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In This Issue:
$100,000
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Ranking Chains by TVL
The Floodgates Are Opening
Ethereum’s EIP 4844 is Here
Blockchain Technology Will Save Billions of $
Link Jumps 40% - When Will Bitcoin Skyrocket?
$100,000
I'm cutting straight to the chase: Bitcoin is on its way to $100K.
The timing is uncertain - it could be tomorrow, next week, or years down the line. I would bet my left arm on it.
Let's break down the numbers.
A $100K Bitcoin price, given the current circulating supply of 19.6 million BTC, equates to a market cap of $1.96 trillion. This valuation is in the ballpark of Google's ($1.8T) and below that of Saudi Aramco ($2T), Apple ($2.9T), and Microsoft ($3T).
To put it in perspective with traditional assets, gold's market cap stands at $13.7 trillion, dwarfing Bitcoin by about 15 times. Even if Bitcoin hits the $100K mark, it would need to multiply its market cap by seven to match gold's valuation.
This analysis suggests Bitcoin's journey to global prominence is just beginning. But the real conundrum arises once Bitcoin hits that $100K milestone. What's the move - buy more, sell for profits, or hold and risk a drop? The answer isn't one-size-fits-all; it depends on personal investment goals, risk tolerance, and market outlook. Here are some key points to consider:
Do you need the money?
This is arguably the most overlooked concept when deciding to take profits, yet it's the fundamental reason why investors invest in the first place. If there are leaks in your roof or your child needs a better education that requires additional spending, why wouldn't you take profit to address these essential needs? Sats will never hold more value than your children's well-being or the roof over your head.
What is your age?
This consideration resembles the first, as expenses tend to rise with age. Aging brings health concerns, increased responsibilities, and urgency to retirement planning. Younger investors have the flexibility to take more risks and wait for desired price targets compared to individuals in their 60s, who may face greater constraints due to their stage in life.
What is your time horizon?
Building off of age, short-term investors should absolutely lock in at least some profits on this significant of a price increase. On the contrary, long-term investors need to consider how much room Bitcoin could grow in this cycle and consider their willingness to hold another 4 years. Long-term investors have a much harder decision to make when Bitcoin hits $100,000.
What is your level of conviction?
Considering your time horizon, it's essential to have an honest conversation with yourself regarding your conviction. If its weak, taking profits is wise. On the other hand, if you're confident but sell during a key retest, it was false confidence. However, if your conviction remains firm and selling doesn't fit your long-term strategy, holding onto your Bitcoin could be the best course of action for you.
Where is the market in the cycle?
This is undeniably the most challenging questions to address. If there were a crystal ball to foresee the future, rational investors would sell at the market's peak, pay Uncle Sam, and patiently await an opportune re-entry point. While there may be indicators signaling the market's peak, they are often obscured by noise and exaggerated optimism about Bitcoin's continued ascent. At best, we will probably only have an idea the market is topping.
Waiting until Bitcoin reaches $100,000 to strategize may be a common fallback for most retail investors, but it's hardly advisable. When Bitcoin hits this landmark figure, the market is expected to surge with emotions. While a steady climb to $100,000 might temper reactions, a sudden spike could lead to heightened volatility.
Here's the straightforward reality: Bitcoin reaching $100,000 seems inevitable, but how you respond to this event isn't predestined.
Your best defense against market unpredictability is self-preparation - educating yourself, understanding your risk tolerance, and being adaptable to market shifts. No matter how high Bitcoin's price soars, remember, profits only become real once they're actualized and taxes are paid. Don't let this potentially once-in-a-lifetime event pass without a solid game plan in place. Stick to your strategy with dedication.
You won’t regret it.
Bitcoin Thoughts And Analysis
We have a beautiful breakout from the bull pennant that I have been sharing, on increased volume with nice candle spread. The flagpole starts down at the $38,500 lows, and based on that measured move, the target is around the recent ETF highs at $49,000.
This is simple classic charting.
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.
I know, memecoin. But the chart is the chart, and I had a great trade from the range lows in the 700s up to around 1100 at the range EQ. As I have shared before, price dropped from there and has formed a descending resistance, which is now being tested. My alarm went off, which means it is time to pay attention.
This breakout would look a lot better on convincing volume with more candle spread by the end of the day. If we do get a candle close above descending resistance, the target is once again around 1150 at the EQ. We can discuss higher if we get there.
Legacy Markets
On a day marked by intensive earnings analysis, stocks exhibited minor gains while bonds remained stable, all under the shadow of an upcoming 30-year US Treasury bond auction. Europe's Stoxx 600 index rose by 0.3%, buoyed by Unilever's unexpected sales growth but dampened by A.P. Moller-Maersk's 13% drop due to a forecasted industry slowdown. S&P 500 futures stayed unchanged after the index neared the 5,000 milestone.
Following successful three- and 10-year bond sales, the next 30-year Treasury auction poses a significant test for market appetite amidst ongoing concerns about the commercial real estate sector and Federal Reserve signals hinting at no rate cuts until May or later.
Key speeches from ECB and Fed officials are anticipated, while the 10-year Treasury yield slightly decreased. In Asia, Chinese stocks showed mixed results ahead of the Lunar New Year, with significant corporate movements including SoftBank's profit rebound and Alibaba's stock buyback announcement despite its shares dropping in Hong Kong.
Corporate highlights touched on a range of outcomes, from Credit Agricole's mixed financial results to Maersk's shipping industry slowdown projections, Unilever's sales increase, AstraZeneca's below-expected profits, Adyen's revenue beat, Gucci's sales dip, and Siemens' stagnating orders due to reduced automation purchases in China.
Key events this week:
US wholesale inventories, initial jobless claims, Thursday
Treasury Secretary Janet Yellen speaks at a Senate banking committee hearing on the Financial Stability Oversight Council annual report, Thursday
Pharma CEOs speak at a Senate panel on prescription drug prices, Thursday
ECB Chief Economist Philip Lane speaks, Thursday
ECB publishes economic bulletin, Thursday
US CPI revisions, Friday
Germany CPI, Friday
President Joe Biden hosts German Chancellor Olaf Scholz at the White House, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.2% as of 9:33 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index fell 0.1%
The MSCI Emerging Markets Index fell 0.4%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0779
The Japanese yen fell 0.4% to 148.70 per dollar
The offshore yuan was little changed at 7.2127 per dollar
The British pound was little changed at $1.2629
Cryptocurrencies
Bitcoin rose 1.1% to $44,669.35
Ether fell 0.3% to $2,422.48
Bonds
The yield on 10-year Treasuries declined two basis points to 4.11%
Germany’s 10-year yield declined one basis point to 2.30%
Britain’s 10-year yield declined two basis points to 3.97%
Commodities
Brent crude rose 0.4% to $79.54 a barrel
Spot gold fell 0.2% to $2,030.84 an ounce
Ranking Chains by TVL
If there's any uncertainty about which blockchain is leading in Total Value Locked (TVL), I recommend using the tool provided in the link above. CoinMarketCap offers an excellent resource for tracking changes in TVL over time, which can help dispel misinformation that often arises whenever a specific chain experiences a surge in activity. Currently, the total TVL in the crypto space stands at $109 billion, a figure that, while significant, is still relatively modest given the ambitious goals of DeFi. There will come a time when TVL surpasses the trillion-dollar mark. While it may not occur in this cycle, I consider it an inevitable milestone.
In case there was any confusion, Ethereum comprises of 2/3rds of crypto’s TVL. Do with that information what you will.
The Floodgates Are Opening
After some investigation, I can confirm that Fidelity's All-in-One ETF does indeed allocate 1% to Bitcoin, as shown in the screenshot I captured above. However, it's worth noting that this is a Canadian ETF, and this allocation has been in place for some time now. While the fund's AUM currently stand at $111 million, relatively modest in the broader context, the significance lies in Canada's forward-thinking approach, which serves as a precursor for allocations to come. Also note, they are allocating 1% to Bitcoin the MOST CONSERVATIVE fund, understanding the power of Bitcoin to improve the Sharpe Ratio of a portfolio. Consider the potential impact when Fidelity's FTEC ETF, boasting $8.3 billion in AUM, incorporates Bitcoin, alongside numerous other major ETFs – an absolute game-changer.
Ethereum’s EIP 4844 is Near
Ethereum's development team is convening today to finalize the timeline for the Dencun mainnet upgrade, targeted for late February or early March. This significant update is poised to bring about major improvements to the Ethereum network. Though the update is technically complex, its implications for the average user are clear: enhanced scalability and lower transaction fees.
Traditionally, Ethereum's market price hasn't shown marked responses to Ethereum Improvement Proposals (EIPs). Yet, in the context of a bull market, this upcoming upgrade could act as a bullish factor, further buoyed by the anticipated ETF proposal.
While this isn't financial advice, my view is that Ethereum remains an undervalued asset with considerable potential.
Blockchain Technology Will Save Billions of $
Coinbase's recent report sheds light on a fundamental reason why traditional banks and politicians harbor animosity towards cryptocurrency: it threatens their profit margins. According to Coinbase's latest 'State of Crypto Report,' American consumers could have collectively saved a staggering $74 billion in credit card transaction fees by leveraging blockchain technology instead of the conventional banking system. When this figure is extrapolated to individual households, the potential savings amount to $600 per household. It's no wonder that entrenched, outdated systems are reluctant to relinquish their monopolies.
Link Jumps 40% - When Will Bitcoin Skyrocket?
Bitcoin ETFs are breaking new records almost every day, but why it does not affect the price of the underlying asset - Bitcoin? At the same time, Chainlink is up 40%, becoming a silent champion of the crypto market. I am talking to Matt Hougan from Bitwise and Chris Inks from TexasWestCapital about the latest developments in crypto - please tune in at 9 am EST!
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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.