Welcome to The Wolf Den! This is where I share the news, my ideas about the market, technical analysis, education and my random musings. The newsletter is released every weekday and is completely FREE. Subscribe!
🔥 MELD is THE WEB3 BANKING STACK.
🔥 MELD is a Layer 1 blockchain and DeFi protocol for web3 finance, providing cross-chain lending, borrowing, and staking with integrated fiat banking.
🔥 Thank You for showing MELD some love, it keeps the Wolf Den Newsletter Free.
In This Issue:
The Truth Behind Order Books
Bitcoin Bullish Divergence Confirmed… Then Hidden Bearish Divergence
NVIDIA Reports Earnings Tonight - Hold On Tight
NFTs Continue To Bleed
Introducing DOP
Who Is Behind This Massive Wallet?
Did Vitalik Dump On Us?
World Mobile Launches Around The World On Google Play
Bitcoin Will Reach $40,000 This Year, ETF Will Take It To $150,000
The Truth Behind Order Books
With every seismic shift in the Bitcoin market, a crescendo of discussion arises surrounding the significance of staggering buy and sell walls on cryptocurrency exchanges. For those new to the terminology, envision these walls as towering orders dramatically positioned within the exchange's order book – the most authentic visual representation of market sentiment.
Buy and sell walls may seem haphazard, yet frequently, this phenomenon materializes around key psychological milestones, such as 20K, 50K, or 100K in the context of Bitcoin. At these levels, traders converge in a flurry of bids and asks, giving texture to the order book's landscape. Yet, in the midst of this orchestrated chaos, myths, and misconceptions surrounding buy and sell walls create complex narratives.
Conventional wisdom often paints sell walls as ominous signs, casting a cloud of bearishness over the market. Conversely, buy walls don the appearance of bullishness, hinting at an eager accumulation of the asset. This interpretation, however, is akin to mistaking the orchestra's tuning for the symphony itself. It's a narrative spun by the whales, who often manipulate these walls as pawns in their game.
Surprisingly, a sell wall frequently materializes not to catalyze a plunge in price, but rather as a deliberate pause – a temporary checkpoint allowing shrewd investors to swoop in and seize an advantageous position. A whale looking to sell would never place a large sell order, it is against their own best interest.
Conversely, a buy wall's role is to act as a buffer, stalling the descent and affording astute sellers the opportunity to offload their assets at their preferred price points. For the same reason as sellers, a whale looking to buy would never place a huge buy order.
Whales that have the intent of making larger move place hundreds if not thousands of small orders over an extended period of time to execute in the most cost-efficient way. Don't let narratives or the order book tell you otherwise.
In traditional financial markets, placing orders with no intention of execution, to manipulate prices, is prohibited and referred to as "spoofing." This practice, employed by traders is illegal in established markets. However, in the relatively unregulated world of cryptocurrency, such actions tend to fly under the radar. Do not interpret this as an invitation to engage in such behavior.
However, the true artistry of trading lies in the subtlety of execution. Michael Saylor may be known for making some “poorly” timed trades, but what he does do well is buy in bulk always undetected. If Michael Saylor can dodge market disruption, then we know for a fact that whales are capable of making large orders without causing undue turbulence. Disrupting the balance of the market is usually either a deliberate choice or forced selling in the event of a liquidation.
Take a look at what Michael Saylor said on a podcast, in late 2020, describing how he purchased Bitcoin.
“Last week I bought $1,000 worth of Bitcoin every second in the evenings and on the weekends...I bought $2,000 worth of Bitcoin during the day...I was not a green candle. The green candles were the other guys...I was just the guy lurking there buying $1k-2k per second.”
Now imagine what would have happened if Saylor had unfurled his entire order in one fell swoop – the market would have gone bonkers. The lesson here is clear: authentic market players, the ones who shape trends instead of succumbing to them, employ discretion. They parcel their intentions into manageable portions, thereby avoiding turbulence in the market's delicate equilibrium. Authentic market players don't build walls, they discreetly conquer them.
What this means for us, the small traders, is that watching the order book is akin to trying to unravel an extremely complex puzzle. This endeavor is more likely to induce confusion than enlightenment, particularly if not pursued with the tenacity of a seasoned professional with insider insight and top-notch tools.
Ultimately, the true art of trading transcends the order books. It's a fusion of skills, spanning from genuine technical analysis and a grasp of market cycles, to adeptly understanding fundamentals and skillfully managing emotions. So the next time there is a seismic move in the market, don't convince yourself the answer was sitting right in front of you in the order book. I promise that nobody except the participating whale truly knew it was coming.
Bitcoin Bullish Divergence Confirmed… Then Hidden Bearish Divergence
The good news is that we got bullish divergence coming out of oversold RSI on multiple time frames.
The bad news is that it was immediately followed by confirmed hidden bearish divergence,
Both are persistent and building. This shows indecision, likely a massive RSI reset after historic lows. After all, when RSI is 5, there’s no way to go but up, so divergence is almost inevitable if price makes another push down.
I would not be surprised to get another push lower. This would likely give us divergence on higher time frames and a much more convincing divergence here.
The bottom line? I got the signal I wanted, but not exactly how I wanted it. I am unconvinced until we get more clarity, which could come on another nice push down.
NVIDIA Reports Earnings Tonight - Hold On Tight
US equity futures are on the rise, particularly led by Nvidia, the chipmaker at the center of AI excitement, as investors eagerly await the company's earnings. In Europe, bonds rallied due to signs of a quickening downturn in the euro area, causing traders to reduce interest-rate hike expectations. Germany saw its fastest decline in overall activity since 2020, leading the euro to fall. Nasdaq 100 contracts rose by 0.7%, and Nvidia gained 1.5% in premarket trading.
Markets are also anticipating a speech from Federal Reserve Chair Jerome Powell at the Jackson Hole Economic Policy Symposium on Friday. Investors are watching for insights into interest rates and the strength of the US economy, particularly after the Fed's recent rate hike to its highest level in 22 years.
In Asia, mainland Chinese stocks faced pressure despite signs of earnings recovery among tech giants, while oil prices fell for a third day. Overall, the market's focus is on Nvidia's earnings and Powell's upcoming speech, with the former expected to show strong revenue and the latter to provide insights into future monetary policy.
Key events this week:
UK S&P Global / CIPS UK Manufacturing PMI, Wednesday
US new home sales, S&P Global Manufacturing PMI, Wednesday
US initial jobless claims, durable goods, Thursday
Kansas City Fed’s annual economic policy symposium in Jackson Hole begins, Thursday
Japan Tokyo CPI, Friday
US University of Michigan consumer sentiment, Friday
Fed Chair Jerome Powell, ECB President Christine Lagarde to address Jackson Hole conference, Friday
Stocks
The Stoxx Europe 600 rose 0.5% as of 10 a.m. London time
S&P 500 futures rose 0.5%
Nasdaq 100 futures rose 0.7%
Futures on the Dow Jones Industrial Average rose 0.4%
The MSCI Asia Pacific Index rose 0.4%
The MSCI Emerging Markets Index rose 0.1%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.2% to $1.0819
The Japanese yen rose 0.4% to 145.36 per dollar
The offshore yuan was little changed at 7.3001 per dollar
The British pound fell 0.4% to $1.2676
Cryptocurrencies
Bitcoin rose 0.7% to $26,030.11
Ether rose 0.9% to $1,644.41
Bonds
The yield on 10-year Treasuries declined six basis points to 4.26%
Germany’s 10-year yield declined 11 basis points to 2.54%
Britain’s 10-year yield declined 12 basis points to 4.53%
Commodities
Brent crude fell 0.4% to $83.69 a barrel
Spot gold rose 0.3% to $1,903.80 an ounce
NFTs Continue To Bleed
The carnage taking place in the NFT space is a sight to behold. If your an NFT holder and already aware of how dire the situation is, I suggest you skip this section, but if you are an outsider like me, take a look below. NFTs are hard to track, but I was able to make some rough calculations below on how the floor price has dropped from average all-time highs. If I am being honest, these calculations are generous because they are calculated from ATH averages, not true singular ATHs.
CryptoPunks: Floor Price = 47.29 ETH, -58.48%
Bored Ape Yacht Club: Floor Price = 24.44 ETH, -85.62%
Mutant Ape Yacht Club: Floor Price = 4.62 ETH, -87.015%
DeGods: Floor Price = 3.74 ETH, -61.44%
Azuki: Floor Price = 3.74 ETH, -85.04%
Doodles: Floor Price = 1.2 ETH, -94.8%
Brutal. It almost makes me want to buy.
Introducing DOP
When it comes to crypto and technology, there is an ongoing conversation that revolves around the concept of true ownership. While blockchains are often touted as offering anonymity, we can't ignore the fact that a 14-year-old armed with modest technical know-how can unearth more about us than we're willing to acknowledge.
This is why I want to share more about DOP, from Tomi, a platform I told you about before and have been very loosely working with to help spread the word. I truly believe in this.
Data Ownership Protocol (DOP), is a novel approach to data ownership. DOP allows users to exercise control over their data, selectively sharing information while maintaining privacy. It emphasizes features like selective data disclosure, professional information sharing, utility within the crypto ecosystem, governance involvement for token holders, and collaborations with developers and communities.
With DOP, you don't have to worry about your name showing up in a massive repository of over 100,000 other names with your wallet attached. The protocol aims to redefine the way individuals interact with their data, providing control, transparency, and value, ultimately reshaping the concept of data ownership.
Here’s an example:
Have you ever sent someone a crypto transaction? I am assuming the answer is “yes.” When you did that, you gave them your public wallet address. Access to this address gives the person who received the transaction a complete view of all previous and future activity. They can see how much money you have, who you have paid, what you have traded and more.
DOP solves this, by allowing you to keep your transactions private.
This is potentially a true game-changer.
Who Is Behind This Massive Wallet?
Over the past three months, an unidentified whale has accumulated more than $3 billion in BTC, ranking 3rd amongst the largest Bitcoin wallets, which has led to some pretty interesting theories. The top theories behind this wallet are that it belongs to either Gemini or BlackRock. The Gemini theory is that the exchange has been moving funds and is simply doing some basic routine work with their funds whereas the BlackRock theory is that the accumulation of Bitcoin is in line with the announcement of their spot ETF product. It is certainly far less likely the BlackRock theory is true, compared to the Gemini theory, but the idea does hold some water. Eventually, we will learn who is behind the wallet and hopefully, it is the latter.
Did Vitalik Dump On Us?
There’s an idea floating around that Vitalik has dumped his Ethereum on us, meaning he must know something we don’t about the market. This is insane. Yes, Vitalik did in fact sell some Ethereum from one of his public wallets, but the amount he sold was negligible when compared to what he owns. In his public wallets, it is known that Vitalik owns somewhere around 286,000 ETH, yet the amount sold was 600 ETH in total, representing 0.2% of his ETH holdings. Vitalik selling $1m worth of ETH is not something to be concerned about, end of story.
World Mobile Launches Around The World On Google Play
I am sharing this because I have come to view Mickey from World Mobile as a friend after meeting him earlier this year in Dubai. If you missed our podcast together, it is well worth a listen. I am sure you will also be inspired by what they are building! I love seeing actual adoption.
Here’s the actual news: World Mobile, a decentralized wireless network operator, has launched its app in the U.S., U.K., Australia, Canada, and Tanzania, expanding its services aimed at bridging the connectivity gap in underserved markets. Utilizing a combination of existing infrastructure, such as unused TV broadcast spectrums and SpaceX's Starlink, the app promotes blockchain-based sharing with its World Mobile Token (WMT) and other Cardano-based tokens. The Google Play launch features the latest app version, although some functions may vary due to regulatory constraints in different regions. Additionally, World Mobile has announced a partnership with AI and robotics firm SingularityNET to develop customer service solutions and explore an AI and blockchain-based lending and credit approval service.
Bitcoin Will Reach $40,000 This Year, ETF Will Take It To $150,000
Sean Farrell, FS Insight's Head of Crypto Strategy, delves into his insights on cryptocurrency trends and offers price predictions for Bitcoin and Ethereum. Meanwhile, Charlie Burton gives an update on his current trading activities.
Sign up for my other newsletter, THE DAILY CLOSE!
I built The Daily Close to give you the same institutional-grade indicators and signals that I use to trade the market on a daily basis. It's automatically generated and delivered to your inbox at the daily close everyday.
1 Week FREE for all subscribers
17% discount if you subscribe for a year
$25 a month, or $250 a year
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.