The Wolf Den Crypto Newsletter

By Scott Melker aka The Wolf Of All Streets

The Wolf Den #525 - Catching Fire





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June 20 · Issue #525 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. Catching Fire
  2. Bitcoin Thoughts And Analysis
  3. Legacy Markets
  4. Fighting Contagion
  5. Hashrate Slow Dramatically
  6. Beware Of Scams
  7. The Wolf Of All Streets Podcast Ft. Jeremy Allaire
  8. My Recommended Platforms And Tools
Catching Fire
Nature has taught us that nothing can grow forever.
Here’s an example.
In the interest of preservation, forest conservationists spend their careers planning and plotting ways in which they can burn the very thing they seek to protect. A forest and its keepers are a perfect example of harmony.
Sometimes you have to give a little to take a little and vice versa.
By strategically burning down small sections of forest, health is restored to the ecosystem. Dead leaves, debris, and old trees are cleared for new life to take form. Burned parcels in checkerboard patterns prevent new fires from spreading to unwanted areas. The benefits are scientifically proven to keep dangerous wildfires to a minimum.
Small, planned fires prevent much larger unplanned disasters.
Clearly, we have not learned this lesson in markets.
Since the 2017 bull market, life has flourished in the crypto space. DeFi blossomed, NFTs grew like weeds, yield attracted farmers, gamification brought color, and Web3 set the landscape. Our forest was beautiful and promising, with all parts inextricably woven together.
As is the nature of, well, nature, our forest continued to grow taller, wider, and thicker. It went far beyond our control. Caught up in the awe of our creation, we never stopped to consider the implications for longevity. What appeared perfect was actually vulnerable to catastrophe.
Sure enough, our forest has been set ablaze. Regardless of where you are standing, you can feel the heat, smell the smoke, and see the flames. We are completely surrounded by danger in every direction.
If nature could speak, it would tell us one thing - we forgot to protect the thing we love.
We never learn.
To some extent, a lot of this could have been prevented. As much as we wanted to keep growing, we forgot that a little bit of fire is actually our friend. But since we ignored nature, it took its most corrective and devastating course. Now we have to accept the fact that devastating fires will be a natural part of our foreseeable future.
If there’s one thing our forest has taught us is that algorithmic stablecoins, high yield, and leverage, probably should have had their own controlled burns a long time ago. By neglecting boundaries, we completely lost sight of longevity and nature has decided to punish us for it.
The good news is that not everything will burn to the ground and no fire burns forever. The areas that we should have controlled will become painfully obvious moving forward. What doesn’t burn grows stronger, and what does burn, makes us stronger.
This certainly won’t be the last time our forest is set ablaze, but it may be the last very serious disaster for a while.
If we put this fire out and learn, we are unstoppable.
Bitcoin Thoughts And Analysis
The monthly chart is incredibly interesting. I wrote at length about this last week, so I will not go into it again, but price almost touched the bottom support line. I really did not expect that to happen in this cycle!
If that was “close enough” to support, then the bottom could be in. But hard to call a bottom on a relentless sell off like this, so I am just watching and waiting.
The weekly candle was looking absolutely horrendous until Sunday, with no wick to the downside and relentless selling on high volume. It still honestly doesn’t look great, but at least there was a bounce and support from the 2017 ATH held.
That said, the pump came on Sunday, and markets are closed today. It is hard to trust any price action right now that comes when the stock market is closed, so tomorrow should give us more information.
The 200 MA was lost as support, so at the very least we should see price head up to test it as resistance. We really want to see price back above that red line.
I am not going to bother with lower time frames for now. Or altcoins.
Legacy Markets
Stock Market Today: Dow, S&P Live Updates for June 20, 2022 - Bloomberg
The stock market is closed today for Juneteenth.
What to watch this week:
  • RBA minutes, Governor Philip Lowe due to speak, Tuesday
  • Fed Chair Jerome Powell semi-annual Senate testimony, Wednesday
  • Bank of Japan April minutes, Wednesday
  • Powell US House testimony, Thursday
  • US initial jobless claims, Thursday
  • PMIs for Eurozone, France, Germany, UK, Australia, Thursday
  • ECB economic bulletin, Thursday
  • US University of Michigan consumer sentiment, Friday
  • RBA’s Lowe speaks on panel, Friday
Some of the main moves in markets:
  • The Stoxx Europe 600 rose 0.5% as of 9:44 a.m. London time
  • Futures on the Nasdaq 100 rose 0.8%
  • Futures on the Dow Jones Industrial Average rose 0.5%
  • The MSCI Asia Pacific Index fell 0.3%
  • The MSCI Emerging Markets Index fell 0.5%
  • The Bloomberg Dollar Spot Index fell 0.2%
  • The euro rose 0.2% to $1.0518
  • The Japanese yen rose 0.2% to 134.79 per dollar
  • The offshore yuan rose 0.3% to 6.6898 per dollar
  • The British pound was little changed at $1.2233
  • Germany’s 10-year yield declined three basis points to 1.63%
  • Britain’s 10-year yield declined one basis point to 2.49%
  • Brent crude fell 1.3% to $111.62 a barrel
  • Spot gold was little changed
Fighting Contagion
Alameda Research lends Voyager Digital 200M USDC and 15k Bitcoin to Safeguard Customer Assets During the Bear Market - Ethereum World News
Contagion is not a foregone conclusion. SBF’s Alameda Research is stepping in to contain the spread of issues with CeFi platforms by loaning coins to Voyager. Voyager borrowed “200 million USDC and 15k Bitcoin on a revolving line of credit.” The purpose is to assure that customers’ assets are safeguarded in case of further collapse of the crypto ecosystem. This is a preemptive move to make sure that there are no issues moving forward.
Comments from the CEOs of Voyager and FTX:
Today’s actions give Voyager more flexibility to mitigate current market conditions and strengthen our relationship with one of the industry leaders. Safeguarding customer assets is always our top priority, and ongoing, prudent risk management as well as a strong balance sheet are two ways that we continue to demonstrate that priority. - Stephen Ehrlich
I do feel like we have a responsibility to seriously consider stepping in, even if it is at a loss to ourselves, to stem contagion. Even if we weren’t the ones who caused it, or weren’t involved in it. I think that’s what’s healthy for the ecosystem. - SBF
Hashrate Slow Dramatically
Bitcoin Hashrate Slams Down After New ATH As Price Continues Struggle |
Bitcoin’s hashrate has been slowing dramatically. Bitcoin’s price is the most obvious reason, but there’s also the fact that energy is becoming more expensive and miners are being forced to clean up their act. If this chart (the hashrate) begins to recover, it could be a strong leading indicator that a bottom is near.
Many speculated that the tail end of the Bitcoin price drop this week was miner capitulation, as mining as no longer profitable and miners were forced to sell and turn off machines.
Beware Of Scams
FBI Agent Says Crypto Investment Scams on LinkedIn ‘Significant Threat’ to Consumers: Report - The Daily Hodl
LinkedIn is apparently the newest hotbed for crypto scams. If it looks too good to be true, it certainly is. The tricky part is picking out what is and is not a scam. There are plenty of legitimate funds that would love your business, right next to illegitimate funds that just want to steal your money. Check, double check, then triple check.
The Wolf Of All Streets Podcast Ft. Jeremy Allaire
Podcast - The Wolf of All Streets
I sat down with Jeremy Allaire, co-founder and CEO of Circle, the company behind USDC. We’ve covered many questions that arise these days in relation to stablecoins: what are the stablecoins, how “stable” are they, why USDC won’t have a bank run, why the demand for stablecoins is growing in the emerging markets, and what role the regulators are playing in the stablecoins development.
In this episode with Jeremy, we discussed:
  • What does stablecoin really mean?
  • Why is regulation needed?
  • Is a bank run possible?
  • What it will take to have the cash at the Fed
  • The role of core money regulators
  • Industry should be more self-regulating
  • Educating politicians 
  • IMF and the dollar-pegged stablecoins
  • People still want access to USD
  • Demand for USDC is growing in emerging markets
  • USDC yield product
  • Why do people borrow USDC? 
  • Are CBDCs pointless?
  • Difference between the Chinese and US approaches
  • Eurocoin
  • Lummis & Gillibrand bill
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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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