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The Wolf Den #520 - Uh Oh

June 13 · Issue #520 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. Uh Oh
  2. Bitcoin Thoughts And Analysis
  3. Ethereum
  4. Legacy Markets
  5. Ethereum Is Not Broken
  6. Difficulty Bomb Delay
  7. The Wolf Of All Streets Podcast Ft. Senator Kirsten Gillibrand
  8. My Recommended Platforms And Tools
The newsletter is a bit late today. To be honest, writing it has been a struggle. I overslept because I was exhausted from Consensus (maybe the first time I have overslept since college) and woke up to a crypto tornado of epic proportions.
I worked hard on an intro and had it ready to go, but the market had other plans. This newsletter was supposed to be called, “Has Everyone Lost Their Mind?” but that one will have to be postponed .
Let’s talk briefly about Celsius.
About an hour before midnight last night, Celsius dropped a bomb.
Scratch that. It was a Mother Fu**ing Nuke.
You can read their official statement HERE.
Titled, “A Memo to the Celsius Community,” the blog says this:
“Due to extreme market conditions, today we are announcing that Celsius is pausing all withdrawals, Swap, and transfers between accounts. We are taking this action today to put Celsius in a better position to honor, over time, its withdrawal obligations.”
The blog has little to no specifics. It’s the statement above and nothing else but a few apologies and some coping. There is a lot that I want to say. But as the bearer of news, good or bad, I want to give Celsius a little bit of time to release more details and want to make sure that I have the facts straight. I am in no way shape or form defending them. This is legitimately bad. But this situation is far too serious to deeply comment on before we have all of the information. That’s what got us here in the first place.
The facts of this situation are murky at best. Celsius has been under immense pressure from a swath of the crypto community, who have been warning of a liquidity crisis, but much of it sounded like the usual coordinated FUD thrown at any community. I had Mashinsky on a panel a few months ago, and he was clearly under pressure even in that setting, because the other guests were generally cautious of lending Bitcoin.
Today’s announcement legitimized the speculation around Celsius’s issues, stating that the suspension of withdrawals will allow it to “stabilize liquidity.” 
“Our ultimate objective is stabilizing liquidity and restoring withdrawals, Swap, and transfers between accounts as quickly as possible.”
There will be a lot to say about this and I will speak my mind. Until then, I am going to wait a moment to gather more facts.
But I can confidently state this.
In the rush to create a parallel and superior financial system, it seems many in crypto have recreated many of the same issues but with more risk and less secure rails.
That is the nature of moving fast and breaking things, but now crypto has to do better. If we don’t learn from these lessons, the industry will fail.
Breaking things when the life savings of every day people who believed they were parking their money on secure platforms like Anchor and Celsius (which could still be safe) is an invitation for regulators to drop an atomic bomb on our heads, which may be exactly what this industry needs.
How can we ask anyone to trust this industry right now?
Things will break.
Bitcoin will not. I am by no means a maximalist, but I have zero concern about my positions in Bitcoin and will be increasing my exposure over time.
As an aside. I can choose one of two paths as a voice in this space.
(1) I can mentally capitulate, slow the content because there are less people, less interest, less engagement. I can basically give up until the next bull run.
(2) I can double down, work harder, put out more content, help as many people possible through the tough time and build. I can share my own losses and experiences so you know that you are not alone.
I think you know which one I will choose.
I am walking face first into this storm with the rest of you, and I have no quit in me. Expect my commitment to this community to only increase, as well as the quality.
This is when we build.
Bitcoin Thoughts And Analysis
Bitcoin is massively oversold, there is a blood in the streets, people are panicking, things are breaking and the macro storm is showing no signs of slowing.
Bad news everywhere, and it could be a long time before we see an improvement.
Good thing we are all here for the long haul, right?
As bad as it gets, it is important to remember that the pendulum ALWAYS swings back the other way. The mission now is to survive. Avoid leverage. Batten down the hatches. Continue to dollar cost average into Bitcoin if you have the means. Take it slow. Take a deep breath.
Charts are useless in times like these. I have always been the first to tell you to take them with a grain of salt, that nobody can predict the future, that we are all just making educated guesses. I can continue to present what I am seeing, but I cannot imply that this is actionable intelligence. We have seen bottoming signals for ages, and price continues to drop. A line on a chart cannot stop the mayhem of platforms collapsing, inflation increasing, interest rates rising.
Worst bitcoin monthly RSI ever: 43.7
Bottom Jan 2019, BTC $3400: RSI 43.9
Bottom Jan 2015, BTC $210: RSI 44.6
And some blue: we are 60% below monthly ATH
PlanB is offering some much needed context to just how bad this sell off has been. We are at historically low levels of RSI for now, although the monthly candle has not closed. Absolutely crazy to see.
It appears we should rename this the “weakly” chart. The 200 EMA was lost for effectively the first time in history. We have been below a few times, but always closed back above. The key $28,800 area is toast, with the candle closing below.
Weekly RSI is oversold, a VERY rare event last seen in December of 2018 at the depths of crypto winter. I guess that huge bear div was a good sign. As I said, they take forever to play out, but I honestly did not expect it to at this level.
The 200 MA has been the bottom of every bear market, and looms around $22,000. That is the red line. Obviously the main support below that is the bull market highs from 2017 around $20,000. Crazy.
I am not going to share lower time frames for now. There’s no point. Everything is oversold, but selling volume remains relentless and high. I do not even want to encourage people to look at lower time frames or actively trade. None of that matters for now.
Quick note. Ethereum is now trading BELOW the last bull market highs from early 2018. This is insane. The $1,400 area “should” have been the strongest support on the chart.
That does not mean the same will happen for Bitcoin at it’s $20,000 level, but it should be clear that anything can happen.
I bought some Ethereum at $1,400 to be fully transparent. I am quite confident price will trade much higher down the road.
Legacy Markets
Stock Market Today: Dow, S&P Live Updates for June 13, 2022 - Bloomberg
Inflation numbers came in hot to close the week, meaning that the odds of a higher rate hike have increased. .75 is now more likely, with markets pricing in a roughly 50% chance of that happening. The previous expectation was continued hikes of .50.
What a time to be alive.
What to watch this week:
  • First WTO ministerial meeting in nearly five years. Through June 15.
  • ECB’s Luis De Guindos due to speak, Monday.
  • US PPI, Tuesday.
  • China key economic activity data, liquidity operations, medium-term lending facility, Wednesday.
  • FOMC rate decision, Chair Jerome Powell briefing, US business inventories, empire manufacturing, retail sales, Wednesday.
  • ECB President Christine Lagarde due to speak, Wednesday.
  • Bank of England rate decision, Thursday.
  • US housing starts, initial jobless claims, Thursday.
  • Bank of Japan policy decision, Friday.
  • Eurozone CPI, Friday.
  • US Conference Board leading index, industrial production, Friday
Some of the main moves in markets:
  • Futures on the S&P 500 fell 2.1% as of 8:22 a.m. New York time
  • Futures on the Nasdaq 100 fell 2.7%
  • Futures on the Dow Jones Industrial Average fell 1.6%
  • The Stoxx Europe 600 fell 1.9%
  • The MSCI World index fell 1%
  • The Bloomberg Dollar Spot Index rose 0.6%
  • The euro fell 0.5% to $1.0464
  • The British pound fell 1% to $1.2186
  • The Japanese yen rose 0.1% to 134.21 per dollar
  • The yield on 10-year Treasuries advanced 10 basis points to 3.25%
  • Germany’s 10-year yield advanced eight basis points to 1.60%
  • Britain’s 10-year yield advanced two basis points to 2.47%
  • West Texas Intermediate crude fell 1.5% to $118.92 a barrel
  • Gold futures fell 1% to $1,857.20 an ounce
Ethereum Is Not Broken
Lido-Staked ETH Prices Slip Due to Liquidity Issues - Crypto Briefing
Ethereum is not imploding and it’s not broken. A lot of misinformation spread over the weekend as stETH lost its 1:1 “peg” to ETH.
Let’s clarify a few things first. stETH is a fully collateralized representation of Ethereum native to Lido. A staker receives stETH for staking ETH and MUST have the stETH to redeem their stake or there is no redemption. It is not comparable to Luna’s UST or Grayscale’s GBTC. Think of stETH the same way you would think of a bond. After a certain amount of time, the bond matures and can be redeemed for its face value.
Like a bond, stETH can trade at different values. It doesn’t have to be exactly worth what it says it will eventually redeem at. The stETH asset does not have to equal a 1:1 price ratio to Ethereum this far out and there is no reason to panic that it is now lower and possibly going further down. stETH earns yield, but if the market wants to value liquidity more than rewards, then so be it. As the merge nears, stETH will return to its 1:1 value.
With the merge being pushed back once again and cash being king, it makes sense investors would want less exposure to stETH. Lastly, I will say this. Rumor has it that Celsius offloaded a massive amount of stETH at a discount to FTX. If this is a war amongst giants, it’s hard to imagine SBF ever losing. Buying stETH here is not for the faint of heart, so do this at your own risk!
Difficulty Bomb Delay
Ethereum Core Developers Announce Further Delay of ‘Difficulty Bomb’
If you were hoping the Ethereum merge would be this month or next month, you are out of luck. The difficulty bomb is a piece of code designed to disincentivize miners as proof-of-stake nears. It being delayed means the merge is pushed back. I think two things matter here. First is that the merge never had a set date, so anybody guessing when it comes is speculating. The second is that, hopefully, the merge takes place near the bottom of the bear market to kick start optimism and a new bull market. If it came right now, I would imagine it wouldn’t be enough to fight macro forces. Hopefully, it coincides with positive sentiment.
The Wolf Of All Streets Podcast Ft. Senator Kirsten Gillibrand
Podcast - The Wolf of All Streets
Senator Kirsten Gillibrand Explains Why The New Crypto Bill Is A Game Changer For Bitcoin
Senator Kirsten Gillibrand, Democrat, teamed up with Cynthia Lummis, Republican, to propose the new Lummis-Gillibrand bill. The goal? To create a regulatory framework for digital assets with clear standards and definitions, clarity for both industry and regulators, analysis of energy consumption, and ongoing flexibility as the space evolves. Senator Gillibrand sat down with host Scott Melker at Consensus 2022 to discuss the creation of the bill, its early reactions, and why you should get involved and speak up. 
In this episode with Senator Gillibrand, we discussed:
  • A regulatory framework for crypto
  • Negotiations and next steps for this bill
  • Early reactions
  • Getting stakeholders involved in early drafts
  • Why Senator Gillibrand decided to get involved
  • Bitcoin mining and the importance of consumer choice
  • The $200 loss or gain exclusion
  • Stablecoins legislation coming soon
  • A forward thinking bill with room for growth
  • Get involved and speak up
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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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