hard to see what is likely happening here. I would like to see price above the center of the trading range first, that would be a more bullish sign. A break above the range would be a true breakout for me.
COTI/BTC
I wish I had stayed in this from way below, but we had some great trades on this pair. You can see that price temporarily rose above the previous all time high, of 455 but is currently trading below. I personally would want to see price trading above that to give confirmation that this is likely to continue. The red line at 382 was never tested as support, so if this drops, I would look for an entry there. Does not seem so likely, but definitely possible. Otherwise if you zoom in, price is clearly consolidating after a massive move up - no reason to believe that the overall trend is turned. Bullish.
ETH/BTC
You likely know by now that I have been buying Ethereum this year like a mad man, far more than Bitcoin. As you can see yesterday, Bitcoin rose and Ethereum managed to rise even more. Awesome. This chart has been bullish - the red arrow shows a bull div that was oversold which signaled this entire last move. Now price is at a key resistance - so the best entry would be a break of that and retest as support. This chart is just really bullish, honestly.
EWT/BTC
People have been requesting this for months and there is FINALLY a chart on tradingview. There's very little price action, hard to read so far - I had to go to the hourly. That said, we can see some clear levels forming. I want to see the top red line hold and the blue resistance broken for a sign that this is bullish consolidation. Then it's price discovery, so good luck!
KNC/BTC
This is parabolic and consolidating. Probably will continue up, why not!? Key levels are marked for support and resistance, so you can play this from level to level. Not much more to say.
NEXO/BTC
No trade zone here. It did a 2X from the time I first posted it, but now it failed to hold that top zone as support and has retested it as resistance and dropped. Now it is in no man's land. I would personally look for entries below - a bounce off of that ascending blue line would be awesome if it happens to go down that far. For now, that looked like a clear top. That could change fast.
OGN/BTC
I don't see much here on the daily. Perhaps a large symmetrical triangle forming, so the trade for a long would be a bounce off of the bottom (which also coincides with the P pivot) or a break of the top descending blue line. A riskier trade is an entry now at the red line, which is a local resistance to support flip.
PLUG (PLUG POWER INC.)
This looks like it topped out and is consolidating. An entry at the red line would be interesting if it drops that far, but no reason to think it will for now. Key areas are marked, but this does look like bullish consolidation. Above the top black line would be the safest bet if it continues up. That would target 29.50 (not shown)
REN/BTC
This had a CLEAR top, with massive bearish divergence on the daily in overbought territory. It did over a 2X from my last setup, which was awesome. This is a tough read for me now. We expect RSI to go to oversold again at some point, which would indicate further downside. I would still like to see the white line, the previous all time high, tested as support. I don't see any real entries in this immediate area. I have bids around the white line.
SC/BTC
I have no idea, honestly. Very hard to read this chart and see anything interesting. Level are marked, seems to be below resistance now. Back above 44 and this becomes interesting.
SILJ (ETF JUNIOR SILVER MINERS)
Silver is bullish and so are all things silver. That said, this is parabolic between levels, so hard to see an entry. Either a drop to the black line below is great or a break of the black line above and test as support. Look at that VOLUME though. Definitively bullish.
STEEM/BTC
I really don't like this chart. Clear pump and dump and then sideways. There's no way to analyze this, in my opinion. It's clearly consolidating and trading in a tight range, but hard to give any good reason why it will go either way. Sorry, but some charts are just not worth looking at.
TT/BTC
This was a bit of a tough chart, lots of ways to draw descending lines and none are great. This was the best I could come up with. Descending wedge, so should break to the upside and head towards the top of the pattern. For now, we want to see a real break of that descending blue line on volume.
VET/BTC
This had a clear top, with bearish divergence in overbought territory. That said, volume has dropped as it has consolidated and RSI went all the way to oversold. This should eventually head back up. I would trade a break of the descending blue line.
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.