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In This Issue:
The Game Just Changed
You Don’t Want To Miss This
Bitcoin Thoughts And Analysis
Ethereum FINALLY Reverses
Altcoin Charts
Legacy Markets
Celsius Is Ready To Begin Recovery
"I Don't See a Reason for the SEC to Deny the ETH ETF," said Bloomberg Analyst Eric Balchunas
CME Surpasses Binance In Futures Open Interest
Waiting To Buy The Bitcoin Dip? Good Luck! l Alex Krüger
The Game Just Changed
Some intros feel really good to write. This is one of them.
Suddenly, amidst the surging expectations surrounding the Bitcoin spot ETF, BlackRock, the world’s largest asset manager, shocked the financial world by filing for a spot Ethereum ETF. This development has undeniably altered the game. If there ever was a fundamental trigger capable of stirring Ethereum from its slumber, this unequivocally serves as the most epic catalyst.
Just to clarify, BlackRock isn't the pioneer among asset managers to file for a spot Ethereum ETF. Back in October, Grayscale beat BlackRock to the punch by filing to convert its Ethereum trust (ETHE) into an ETF, followed by Ark Invest, 21Shares, and VanEck, preceding Grayscale. My guess is that it's reasonable to anticipate a fresh wave of registrations now that BlackRock has joined the mix, akin to the trend we witnessed with Bitcoin.
The similarities between Bitcoin and Ethereum are evident, yet certain distinctions will emerge. Let's take a moment to explore these differences briefly.
Unlike Bitcoin, Ethereum integrates staking as a fundamental element. Asset managers are aware of the possibility for the Ethereum they custody to participate in staking, presenting a new and favorable dilemma of managing the generated yield. I anticipate that investors will not be content with merely holding shares of a spot ETH ETF without reaping the benefits of their investment. Asset managers will probably impose a fee for the ETF, potentially a larger one, yet they'll likely have to distribute the staking yield if the ETF permits such participation. We will learn more about this as the details of the filings are released.
Of course, this is speculative and likely a consideration for the future, but it’s a tangible reality. A spot Ethereum ETF distinctly stands apart from a spot Bitcoin ETF, introducing a new and potentially lucrative layer of complexity.
This prompts the following question: How imminent is the arrival of a spot Ethereum ETF? While this is an exceedingly challenging question, I'll venture into it nonetheless. BlackRock's registration of a new crypto product implies heavy confidence in the imminent approval of their Bitcoin ETF. The initial application for BlackRock’s Bitcoin ETF was submitted around five months ago on June 15, and indications suggest its potential approval within the coming two months. This leads me to conflicting notions: the likelihood that Ethereum will present its own unique challenges, demanding additional time for approval, and the prospect that if the SEC greenlights the Bitcoin ETF, embracing Ethereum might be more palatable. Once the Bitcoin ETF is finished, the full force of asset managers will pivot attention towards Ethereum, fostering a similar level of momentum as seen with Bitcoin.
My crystal ball is begging me not to say this, but my guess is 6 to 12 months.
Don’t shoot the crystal ball reader!
So far, we have talked about the applicants, what makes Ethereum different, and a possible timeline. Let’s now shift gears to price.
Back on October 24, I penned an introduction titled 'Buy The Rumor, Buy The Dip After The News,' a playful twist on the saying 'Buy the rumor, sell the news.' During that time, Bitcoin was trading at $34,000, a climb from $30,500 the previous day. The essence of my intro centered around the notion that the behavior of Bitcoin prior to ETF approval would significantly influence its reaction post-approval. Just before that introduction, the SEC had been actively rejecting ETF applications due to the impending government shutdown. However, on that day, a false approval news story triggered FOMO buying, propelling the price higher.
Presently, sentiment is notably heightened due to unfolding developments, further increasing market anticipation. I anticipate a parallel sequence of events for Ethereum. The greater the run-up of Bitcoin and Ethereum before their respective approvals, the more I expect a subsequent pullback or at least diminished returns once the immediate hype settles.
My crystal ball is also begging me not to say this, but fundamentally, there is very little holding Ethereum back now from recovering to at least half of its all-time high, which is about $2,400. From a technical perspective, the chart is showing higher on the breakout.
Admittedly, I could be way off the mark on these predictions, and I have no intentions of seeking short positions. However, the current market volatility, especially with the entrance of major players, is already proving to be quite evident. Additionally, it's worth noting that retail investors are still nowhere in sight.
Let's now delve into the topic of volatility. I don't expect institutions to just make a few dips and splashes in the pool. I anticipate their buying strategies to be methodical, but there will be volatility as major players bump into each other in a tight space. On the opposite spectrum of institutions is retail, which seems to still be radio-silent at least among my friends, family, and day-to-day contacts. It's become a sort of social experiment for me, observing the sentiment towards crypto in the world around me, and so far, I've gathered no data— and strangely, I find this really exciting. When retail does finally show up as institutions are already here, the resulting volatility will be epic.
In the not-so-distant future, there will be a day when Bitcoin and Ethereum have $10,000 and $1,000 respective upswings - candles you won't want to miss.
My gut tells me that yesterday marked a turning point for Ethereum as it starts to shake off negativity and begins its ascent against Bitcoin. Do keep in mind though that there is no such thing as competition between Bitcoin and Ethereum or any set of assets. Ethereum investors have long awaited a breakthrough, and it's truly refreshing to witness their success.
Standing by Ethereum while Bitcoin stole the limelight was no simple feat; investors staked more than their assets, they staked their reputations, and BlackRock's recent move has come to their rescue. I eagerly anticipate celebrating the major and minor victories as Bitcoin secures approval and Ethereum paves its own path. Today represents an unparalleled time for crypto investors. Although I foresee unforeseen challenges during this bull cycle, I expect the arrow to remain pointed up.
You deserve it, we deserve it, and the world deserves it.
I’ve been beating the ETH drum in the newsletter this entire time. I even wrote an intro last week saying that Ethereum was the “most hated asset,” and now…
We are F****ing WINNING.
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Bitcoin Thoughts And Analysis
Holy rejection Batman. Holy bounce, Batgirl.
Bitcoin was squarely rejected at the most significant resistance on the chart (blue zone) - the $38,000 area. What does this area matter? Because this is where price was right before the LUNA collapse and the contagion of 2022. A move above this level will effectively erase all of the downside of the 2022 disaster. There are likely endless traders and investors looking to take profit in this area and run for the hills.
The news to me is not the huge drop when it hit $38,000 (to around $35,500), but the continued strength after... and the larger drops on altcoins and their huge bounces.
This is a BULL MARKET for now, so dips are for buying.
Ethereum FINALLY Reverses
The above 4-hour chart shows what happened right after the ETH Spot ETF news was announced. We had insane volume and a spike in under an hour, with Ethereum finally bouncing on the Bitcoin pair. It is naturally dropping now as traders absorb the news, but I think that we are finally seeing the reversal that I have been anticipating for so long.
Do you remember the weekly chart that I have shared multiple times? This shows that ETH was oversold on RSI for only the 4th time EVER against Bitcoin, while we had unreasonable fear, uncertainty and doubt.
Altcoin Charts
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.
Wow. Yesterday saw Bitcoin rejected at $38,000 and some altcoins dropped as much as 30% in a matter of minutes… and then quickly rebounded! What a day. Most of those coins dropped right to (and temporarily through) support levels that I have been sharing. The dips we were waiting for happened in a flashm, showing why you need your bids set and ready for anything.
Here are a few examples.
EGLD
This one missed support by an inch.
ALGO
Seriously?
HBAR
Perfect.
I think you get the idea… as I CONTINUE TO SAY - DIPS ARE FOR BUYING IN CRYPTO. This was a chance to buy quite a few, at huge discounts, but the sale only lasted a few minutes,
Be prepared for these moves!
Legacy Markets
Global stock markets declined following Federal Reserve Chair Jerome Powell's remarks indicating potential further hikes in interest rates. How ridiculous.
The Stoxx 600 fell 0.6%, with significant drops in shares of companies like Diageo Plc and Richemont. This decline was partially attributed to disappointing corporate reports. In contrast, energy shares rose as WTI crude oil prices increased.
Nasdaq 100 futures also experienced a slight decline. The 10-year Treasury yield remained stable around 4.63%, despite an earlier surge due to concerns about higher interest rates and a weak 30-year note auction, raising worries about the market's capacity to absorb new debt.
Powell emphasized the Fed's readiness to tighten monetary policy if necessary to control inflation. In the UK, the pound weakened despite data suggesting the economy might avoid a recession this year. The UK's currency struggles also relate to the Bank of England's position on not needing further rate hikes.
Investors are now looking forward to statements from ECB President Christine Lagarde and Federal Reserve officials Lorie Logan and Raphael Bostic. In corporate news, Trade Desk Inc.'s stock plummeted 27% in premarket trading due to weak sales projections, and the US unit of Industrial & Commercial Bank of China faced a cyberattack, affecting its ability to clear US government bond trades.
Key events this week:
ECB President Christine Lagarde participates in fireside chat, Friday
US University of Michigan consumer sentiment, Friday
Dallas Fed President Lorie Logan and her Atlanta counterpart Raphael Bostic speak, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.8% as of 9:49 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures fell 0.1%
Futures on the Dow Jones Industrial Average rose 0.1%
The MSCI Asia Pacific Index fell 0.9%
The MSCI Emerging Markets Index fell 0.9%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro rose 0.1% to $1.0679
The Japanese yen was little changed at 151.42 per dollar
The offshore yuan was little changed at 7.3003 per dollar
The British pound was little changed at $1.2222
Cryptocurrencies
Bitcoin was little changed at $36,529.88
Ether rose 2% to $2,100.4
Bonds
The yield on 10-year Treasuries was little changed at 4.63%
Germany’s 10-year yield advanced seven basis points to 2.72%
Britain’s 10-year yield advanced six basis points to 4.33%
Commodities
Brent crude rose 1% to $80.80 a barrel
Spot gold fell 0.2% to $1,954.96 an ounce
Celsius Is Ready To Begin Recovery
I'll be honest, my focus is currently elsewhere, making it challenging to write this segment. However, this news remains pertinent! As reported by Bloomberg yesterday, Celsius has secured approval in bankruptcy court to transform its enterprise into a Bitcoin (BTC) mining company owned by creditors. Who saw this coming a year ago? Furthermore, the proposal involves former frozen account holders receiving cryptocurrency and stocks in the restructured company by early 2024. Please read the following paragraph for some details of this release.
“According to court documents, the settlement will distribute Celsius’ CEL token at a value of $0.25. Earlier developments in the case saw various customers and creditors object to a CEL distribution because of the token’s reduced value. However, Celsius and its unsecured creditors committee argued for this approach, and U.S. Bankruptcy Judge Martin Glenn ultimately ruled that a distribution using the CEL token is reasonable.”
The last crucial detail in this segment is that the SEC still needs to approve the bankruptcy court’s plan. The presiding judge has urged the SEC for a prompt decision. However, at the moment, creditors are left with no choice but to wait and hold their breath. Lastly, for those who are curious, Mashinsky's criminal trial is scheduled for September 2024. Maybe he and Sam can share a cell.
"I Don't See a Reason for the SEC to Deny the ETH ETF," said Bloomberg Analyst Eric Balchunas
ETF expert Eric Balchunas recently said the following on the Defiant Podcast: “I don't see any reason for them to deny Ether given they have approved Ether futures. They could open themselves up to another lawsuit." However, that being said, one of the factors holding Ethereum back is the following, said again by Eric: “Most people don't get Ethereum, whereas Bitcoin, they can be like, okay, got it, digital gold. Time and time again, advisors have generally shunned more complicated things they don't understand.”
Both Eric Balchunas and James Seyffart have provided exceptional coverage of the ETF developments, serving as primary sources for a significant portion of my content. I eagerly anticipate their predictions and insights being proven right as the Bitcoin ETF gets approval, and Ethereum follows along a similar successful path. Blue skies ahead.
CME Surpasses Binance In Futures Open Interest
This is something that I have been pointing at for quite a while, and now it has become reality. If you ever need evidence that the institutions are here and are active, than this is it.
Waiting To Buy The Bitcoin Dip? Good Luck! l Alex Krüger
Crypto Twitter and Fintwit favorite Alex Krüger joins to discuss the macro picture, the newly anointed bull market, and why you may not get the dip you are waiting for.
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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.