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The Wolf Den #514 - Everything Is Going Lower!

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June 3 · Issue #514 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. Everything Is Going Lower!
  2. NFTs Down Bad - IntoTheBlock
  3. Bitcoin Thoughts And Analysis
  4. Altcoin Charts
  5. Legacy Markets
  6. Arthur Hayes Speaks Up
  7. Trading Is Hard
  8. Coinbase Cuts Costs
  9. Redemption On Fox Business
  10. Japan Regulates Stablecoins
  11. New York Cracks Down On Bitcoin Miners
  12. My Recommended Platforms And Tools
Everything Is Going Lower!
Do I have your attention?
Good.
I get the sense that almost everyone is expecting the market to go lower. Every time I turn on the financial news, open twitter or read an article, it feels like a deluge of bad news and negative expectations. There is a camp that reasonably believes we are long overdue for a relief bounce or reversal, but it feels like the majority is convinced that we are going much lower.
I don’t blame them, the world is in a rough state.
They may very well be right.
I understand that negativity sells, that the macro picture is in shambles, and that we are all riding on a leaky ship with a drunkard captain in the Fed at the helm, but the amount of investors confidently waiting for lower lows in the 3rd and 4th quarters is starting to feel a bit fishy. Warren Buffet is buying already, right?
I know that we are at the mercy of a lot of sh*t that we can’t control, but where is all of this bearish euphoria and certainty coming from? The average investor is seemingly convinced that the easy ticket out of this mess is to just wait and buy lower later in the year.
If we know anything about markets, it’s that nothing is ever that easy.
First off, who comfortably buys the bottom? Buying the bottom is like staring an executioner straight in the eyes and spitting “F*** You” with all of your heart. It’s like William Wallace screaming “Freeeeeedoooooom” at the end of Braveheart. It takes a rare person to spot a bottom and an even rarer one to have the courage to act on it with their capital. If it was that easy, we would all be rich. Every single one of us could just buy the generational lows coming within the next few months and make off like the Rockefellers.
Wouldn’t that be nice? It would, but last time I checked there was no ice skating rink and Christmas Tree in Melker Center.
Maybe this is a rare case where the majority is right and we do get these lower lows. I can almost guarantee that if we do get there, it will be on a volatile path that few expect, including major bull traps and bounces along the way. Those bounces will likely be enough to convince everyone that the bottom is in and that markets are going back to the moon.
The market is designed to rattle you to your core and dish out max pain.
Fun, right?
Now is not the time to get comfortable. Volatility = opportunity. The market gods decide what’s next, not us.
We may see lower lows. We may see an extended recession or even a depression.
We also may have already bottomed and this may already be the generational buying opportunity that people are waiting for. Nobody knows, so be open to anything and act accordingly.
NFTs Down Bad - 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.
NFTs Down Bad
As risk-off sentiment becomes engrained in markets, the furthest assets on the risk spectrum are getting crushed. Although NFTs had managed to appreciate in the first quarter of 2021 in contrast to other assets, they have underperformed substantially over the past month.
$240k Down — Bored Ape Yacht Club (BAYC) NFTs have crashed severely in May
  • Buying a BAYC NFT at floor price four weeks ago would have resulted in a loss of nearly a quarter of a million dollars
  • This coincides with a drop in Ether’s price, which is the main currency in which NFTs are traded
  • However, ETH is down “only” 30% in May, while most NFT collections have lost over half of their value
Along with the crash in NFT prices, trading volume has plummeted.
Back to Earth — After increasing parabolically in January and February of 2022, NFT volumes have plateaued
  • Over $16 billion in NFTs was traded in January, compared to under $4 billion in May
  • Coinbase’s NFT marketplace has thus far disappointed, trading under a million dollars worth of NFTs with less than 2,000 users as per TechCrunch
  • Coinbase is not alone on this, with NFT interest dwindling throughout the world.
Bitcoin Thoughts And Analysis
Markets are as difficult to read right now as ever before. Signals are confusing, charts are chopping sideways and almost any scenario could play out. As a joke, I posted this chart on twitter yesterday.
This is snarky, yet somewhat accurate consolidation of all of the charts that I have seen (and shared) of late.
The reality is that Bitcoin is currently another boat braving the same storm as every other asset, and clarity globally is what is likely needed for a course correction. We are chopping sideways, waiting for direction. Don’t get too caught up in the day to day.
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. These are just ideas, and are almost always “if, then” scenarios. If a certain set of things happen, then I would consider a trade.
The altcoin market has been brutal. Like being forced to watch Season 2 of Emily In Paris or Bridgerton with your wife levels of brutal. Like Sex And The City reboot brutal.
I am an eternal optimist and tend to view markets with a glass half full approach. Things always end up reversing and going up and to the right, so this generally benefits me if I just… wait long enough.
There are endless reasons to avoid altcoins right now, which is what I would generally recommend for traders and those who cannot stomach endless torture. That said, even in the depths of the bear market, we can hunt for signals that things are likely to improve, even if only short term.
BITCOIN DOMINANCE
I have analyzed this at length. It is a bit of a meme to chart it as it is not a traded assets. Still, every time it has been this overbought we have seen altcoins outperform. Alt seasons, if you must, although that is not what I anticipate in the current environment. Also, we have more potential bearish divergence forming here, usually a top signal… not confirmed.
Now compare that to the ETH/BTC chart…
ETH/BTC
Rekt, right? Looks terrible, right?
We have potential oversold, bullish divergence at support. NOT CONFIRMED. But the night is darkest before the dawn. If this confirms, I expect altcoins to have a nice relief rally.
That is a BIG IF. Right now things still look bad.
Legacy Markets
Stock Market Today: Dow, S&P Live Updates for Jun. 3, 2022 - Bloomberg
Here are some key events to watch this week:
  • US May employment report Friday
  • The UN’s Food and Agriculture Organization releases its monthly food price index at a time of maximum concern about global supplies on Friday
Some of the main moves in markets:
Stocks
  • The Stoxx Europe 600 rose 0.2% as of 9:56 a.m. London time
  • Futures on the S&P 500 fell 0.3%
  • Futures on the Nasdaq 100 fell 0.5%
  • Futures on the Dow Jones Industrial Average fell 0.2%
  • The MSCI Asia Pacific Index rose 0.4%
  • The MSCI Emerging Markets Index rose 0.3%
Currencies
  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0754
  • The Japanese yen fell 0.1% to 129.98 per dollar
  • The offshore yuan rose 0.3% to 6.6335 per dollar
  • The British pound was little changed at $1.2575
Bonds
  • The yield on 10-year Treasuries was little changed at 2.91%
  • Germany’s 10-year yield advanced two basis points to 1.25%
Commodities
  • Brent crude fell 0.4% to $117.14 a barrel
  • Spot gold fell 0.2% to $1,865.25 an ounce
Arthur Hayes Speaks Up
Shut it Down!. (Any views expressed in the below are… | by Arthur Hayes | Jun, 2022 | Entrepreneur's Handbook
It’s always a treat when Arthur Hayes releases a blog. He is a genius, albeit one who admitted in court that he made his fortune counter trading his own customers. In his most recent post, “Shut it Down!” Hayes discusses the Fed’s appetite, the state of inflation, how to reach $1M per Bitcoin, risk assets, bottom signals, and more. The article is very long, but is an absolute must-read. Here are a few of my favorite snippets.
The Fed believes it can eat Big Macs made of 50bps rate hikes without the US and global economy violently vomiting. We are just a few minutes into the competition, and already risk asset markets are begging some senior politician to SHUT IT DOWN!
Asset holders must feel like the ugliest duckling to ever be created.
I firmly believe that crypto leads the broader markets. The data supports this, as correlations broke down between Bitcoin / Ether and the Nasdaq 100 during the recent crypto market meltdown.
My bottom checklist:
  1. Bitcoin / Ether move increasingly in a less correlated fashion vs. the Nasdaq 100.
  2. The current price levels are very close to the previous cycle’s all-time highs.
  3. The mainstream financial media gloats about how stupid and greedy plebs were who attained short-lived wealth investing in crypto.
Three strikes, you’re out!
Trading Is Hard
Fail better: Scott Melker on defying the odds with crypto trading – Cointelegraph Magazine
It’s always an honor to see my name appear in print, none of which would be possible without all of you supporting me on my journey. This article covers just about every part of my story, from hustling DJ gigs to riding investments to literal zero to starting a career in crypto to now.
Coinbase Cuts Costs
Coinbase Outlines Cost-Cutting Measures, Employee Grants Amid Weak Results and Crypto Rout: Report
Nobody is immune to the downturn, not even the big boys. Just about every major exchange is looking to cut costs and slow down. Coinbase has initiated a 2-week hiring freeze among other reduced spending plans. Some exchanges have announced they are cutting their workforce by a certain percentage., including Gemini.
It’s tough out there, you are not alone.
Redemption On Fox Business
Bitcoin ‘a hedge against inflation’: Crypto trader | On Air Videos | Fox Business
As you know, I was on Varney & Co a few weeks ago to talk about crypto markets. I wrote a long newsletter intro the next day about my regrets, having missed an opportunity to tell the world why Bitcoin was so important.
This time I was better prepared.
Charles Payne is a crypto advocate and always measured and fair in his approach, so this was not the same hostile environment. Still, I took the opportunity at the end to talk about why Bitcoin is truly important to people all over the world.
I feel a hell of a lot better today.
Japan Regulates Stablecoins
Japan passes bill to limit stablecoin issuance to banks and trust companies
Japan is one of the first nations to pass legislation regulating stablecoins, in a move that could shed some light on what is to come in other countries. The new legislation, which comes into effect in 2023, defines stablecoins as digital money and restricts issuance to licensed financial institutions. Basically you have to be a bank or trust company to issue a stablecoins… which is very much like what is being proposed in the US.
New York Cracks Down On Bitcoin Miners
New York just passed a bill cracking down on bitcoin mining — here's everything that's in it
New York State continues to work extremely hard at sucking. And they are doing a great job.
Long the most difficult states for crypto companies and enthusiasts, New York has now passed legislation to ban proof-of-work mining for 2 years, unless the miner uses 100% renewable energy.
Let’s hope the Governor vetoes the law.
Read the article for more insight.
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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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