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The Wolf Den #374 - Don't Be The Sucker

November 17 · Issue #374 · View online
The Wolf Den Crypto Newsletter
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Sentiment is everything.
Sentiment and emotion drive our decisions, our perception of reality, and greater trends in society.
As Bitcoin begins its march into uncharted territory, tracking sentiment will become vital for properly scaling out of your crypto holdings when in profit. Here are some signs to look for in the final stages of euphoria so you can get out before waiting another cycle.
To be clear, I am not saying you will ever “sell all of your Bitcoin.” I am merely offering prudent ideas for taking profit at an appropriate time, especially as a trader. This also refers primarily to altcoins if you intend to HODL Bitcoin indefinitely.
Our top signs of crypto euphoria include, family members finally showing interest, crypto investors buying Lamborghinis, everyone suddenly supporting a coin they used to call a “shitcoin”, celebratory and mocking memes and videos, humble people publicly bragging about their profit, the Fear & Greed Index at +90, everyday normies joining the space, people stating they will never sell, hearing about crypto in public, newbies explaining crypto to veterans, every major news channel talking about crypto, people checking the price way more than usual, losing sleep over price, absurd price predictions, the Bitcoin narrative changing and haters denying ever hating crypto.
Many of the items on the list probably sound comedic, but euphoria makes people act in strange ways. Our top 3 signs of euphoria are the Fear & Greed Index at +90, absurd price predictions, and a changing narrative.
The Fear & Greed Index at +90 paired with the other signs is a strong signal that the market is euphoric. It has already hit the mid-90s multiple times of late and will continue to do so. This metric alone is a bit of a meme, but when greed remains prevalent and the other signals arise, it’s worth paying attention.
Absurd price predictions are our next top euphoric sign. Most Bitcoin price predictions have ranged from 50k-300k since the pits of the bear market. When Bitcoin starts to approach these price levels and the predictions shift to 500k -1M, we will likely be approaching the top. This happened during the last bull run as the price approached 15K. People thought that selling at 20K was “way too early” because 100k would be the actual top. Don’t fall prey to a new set of price predictions even if they gain traction in the community. The predictions made when euphoria is not present are far more likely to be accurate than those made during the height of the hysteria. This is much like setting a price target as a trader and then refusing to sell when it hits because now that price has arrived and you think it has to go higher.
The last and final sign of euphoria is a coin’s narrative changing. Bitcoin’s popular current narratives are that it’s a store of value, digital gold, a medium of exchange, and a portfolio hedge. These narratives were forged from academic studies, community alignment, and a historical track record - not as a result of elevated emotions. When the majority of people start shouting that Bitcoin is a “new world reserve currency” or a “currency to end all currencies” we are likely nearing the top. Just because the price goes up does not mean the narrative has to shift with it.
The only way for the largest players to sell at the top is to have a deluge of new suckers to buy at that price. Don’t be one of those suckers.
We will continue to monitor sentiment as the market matures. We will collectively track the euphoric signs, and strategically take as much profit as possible along the way. 
There will be NO CHARTAPALOOZA TODAY and NO NEWSLETTER TOMORROW. I almost never take a day off, but it is my wonderful wife’s birthday and we will be in Miami for the charity event discussed below.
In This Issue:
  1. Don’t Be The Sucker
  2. ETH Is Becoming Deflationary - IntoTheBlock
  3. Bitcoin Thoughts And Analysis
  4. Altcoin Charts
  5. Legacy Markets
  6. 10 Fundamental Rights Of Crypto Users
  7. Senators Oppose The Crypto Language In The Jobs Act
  8. Mt. Gox Compensation Settlement Reached
  9. Supercar Show And Auction For Autism
  10. My Recommended Platforms And Tools

ETH Is Becoming Deflationary - IntoTheBlock
In this report, we bring to you the latest in on-chain cryptocurrency analysis. We look at the blockchain directly and analyze balances, transactions, and the overall activity of market participants. This gives us a unique insight into the future of the market.
This section is written in conjunction with IntoTheBlock (ITB).  ITB is an intelligence company that leverages machine learning and advanced statistics to extract intelligent signals tailored to crypto-assets. IntoTheBlock tackles one of the hardest problems in crypto: to provide investors with a view of a crypto asset that goes beyond price and volume data. 
The Wolf Den research team uses IntoTheBlock to dig deeper and get the most important insights about the crypto market.
ETH Is Becoming Deflationary
The London hard fork took place on August 4 and included the implementation of five Ethereum Improvement Proposals (EIPs), EIP-1559 being the most prominent of these. The much-awaited EIP restructured fees on Ethereum by introducing a base fee. In contrast to “normal” transaction fees, the base fee is burnt as opposed to earned by miners. This means that the ETH paid for the base fee is effectively removed from circulation and reduces selling pressure from miners, which experienced a decline in their earnings.
Since the implementation of EIP-1559, most of the Ether used as transaction fee has been burned, leading to several days where more ETH is being burned than issued, making it deflationary.
Crunching the numbers:
  • Since EIP-1559 was implemented on August 4, the Net Issuance of ETH dropped from an average of 4% to 0.07% during the month of November.
  • Over 914,680 ETH ($3.8B+) has been burned since. This means that since the Implementation of EIP-1556, an average of 9,056 ETH has been burned on a daily basis. 
  • We have seen several outliers that lead to this massive burn, with NFT mania being the first. Open Sea volume skyrocketed during the month of August. Lately we are seeing a spike of on-chain trading with SHIB and metaverse tokens leading the way.
ETH as an inflation hedge? It may be too early to classify Ether as such given that it has had less than ten deflationary days. However, with the merge and transition to proof of stake, Ether’s issuance is projected to drop 90%, which would make it consistently deflationary.
Bitcoin Thoughts And Analysis
There is little reason for the moment to view current price action as anything more than corrective and healthy. There are ALWAYS dips in a bull market and everything we are seeing now is still within the realm of normal.
As I have said a few times in the past week, if we see continued downside I would view it as another buying opportunity. I am watching the area around 53K, a key resistance level that was never retested as support after it was broken. This area is important because the break signaled a higher high and the end of the local bearish market structure. It would be VERY bullish for continuation to the upside to see this area retested as support. Sometimes you have to go down to go up, although I am far from certain that we get there. We could already be bottoming, of course.
Price has formed a bit of an ascending channel, although the second touch down barely missed support. Either way, this looks like a solid idea of how price is moving. As you can see, the 50 MA has held twice as support for now, a key level that is always tested a few times in a bull market. The further you get away from the 50 MA, the more likely you are to eventually revert to the mean and test it. Nothing bearish about it for the moment.
I drew the blue box on the left to show you how long price took to form the top in early 2021. It would be expected after creating such a major area of resistance to see it repeatedly tested as support. That’s what is happening now, in my mind. We got above it, now we are trading in and above that area for a bit before heading up. This is a strong area of price action, no surprise we have been stuck here for a bit.
The daily candle has not closed, but we have potential tweezer bottoms, although not perfect. If this candle closes higher than the current low, this would confirm and is viewed as a bottom signal. We also have a hammer candle for now, but 12 hours left in the day.
Tweezer bottoms at Bollinger Band support. If this holds, we should expect price to rise from the lower band and test the centerline. A successful flip of the centerline would take price to the upper band and beyond.
There is potential hidden bullish divergence with RSI, which is a signal of continuation to the upside and would cancel the red bear div. This is not confirmed yet, we need to see this clear elbow up on RSI at the daily close.
RSI eventually needs to make it back to oversold. We are pretty far away, so if we continue down to 53K that could make it happen.
RSI finally made the trip to oversold. You know what that means! I will be watching for bullish divergence. It does not need to happen, but it usually does and signals the bottom. I will be looking for something like I drew above. This would require a lower low on price, but only at the close.
Altcoin Charts
I do NOT share signals in this section. I share setups and charts that I am watching, in an effort to help show you how I view a chart and what criteria would be necessary for me to consider taking a trade. NEVER blindly buy something because it is listed in a newsletter or posted on twitter. You need to have a plan when you enter a trade. My charts are just ideas, and are almost always “if, then” scenarios. If a certain set of things happen, then I would consider a trade.
That said, the market is correcting and altcoins are generally suffering as a result. When this happens, it is usually best to sit on the sidelines, wait for the charts to reset and look for positions accordingly. I will post charts in the coming days as we have more clarity.
Legacy Markets
I have been waiting patiently for ages for SIRI to flip $6.73. Price has consistently been rejected at that line, with multiple wicks above that ended in candle closes below. We want to see a close above that level, with a clear flip of resistance to support. As you can see, we have an ascending triangle, with a flat top at resistance and consistent higher lows. The target is shown based on the depth of the triangle.
This is NOT a buy here at resistance.
10 Fundamental Rights Of Crypto Users
Your Crypto Rights - Crypto belongs to all of us
Binance shared an incredible post, outlining a “Bill Of Rights” for crypto. They rightfully pointed out that the media headlines in the space often portray crypto in a negative light, often saying that crypto is evil.
Here is what they had to say in their intro:
“There’s a world beyond Bitcoin and Dogecoin, one where financial opportunity is accessible to everyone, not just the privileged few.
Crypto belongs to all of us. But there’s still work to be done if we want this breakthrough innovation to become part of our daily lives. Like seat belts in a car, a more regulated crypto market provides greater protections for everyday users.
To welcome the next billion users, Binance is working with regulators and policymakers to support a global framework that protects users without limiting growth and innovation.”
Binance is clearly working hard to become compliant with regulators, but are also willing draw a line in the sand to outline the unalienable rights of crypto users. Read it, print it, put it on the wall. It’s amazing.
They concluded: “Crypto belongs to everyone. So let’s make it ready for everyone.”
Senators Oppose The Crypto Language In The Jobs Act
Ted Cruz seeks repeal of Biden infrastructure bill's crypto broker definition
The broker-dealer language that passed in the infrastructure legislation had the entire crypto space up in arms. The law that’s slated to go into effect in 2023-2024 forces all crypto stakeholders/users/builders/developers to comply with KYC laws, an unrealistic demand that would be impossible for many companies and individuals to comply with. Members of Congress are pushing back, penning a letter to Nancy Pelosi that already has 10 supporters. Senator Ted Cruz also put out a statement opposing the wording in the legislation. Senators Lummis and Toomey are worked across the aisle already on a bill that would change the language.
This is a rare case where representatives on both sides of the aisle realize that they are on the same team and fighting the same fight.
Mt. Gox Compensation Settlement Reached
Mt. Gox rehabilitation plan is now 'final and binding'
Almost 8 years have passed since the Mt. Gox hack and the saga is finally nearing its end. 850,000 Bitcoins were stolen from the exchange in 2014, now worth over $51B. The rehabilitation process to compensate lost funds, which began back in 2018, has now received a final court approval. The creditor responsible for paying back the users currently has 150,000 Bitcoins to distribute, roughly 18% of the lost funds. Considering Bitcoin was trading well below $1,000 at the time of the hack and has since appreciated by more than a factor of 60x, receiving 18% of lost funds is a decent outcome. Let’s be honest, most of those people would have sold their coins long ago, so this was a form of forced HODLing.
Supercar Show And Auction For Autism
Supercar Show and Auction » Center for Autism and Neurodevelopment » College of Medicine » University of Florida
This is a cause that is near to my heart. My nephew is autistic and my brother spearheaded this event and is also the driving force behind The UF Health Center for Autism and Neurodevelopment.
Miami, Thursday November 18th, come hang with me, bid on some super cars and support an amazing cause. If you cannot make it, feel free to donate on the website.
My Recommended Platforms And Tools
This is where I trade with leverage and can also trade spot with no fees.
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. Code Wolfsden50%off for a 50% discount on the first month.
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: WOLF25
Mining for everyone! You can buy an ASIC and have it set up at a destination of your choice by them, and you only pay the electricity cost. Absolutely awesome.
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
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.
Subscribe to my YouTube channel for free daily content.
Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
On-chain and fundamental analysis, research, predictions and indicators, all in one place. Highly recommend.
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.
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