The Wolf Den #90 - Trades, Requests and News
Bitcoin Thoughts And Analysis
Bitcoin seems to make strange and crazy moves every Tuesday and Thursday morning EST when I am doing analysis for the newsletter! This seems very difficult to trade at the moment, and there's very little to share that is new from Tuesday. Some days there's just no way to really analyze Bitcoin.
I exited (shared on twitter) my long yesterday around $11,500 and am feeling good about that decision.
4 HOUR CHART
Look at this 4 hour candle. What a joke. It pumped just past descending resistance (bit of a bull trap) and almost to the 50 MA. Then it fell back below the 200 MA and now is a crazy dragonfly below all of the local supports.
Good luck figuring that one out. This is nearly impossible to analyze. You could view this candle as "bullish" if you consider price to be in a downtrend and we see a green candle next. You can consider it "bearish" because there was a ton of selling into the move and it appears to be engineered liquidity for shorts.
Hourly shows a clear descending channel. That is bullish and should eventually break to the upside. It's perfect. That said, price can drop to the bottom of the channel and remain bullish, so I am looking for longs there if it happens. That would also be in confluence with key monthly and weekly levels and the major line at $10,540.
Bottom line here: I still would not be surprised to see a drop to $10,500 to $10,800 and will be looking for longs in that area.
Altcoin Charts
The altcoin market continues to look shaky and be rough to trade. I am watching a few things, but there is nothing jumping out that is really compelling. I will share some ideas, as usual, but I have not been trading alts very much. I have also noticed a dramatic drop in charts and ideas being shared on Twitter, which is a great indicator that people are nervous.
The PNT trade that I posted (inverse head and shoulders) went crazy today, exceeding the target quickly in a single candle. My alarms went off, but I was asleep and completely missed it myself. There was no great retest (yet) to speak of. It hit its target, so in my mind the trade is "finished." That said if it comes back down to that red line, it should bounce and continue up. This is a clear reversal pattern and looks like an asset now where dips are for buying.
QTUM also went ballistic on Tuesday, while the other trades I shared are all seemingly treading water. It's been a rough market, but I am still in them.
Here are some ideas that I am watching. Remember, many may never come to fruition at all. I set the alarms on the areas of interest and take what comes.
DOT/BTC
DOT is the hottest new thing in crypto, so it bears watching. I find it hard to trade something with so little price history, but it's hard to be bearish on this fundamentally. Also, there's a really tight invalidation for a trade in this area - a break down of the red ascending support.
So, I took a trade here, even if I am not sure it will go up. Why? Because the upside is nearly unlimited and the downside (a break of that red line) is small. My position is not huge, the loss will be small if it breaks down.
More likely, we want to see the black line around 510 hold.
Again, this is risky, but low risk and high reward. That's what we look for in trading. We can be wrong on 10 of these if we are right on 1.
ERD/BTC
I am always watching Elrond. It is setting up much like the PNT chart above, which is what grabbed my interest. Again, an inverse head and shoulders is JUST AN IDEA until the neckline (red) is broken. I have an alarm set on that line in case it breaks. We also have a clear resistance at 171 that needs to be broken to feel bullish. Flipping that to support after these wicks have failed would be a really positive step. Finally, you can see price is in the blue trading range. We want to see price at least above the EQ (Equilibrium, center dashed line) of that channel. A bounce near the bottom could be a good but risky entry as well.
WAVES/BTC
Waves had a huge weekly candle two weeks ago, hit overbought on weekly RSI and is finally resetting. You can see that it lost support, which is not ideal. That said, the entry I have been looking for and discussing is a retest of the black line below at 1872, or more likely a bounce off of the top of that blue ascending channel which was confirmed and broken. The 2 recent weekly candles are not ideal, but zoomed out this is a very bullish chart in my opinion. This looks like retracement after a strong breakout, so I am interested in finding a decent entry if it drops.
Legacy Markets
The economy looks bad but the stock market looks good. Welcome to 2020. People are still losing jobs by the millions, the FED is officially (as of today) allowing inflation to rise and the global economy looks like crap.
But stocks are raging.
Tuesday's trades from AMD are looking amazing - Microsoft hit both targets in less than two days and Nike is moving.
Let's take a look below at the dollar and the SPY.
DXY (USD)
In the words of the Wu Tang Clean, C.R.E.A.M. - Cash Rules Everything Around Me. The dollar is the key to trading every other market at the moment. As I have shown a number of times, Bitcoin clearly moves inversely to the dollar. Dollar strength = bitcoin weakness right now and vice versa.
That means this monthly candle on the dollar is important. At present, it still looks likely to close below support of a channel it has been in for over a decade. If that happens, we would expect a move up (temporarily bad for BTC) to test support as resistance and then a major, sustained drop. If it closes above, could get ugly for crypto, gold, silver and the stock market. Eyes on the dollar (dollar dollar bill y'aaaaalll)
SPY
What is there to say? The stock market is hitting all time highs on decreasing volume, which should lead to a reversal but... the Fed keeps on printing. There's no reason to fade the stock market now, they will probably pump this right through the election. I can't really trade it effectively, just going to keep averaging in and enjoying the gains while they last.
The Eiffel Tower Con
Written by Sahil Bloom:
In 1925, a handsome 35-year-old con artist made a fortune selling a famous piece of French real estate. The item for sale: The Eiffel Tower. Who's up for a story?
Victor Lustig was always looking for his next score. Born in 1890 in Austria-Hungary, Lustig had built a vibrant career out of audacious scams and cons. He had a mesmerizing charm and possessed an air of nobility. He took to calling himself Count Lustig.
Fluent in 5 languages, he sailed on transatlantic ocean liners, scamming wealthy passengers along the way. But in 1925, he started to think bigger. While staying in France, Lustig read a newspaper describing the maintenance problems facing the Eiffel Tower. He had an idea.
The Eiffel Tower was constructed in 1889 as the entrance to the 1889 World's Fair. At the time, it was the tallest man-made structure in the world. But by 1925, its annual maintenance had become a major national headache. Some French observers had called for its removal.
Victor Lustig had been looking for a big score. He had found it. He would sell the Eiffel Tower to the highest bidder! Lustig sent out invitations on forged government stationary, inviting a group of scrap metal dealers to a confidential meeting at a fancy Paris hotel.
In the meeting, Lustig introduced himself as Deputy Director General of the Ministry of Posts and Telegraphs. He explained to the gathered men that the maintenance of the Eiffel Tower had become too burdensome. The French government wished to sell it for its scrap.
One man, Andre Poisson, appeared to Lustig to be most likely to fall for the rouse. Poisson was extremely eager to elevate his status as a businessman and viewed this as his big moment. Like any good con artist, Lustig singled out his mark, arranging a follow up meeting.
He told Poisson that he could guarantee the Eiffel Tower contract if Poisson were to pay him a bribe. Anxious to win the deal, Poisson agreed, paying Lustig the asking price plus a bribe in cash. Lustig is believed to have received ~250K francs (>$1M today). Quite a score!
By the time Poisson realized he had been conned, Lustig was in Vienna, counting his money. Deeply embarrassed, Poisson never contacted the police or reported a crime. His scam still a secret, Lustig actually went back to Paris and tried to sell the Eiffel Tower...again!
This time, he would not be so lucky. Police were informed and he fled to the US. He was eventually arrested in 1935 in New York and sentenced to 15 years on Alcatraz Island. When he died in 1947, his death certificate ironically listed his occupation as Apprentice Salesman.
So that is the story of "Count" Victor Lustig, the man who sold the Eiffel Tower.
Uniswap Tutorial Round 2
Here is another good tutorial from Goomba on the basics of MetaMask and Uniswap. I cannot stress enough how careful you need to be trading here. I just spoke with the CEO of a major crypto company for the podcast and he was hacked using Uniswap and his MetaMask funds were drained. He asked that I not share any further details. I suggest that, if you are going to use MetaMask and Uniswap together, you limit the funds that you hold on that wallet to what you want to use to trade. And be very careful about the links you click.
Accreditation Investment Laws Are Changing!
Accreditation laws, the SEC’s rules dictating who can and can't participate in private markets are finally being updated. Currently, to invest in private markets, an investor has to have a yearly income of $200,000 for the past couple of years or a net worth over 1 million dollars excluding their residency, in order to participate. Our good friend Sahil Bloom, who was just recently on the podcast, pointed out that a newly minted Robinhood trader can participate in a risky margin trade mortgage REIT, but is denied a chance to invest in their neighbor’s startup business. The laws were due to change.
The new definition of an accredited investor has expanded to someone with, “professional knowledge, experience, or certifications.” In total, 6 additional ways to meet the requirement were outlined in addition to the current standing laws. The SEC’s reason for this move was to “simplify, harmonize, and improve the exempt offering framework, thereby expanding investment opportunities while maintaining appropriate investor protections and promoting capital formation.” This amendment may disadvantage the elite 1%, but it benefits millions of investors, plus it brings new money into markets.
FTX Acquires Blockfolio and Their 6 Million User Base
FTX, the 6th largest cryptocurrency derivatives exchanged just shelled out $150 million to acquire Blockfolio, the number one asset manager app. Being a crypto derivatives exchange, it is more geared towards advanced traders and experts in the space. On the contrary, Blockfolio is widely known as the retail-friendly crypto tracker.
A partnership between the two symbolizes a major, “bridging of the gap” between retail and experts in the space. This acquisition sits among the ranks as one of the largest mergers and acquisitions in crypto. In a rapidly developing space, it is only a matter of time until the largest players merge and a few winners emerge.
Voyager Increases Interest to 9.5%
This is crazy, and I am not sharing this just because they are a sponsor. These are the highest rates that I have seen, from a company with FDIC insurance that is traded on the Canadian stock exchange.
My friends at Voyager just stepped up their game BIG TIME. 9.5% interest in USDC, 6.5% on $BTC and 5% on $ETH holdings, with no limits or lockups. They also added interest on Chainlink (LINK), Basic Attention Token, and Kyber Network, offering customers and partners access to 17 interest-bearing assets.
LINK marines can earn interest!
Compounding interest while you trade is an incredible value proposition.
The Wolf Of All Streets Podcast Ft. Micah Johnson
Micah Johnson was a baseball star, playing for multiple teams in MLB and enjoying an incredible career. While competing, he discovered that he had a talent greater than sports - painting. Micah dropped the bat and picked up paint and charcoal and began to pursue his passion, quickly finding success outside of baseball. Micah finally felt free, as he could voice his frustrations and aspirations to the world and be his own boss. Now his craft is inspiring disadvantaged youths everywhere, proving anyone can do anything.
Micah and I further discuss having one dream your entire life, learning how to play as the last man on the roster, batting for the first time in the pros, discovering a talent you never knew you had, painting black children as astronauts, balancing a newborn with a new career, painting the blockchain, battling depression during the season, learning how to compete as an artist, the stages of discovering Bitcoin, and more.
Huge thanks to Kingdom Trust and Voyager for sponsoring.
Chart Requests
BAT/BTC
This is a really interesting chart with a lot of important lessons. First, I became "bearish" on BAT ages ago when it broke that ascending black support. That was a really key level. You can see that it formed a range and then flipped the blue area back from resistance to support. Anything above that area is encouraging. That said, look at the major rejection at the top of the trading range on these weekly candles. This week is not closed, but it looks pretty ugly. We have to long wicks above the range highs with candle bodies below. that's a major bearish SFP and a very clear sign that there's a ton of sellers above that range. Those candles also have tweezer tops, a sign that more downside is likely. I would not panic here, but I also would not be interesting in trading this asset unless we see a candle CLOSE above the range high. Otherwise, it's somewhat likely that you will be able to get this cheaper in the future.
DASH/USD
Dash broke through a key level of resistance, only fall back below and retest it once again as resistance. This pair will likely do what Bitcoin does, since it is against USD. The two areas of interest would be a break of the descending black line, or a bounce off of the ascending blue line, in my opinion. There is a minor support level (red) that is right around current price.
If you like trading with RSI, it is also clear there is a resistance line there. If that breaks out, price usually follows. Worth watching.
LTC/USD
Hard to take an entry at current price, but this does look generally good. Price clearly broke the descending white resistance, which was the macro breakout that we have been watching for. Now we would look for another retest of that line, or perhaps a drop to the red line around $50 for a decent entry - although that would be a knife catch. Still, it's a clear support level and easy to cut the trade if it fails. Otherwise, you almost need to wait until price is above $64 to really feel confident. Above $80 would be even better.
SNGLS/BTC
This one is interesting, giving a bit of mixed signals depending on how you approach the chart. I think it's clear that the downtrend was broken when the black descending line was smashed with a large bullish candle on decent volume. It also broke and is struggling to hold a key support at 100 sats. For me, holding 100 sats is big and should lead to more movement up. The 50 MA is below around 97 sats, so I would probably put a stop somewhere below that - 93-94 sats or so. That should give room to avoid a wick below 100, although anything can happen. The next target if 100 holds is 123, a nice 20% move from here.
SXP/BTC
I have no idea what is going on with this coin. The fundamentals seem bullish but there's been strange FUD surrounding it on twitter. People are very entrenched on both sides. The chart, for me, is bullish. A clear breakout of a perfect descending channel and a flip back of resistance to support at 23739. I am still in this coin, can't see a good reason to exit, but it has not popped in the manner that I expected. I could definitely see taking an entry above 23729 here.
VET/BTC
I shared this recently and it has been playing out somewhat as expected. While the chart is bullish in a massive bull flag, that does not mean it's time to buy. It broke a key support, so it could travel further down in the flag before breaking out. You can see the key levels. At this point, in my opinion, the good trades on this are a clear breakout of the flag or a drop to 110 as support. I would buy heavily there.
My Recommended Platforms And Tools
This is where I invest, commission-free. They now let you earn interest on your Bitcoin held in Voyager, so you can compound while trading. Not only that, you’ll get $25 in free BTC when you download & fund.
Rewards Code: Scott25
This is where I trade with leverage and can also trade spot with no fees.
I use RoundlyX to buy small amounts of Bitcoin every single day. They automatically round up my credit card purchases (with 10x multiplier) and invest them in crypto. Absolutely brilliant. Passively invest money you don’t need without a thought. Further, they have integrated with Voyager (see above) to offer commission-free purchases.
Rewards Code: WOLF
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.
Binance is finally available in Florida!
Self-Directed IRA for Americans - allows you to invest in Bitcoin and any other asset for your retirement, with all of the tax benefits of a normal IRA.
Concierge Phone Service for Americans that protects your from SIM Swaps and other phone related hacks. I cannot stress enough how amazing this service is.
BlockFI is where I personally store part of my long holdings. They offer up to 8.6% annually, compounding, depending on the asset (BTC, ETH or GUSD), which is much better than any legacy savings account or investment.
Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
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.