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In This Issue:
Breakpoint
Bitcoin Is Still Pushing
Is HBAR The Next Layer 1 To Run?
Powell Indicates That The Tightening Cycle Is Ending
Futures Trading Is Finally On Coinbase
The SEC Charges SafeMoon
‘Uptober’ Was A Success
Bitcoin Rally Confirmed As Institutions Prepare For ETF Approval
Breakpoint
A watershed moment is a critical turning point or event that marks a significant change or development in a particular situation or field. It's a metaphor derived from the geographical concept of a watershed, which is a dividing line separating two areas where water flows into different rivers, basins, or drainage systems.
Solana’s watershed moment is now.
In a competition measuring the severity of a bear market, Solana would undeniably contend for the grand prize. The recent bear market proved to be a make-or-break period for Solana. At one point, the blue-chip coin, aka ‘the Ethereum killer,’ was beaten into life support while the community fervently strived to prove Solana was a shining star amidst a lackluster backdrop and endless mocking. It appears the game has changed.
This intro is the story of Solana's watershed moment.
Before delving into Solana, allow me to briefly outline some of Bitcoin’s watershed moments in history so you can see where I am going with this. Watershed moments are not singular occurrences, but pivotal events that happen across an asset's lifecycle. For Bitcoin, these pivotal moments included its first halving, the fork wars, the significant price surge in 2017,El Salvador’s adoption, and notably, the upcoming approval of an ETF. In my perspective, each of these events represents pivotal turning points for the #1 asset.
*I’m sure you can point to alternative watershed moments for Bitcoin, but you get the point.*
Returning to Solana, I firmly believe that right now marks a defining moment for the asset. Most of the altcoins previously aligned with Solana will not achieve what Solana has just accomplished. Unlike many other coins in its category, Solana faced substantial challenges, including criticism for its reliance on venture capital support, doubts regarding the sustainability of its growth, controversies involving key figures like SBF, FTX, and Alameda related to fraud and bankruptcy, the departure of significant NFT projects, network outages, controversy around the ‘Master of Anons,’ token unlocks, and a myriad of other concerns.
As a result of these challenges, Solana experienced a steep decline in market value, losing 95.7% of its value from its ATH. This drop put Solana in a precarious position; the asset had to recover from a significant loss just to catch up to the majors it wanted to play ball with. Bitcoin and Ethereum dropped 75.8% and 74.9% respectively, but 95% is a league of its own for a major asset. To put this in perspective, Solana needed roughly a 5x increase to be down 75% instead of 95%. That is a big mountain to climb just to catch up to Ethereum and Bitcoin, even in crypto.
On that note, this next paragraph is the most important thing I’ll say in today’s newsletter:
The twist here is that Solana encountered these challenges due to its rapid adoption during the previous bull run. If Solana hadn't attained significant milestones, it wouldn't have experienced such a hard fall—a narrative shared among successful assets in their early stages of life. Solana has bounced back with a vengeance.
So that’s the story of Solana, let’s now discuss what’s current.
The name of this newsletter, Breakpoint, was really just an Easter egg for the die-hard Solana followers who know that the Breakpoint conference is happening right now in Amsterdam. Although I'm not attending the conference and don't attribute the price surge directly to the event, I am impressed by Solana's return from hell, clocking in +350% from the bottom.
For those of you who know me, you know I've consistently favored Ethereum over Solana due to its compatibility with my risk/reward preferences, and I'm not one to jump on the bandwagon. Nevertheless, a healthy price surge is undeniably exciting as it often hints at potential movements for other assets. Moreover, strictly comparing Solana to Ethereum or Bitcoin is a limited mental approach. Ethereum's price trajectory was notably different—it didn't encounter as sharp a decline and didn't consolidate on support for such an extended period, resulting in a wholly distinct chart. On another note, kudos to Wick for acing his Solana setup mentioned in the newsletter a few issues back.
You can learn more about Trading Alpha HERE.
Getting back on track, it's a breath of fresh air to witness Solana holders finally triumphing, especially after the enduring challenges this community weathered during the bear market. For Solana, securing an early win was crucial for any possibility of the asset returning to all-time highs or generating a reasonable return in this bull market. While I believe many altcoins will surge during a proper altcoin season, achieving standout victories is imperative for an asset aiming to emerge from a significant downturn or even catch up to the recoveries of Bitcoin or Ethereum.
I have nothing but respect for the Solana community and wish it the best moving forward. What once resembled an epic downfall is now looking like an epic comeback. Just remember, don't measure your gains against other coins. Instead, invest in what aligns with your strategy and patiently allow the market tides to rise. The worst move you can do right now is FOMO into Solana without proper conviction and miss out on other coins preparing to take off. With thorough research and diligence, your investments will set sail.
Bitcoin Is Still Pushing
Bitcoin broke above the local range, making a new yearly high in the process and reaching as high as $36,000 on some exchanges.
As you can see, it has now tested that range high resistance as support and is currently trading above.
There’s still a LOT to lik on the Bitcoin chart, I see no reason to turn bearish for now.
Is HBAR The Next Layer 1 To Run?
For those who are new here, I share SETUPS and not SIGNALS. These are ideas that I am watching - if a certain thing happens, then the trade triggers. I am not telling you what to buy or when. I am showing you how I am watching certain charts and what has to happen for me to take a trade.
We are in narrative season, and Solana has led the layer 1 pump, with NEAR following yesterday. Almost all of the coins that have made solid moves are overbought, some with bearish divergence forming. I am looking for coins that have not made large moves yet that fit the narrative, like HBAR.
As you can see it is at resistance at .0550. The ideal trade for me here would be a break above and then retest as support on the daily chart, although I could see buying the break itself. We do not have overbought conditions yet or bearish divergence. This is a layer 1. You get it.
We have confluence with Trading Alpha, which shows price trading above the trackline, with green dots and candles rising.
*I do not own HBAR.
If you like this analysis and want more like it, use the link HERE, to sign up for Trading Alpha.
Powell Indicates That The Tightening Cycle Is Ending
Stocks experienced a surge as investors interpreted the Federal Reserve's potential end to its historic rate hikes. Europe’s Stoxx 600 index witnessed a significant boost, primarily from real estate stocks sensitive to rates, marking its most extended winning period since July. Concurrently, U.S. equity futures indicated further gains, and Asian stocks were on track for their most substantial increase in nearly four months. Pharmaceutical company Novo Nordisk A/S reported a substantial third-quarter sales increase, driven by its popular obesity and diabetes medications. Additionally, Shell Plc experienced gains after speeding up its share buybacks due to an uptick in third-quarter profits. While Apple Inc. is set to announce its U.S. earnings soon.
The Federal Reserve, after holding off on Wednesday, has suggested the possibility of another rate increase. However, the surge in long-term Treasury yields might diminish the need for further tightening. The Bank of England is expected to maintain its high-interest rates on Thursday, given the signs of a weakening UK economy, labor market, and inflation.
Florian Ielpo from Lombard Odier Asset Management commented on the Fed's recent stance, noting it aligns with a moderate growth scenario. The market perceived this as a signal that bad news might actually be favorable. Subsequent to the Fed's decision, U.S. yields had already started to decline when the government disclosed its borrowing plans for the next quarter, which were slightly less than anticipated. This brought relief to investors concerned about excessive debt issuance. Meanwhile, a measure of U.S. factory activity didn't meet expectations, raising alarms about a potential economic downturn.
Asian currencies, especially the South Korean won, experienced growth, and the region's stocks displayed signs of recovery. This was a relief to investors who had been anxious about the prolonged high U.S. rates and the continuation of hikes into 2024. Since the end of July, Asian stocks had decreased by over 12%.
Federal Reserve Chair, Jerome Powell, emphasized the recent tightening financial conditions, attributing them to factors like rising long-term bond yields. He frequently mentioned the committee's cautious approach, indicating a low chance of immediate policy changes, and acknowledged the increased risks as the tightening phase draws to a close.
Lastly, U.S. employment data showed mixed results. Job openings exceeded predictions based on the latest JOLTS data. However, ADP's private payroll figures reported fewer new positions than expected. The initial jobless claims figures will be disclosed later Thursday. On the commodities front, global benchmark Brent crude oil prices surpassed $85 per barrel, recovering after a nearly 5% drop in the past few days.
Key events this week:
Eurozone S&P Global Eurozone Manufacturing PMI, Thursday
Bank of England interest rate decision. Governor Andrew Bailey holds news conference, Thursday
US factory orders, initial jobless claims, productivity, Thursday
Apple earnings, Thursday
China Caixin services PMI, Friday
Eurozone unemployment, Friday
US unemployment, nonfarm payrolls, Friday
Canada employment report, Friday
Here are some of the major moves in markets:
Stocks
The Stoxx Europe 600 rose 1.4% as of 8:52 a.m. London time
S&P 500 futures rose 0.5%
Nasdaq 100 futures rose 0.6%
Futures on the Dow Jones Industrial Average rose 0.3%
The MSCI Asia Pacific Index rose 1.4%
The MSCI Emerging Markets Index rose 1.6%
Currencies
The Bloomberg Dollar Spot Index fell 0.3%
The euro rose 0.3% to $1.0604
The Japanese yen rose 0.4% to 150.42 per dollar
The offshore yuan was little changed at 7.3321 per dollar
The British pound rose 0.1% to $1.2166
Cryptocurrencies
Bitcoin fell 0.4% to $35,306.23
Ether fell 1.3% to $1,831.95
Bonds
The yield on 10-year Treasuries declined one basis point to 4.72%
Germany’s 10-year yield declined five basis points to 2.72%
Britain’s 10-year yield declined eight basis points to 4.42%
Commodities
Brent crude rose 1.4% to $85.79 a barrel
Spot gold rose 0.2% to $1,987.46 an ounce
Futures Trading Is Finally On Coinbase
In August of this year, Coinbase Financial Markets received approval to introduce futures trading to its U.S. clientele, and the much-anticipated product has finally been launched. Tailored explicitly for retail traders, these contracts come in nano sizes: 1/100th of a Bitcoin and 1/10th of an Ethereum. They are accessible through Coinbase’s Advanced platform and necessitate an application for approval. Presently, the product is solely accessible via the web, although Coinbase has revealed plans to expand its availability to mobile platforms. Given the substantial scope of futures trading, I foresee this product becoming a significant profit earner for Coinbase in the long run.
The SEC Charges SafeMoon
As numerous individuals have highlighted on Twitter, SafeMoon never lived up to its name, failing to reach the moon and never once being safe. News broke yesterday that SafeMoon's executives—John Karony, Thomas Smith, and Kyle Nagy—have been arrested and charged by the SEC for allegedly orchestrating a "massive fraudulent scheme." This really isn't a shocker.
According to the SEC's press release, the funds supposedly 'safely' secured in the SafeMoon liquidity pool were utilized for purchasing luxury items such as McLarens, luxurious residences, and extravagant travel. At one point, price did actually make a shot for the moon, but the asset never stuck the landing. It was all a scam and props to the SEC for taking out the garbage.
The only way this space moves forward is if a harsh precedent is set against the real scammers. SafeMoon executives deserve ample time behind bars. This might be one of the rare cases in which the crypto community and justice system see eye-to-eye.
‘Uptober’ Was A Success
Bitcoin has reached its highest monthly closing figures since May 2022. To provide some context, the price of Bitcoin opened the month of October at $26,967.40 and closed at $34,667.78, signifying a notable 28.5% increase. Interestingly, November historically stands as Bitcoin's strongest month of the year, not to October, which we like to call ‘Uptober.’ If November outperforms October's 28.5% surge, Bitcoin could potentially reach approximately $44,720, which would mandate November being rebranded to ‘Moonvember.’ Just a fun idea to consider.
Also, how nice of Michael Saylor to announce MicroStrategy’s $5.3M October Bitcoin purchase on the first of November. Michael Saylor is in the running for this generation greatest investor.
Bitcoin Rally Confirmed As Institutions Prepare For ETF Approval
I am joined by Mike Alfred and Noelle Acheson to discuss the impending ETF approval and the FOMC decisions today.
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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.