The Wolf Den #526 - Ignore Price

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Last week, the majority believed that any price above $20k was your last chance to sell before things went to hell.

This week, the majority believes that any price below $20k is your last chance to buy at the bottom of the bear market.

With just a little bit of price action to interpret and no material changes in the news, almost everyone seemingly shifted to the opposite side of the boat.

But the boat is the same and the seas are still rough.

There is still a chance that the Fed raises rates by 75 or 100 basis points.

Repeatedly.

A recession is inches away (or here already).

Inflation can still rise.

Housing prices are sitting on a cliff.

And we all know that the COVID narrative can return any day.

The list goes on - Russian sanctions, the war in Ukraine, China’s lockdown, supply chain issues and Monkey Pox.

Monkey Pox!

There’s no reason for sentiment to shift so sharply, simply because price zigged and zagged. Eventually there will be a bottom, and everyone that bought along the way will be rewarded. Flip-flopping emotions are a distraction, especially if you are buying as an investor for the long term.

How will you feel if Bitcoin drops to $15k? 10k? Both will be buying opportunities for me and neither is a time to panic. Zoom out.

There’s no way to change the macro environment, or the fact that crypto is at the mercy of global events.

Contagion from within is still a real threat.

But all of this will eventually end.

Crypto will likely be the first market to bottom. It’s our canary in the coal mine. This happened in March, 2020, although there are no guarantees that history will repeat.

Be patient, don’t change bias with the wind and take a long term approach.

I ran a simple poll on twitter yesterday to gauge sentiment, and 70% of the respondents believe that the bottom is not yet in for the crypto market.

Is this an easy countertrade or is this a case where there is wisdom in the crowd?

The crowd is usually wrong, but I do not believe we have enough information here yet to draw any meaningful conclusions. The global market situation is far too rocky to determine clearly whether we have a bottom, but the possibility should at least be considered.

Bitcoin is arising alongside global markets today, a continuation of the sizable bounce from Sunday, which was further follow through on Monday.

Notably, we have a perfect retest of the 2017 high as support on this week’s candle… but it is only Tuesday and too early to call it a true retest.

For now, things look decent at least for a move up to the 200 MA to backtest it as resistance. A break above that red line this week would mimic what we saw in 2020 - a brief break below and then a bottom. That’s what we want, but not sure it is what we will get.

We need more information and time to determine what likely comes next.

What to watch this week:

Some of the main moves in markets:

The Bancor protocol, a DeFi AMM, decided to pause its impermanent loss feature. I’ve written about impermanent loss before. It’s a phenomenon that occurs when deposited balances in a liquidity pool deviate in their value. In an effort to protect their liquidity and maintain the integrity of the pool, LPs often lose money.

The move by Banco has led speculators to state that Bancor is printing tokens to cover their asses. These newly printed tokens inflate the supply and offer a chance for users to sell as their coins are devalued, causing the price to drop further and induce more printing. 

The official word from Bancor stated that the decision was due to, “hostile market conditions,” and “anomalies, if not manipulative behavior, occurring in the data.” Even if there was a manipulated attack, it doesn’t excuse poor money management or high-risk design. I guess time will tell if this is FUD or an actual concern, but it is something to keep an eye on.

If ever there was doubt as to the SEC’s views on crypto, I think we finally have some clarity. And it ain’t good!

The SEC has officially approved $BITI, a short Bitcoin strategy ETF. On the long side, we have a futures ETF and a fund with a 34% discount to NAV, but no spot ETF. For the record, I find it completely acceptable for investors to use these options, but abhorrent for the SEC to deny a superior product in the spot ETF.

This be an epic way for Celsius to recover, but don’t get your hopes up. Rumblings of a mega short-squeeze are starting to spread, but that doesn’t mean you should join. The idea is community-led and has no official support. I personally won’t be taking part in any Celsius trading.

When your favorite retail store has a sale you run towards it. So why do investors run the other direction when the market has a sale? Mark Yusko, Co-Founder & Partner of Morgan Creek Digital, sees market drops as an incredible opportunity. We talk more about the opportunity in dips, the amazing talent migration into crypto, and how we will soon start monetizing our attention and focus. Mark also shares 3 important tips for staying calm. This episode is full of incredible soundbites that you don’t want to miss.

In this episode with Mark, we discussed:

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