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The Wolf Den #490 - NFT Madness

May 2 · Issue #490 · View online
The Wolf Den Crypto Newsletter
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Yuga Labs, the creator of Bored Ape Yacht Club, launched their newest NFT project this weekend. “Otherside” was arguably the most hyped mint ever, selling digital plots of land in the metaverse. The plan was simple - sell the NFTs in ApeCoin, use the Ethereum blockchain for processing, and sell 55,000 plots to accommodate the demand.
Except nothing went as planned.
A near-instant sell-out resulted in an unprecedented amount of demand. Yuga labs turned a near $300M profit, but at the cost of pressure testing Ethereum’s infrastructure and frustrating buyers. Etherscan failed during the mint, gas prices hit levels never seen before, and the entire Ethereum network bottlenecked because of the drop.
It was madness.
But the records continue. The Otherside project has already taken the #1 position on OpenSea for 30-day volume and is fast approaching top 5 all-time volume in just the couple of days it has been on the market. INSANE. It was by far the largest mint on OpenSea, ever.
Perhaps the most impressive metric was the amount of Ethereum burned from this drop. If you visit the Ethereum burn leaderboards here, you’ll see that Otherside NFTs are in the all-time #6 position for total Ethereum burned. Within one hour of the mint, 26,000 Ethereum were burned, and after 24 hours that number doubled - $155,000,000 permanently removed from the market (another good reason to hold Ethereum).
As rough as the launch was, not everything went poorly. Those who managed to mint are already sitting in profit and currently hold a highly coveted NFT. Furthermore, those that failed to mint are being refunded their gas. Yuga Labs went out of their way to do this, which is not something that usually happens. Plus, if you hold Ethereum, you should be happy about the burn because there is less supply on the market.
Seemingly no major NFT drop happens without controversy. Some are saying that the mint was just an unfortunate gas war and others are saying it was a setup for ApeCoin to switch chains. Who knows.
It is clear that we are “still early” and that there is still a lot of work to be done in the NFT and layer 1 space to scale for mainstream adoption. Problems like these can’t happen when 10x more people are involved. Nothing would work.
A mint should not shut down an entire blockchain, no matter how popular it is. But catastrophes aren’t all bad. Without setbacks, it’s hard to know where we are weak and strong. Now developers can address the issues and fix them for the next wave.
In This Issue:
  1. NFT Madness
  2. Bitcoin Thoughts And Analysis
  3. Altcoin Charts
  4. Berkshire Hathaway Dismisses Bitcoin
  5. Tough Week For Layer 1s
  6. My Recommended Platforms And Tools
Bitcoin Thoughts And Analysis
The monthly candle closed this weekend, and it was less than ideal.
First, zooming out you can see that Bitcoin is in a “never ending bull market” on high time frames. An ascending channel of higher highs and lows. That said, every break of the center dashed line (EQ, equilibrium) in the past had sent price to the top or bottom of the channel - until price failed to reach the top on the last break. So now we are more sideways, waiting for clearer direction.
April’s candle (April is supposed to be a historically bullish month) closed almost at the monthly low, meaning that bulls were unable to defend virtually anything. The candle also bearishly engulfed the bullish bodies of both February and March.
Take this with a grain of salt. Monthly candles are difficult to use and take forever to play out. But that was an ugly candle, regardless.
That said, since the 32K lows, each month has basically put in a higher low. So there is some cause for optimism.
The weekly chart is showing indecision at support. The last two weeks have had indecisive candles, with a spinning top to close this week. As I said before, the key support area shown below between $37.7K and $34.4K is still holding and is an important area. $39.6K is the key resistance close by.
Bitcoin currently has bounced perfectly from the bottom of this ascending channel. That ascending lower line is a key support now, regardless of the pattern. If it holds, we will have yet another higher low and have price heading towards the top of the channel. If it breaks, we are looking at revisiting the lows.
This is exactly where traders that use ascending support would have been looking to buy.
It is very hard for me to become a bear when Bitcoin continues to build more and more bullish divergence, especially on the daily chart. We have yet another confirmed div, with price in a clear descending wedge.
This should mean we at least see relief and a breakout to the top of the pattern.
I will be watching for hidden bearish divergence.
The Bollinger Bands are tight - that means the real volatility is likely yet to come.
Altcoin Charts
Altcoins seem to have potentially capitulated across the board this weekend. although it is too early too tell. Last week, we looked at a number of coins that were sitting on key levels of support. Those almost all broke, sending coins to the next lower levels. This makes the situation once again similar.
I am currently still not looking to enter any positions, I do not want to catch a falling knife in a shaky market. Altcoins are avoidable, unless you are looking to scalp bounces or try to find the bottom, neither things that I am interested in.
Berkshire Hathaway Dismisses Bitcoin
Warren Buffett gives his most expansive explanation for why he doesn't believe in bitcoin
Warren Buffet and Charlie Munger still fail to understand Bitcoin.
At 91 and 98 years of age respectively, it’s easy to see why understanding digital assets could be tricky for them, which is exactly why we don’t need to listen to either of these men on this subject.
Buffet makes the argument that Bitcoin isn’t tangible, doesn’t produce anything, and only derives value from what the last guy is willing to pay for it. While bashing Bitcoin, Warren Buffet sits in front of Sees chocolate boxes, the product of his prized $700B company, which is partially responsible for poor health around the world.
I digress.
Take a look at what these two men had to say.
Now if you told me you owned all the Bitcoin in the world, and you offered it to me for $25, I wouldn’t take it because what would I do with it? I have to sell it back to you one way or another, maybe to the same people but it isn’t going to anything. The apartments are going to produce rental and the farms are going to produce food. If I’ve got all the Bitcoin… incoherent ramble… something about a mystery… Buffet Coin… you can make your own.” - Warren Buffet 
Below is an ironically wiser take from Munger, who is 7 years older.
In my life, I try to avoid things that are stupid, and evil, and make me look bad in comparison to someone else, and bitcoin does all three,“ Munger said. "In the first place, it’s stupid because it’s very likely to go to zero, and it’s evil because it undermines the Federal Reserve System and national currency system, which we desperately need to maintain its integrity and government control and so on. - Charlie Munger
What’s left to say?
Tough Week For Layer 1s
Solana Goes Dark for 7 Hours as Bots Swarm ‘Candy Machine’ NFT Minting Tool
The Ethereum/Otherside situation was not the only fiasco in crypto - it was a bad week for layer 1s in general. Over the weekend, the Solana network went totally dark after bots flooded into one of Solana’s NFT minting tools known as the Candy Machine. Luckily, validators were able to regain consensus and get the network running after the shutdown, but not until 7 hours later.
On top of the Ethereum and Solana hiccups, Fantom faced unprecedented token liquidations as a whale decided to dump and Avalanche found early struggles in a gaming venture. As I often say, when it rains, it pours.
Regardless, L1s are hardly close to failing.
Setbacks? Yes. Failures? No.
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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.
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