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The Wolf Den #539 - The Risk We Miss

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July 12 · Issue #539 · View online
The Wolf Den Crypto Newsletter
Welcome to The Wolf Den! This is where I share my ideas about the market, technical analysis, education and advice regarding trader psychology and emotional control. The newsletter is released every weekday and is completely FREE.
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In This Issue:
  1. The Risk We Miss
  2. Bitcoin Thoughts And Analysis
  3. Legacy Markets
  4. Where Are Kyle Davies And Su Zhu?
  5. EUR/USD Parity
  6. Uniswap Phishing Attack
  7. Wall Street Will Fail | Mike Belshe On Bitcoin, Institutional Investors, Regulation & US Dollar
  8. My Recommended Platforms And Tools
The Risk We Miss
What if Bitcoin drops another 30% to $14,000 or 50% to $10,000? It is possible.
What if Ethereum drops another 30% to $800 or 50% to $570? That could also happen.
So what’s your plan?
Are you holding out for these lower levels? They very well may come, but what’s the hidden risk in waiting for significantly lower prices?
Missing the boat entirely or paying higher prices, of course.
From their respective all time highs, Bitcoin has currently dropped about 70%, and Ethereum 76%. Historically, this is close to bottom territory and these are undeniably good discounts for long-term HODLERs. But for those of you sitting on spare cash, there’s an attractive play potentially lurking in the distance. In your head, it sounds something like this.
Buy now, HODL, and maybe there is a chance to 5x the investment over the next 10 years. But if I hold out and buy those lower levels, there’s a chance to 10x the investment or more.
Let’s assume the market drops to those lower levels, you still have the spare cash, and you have mustered the confidence to buy the blood. You pick up some Bitcoin at $10,000 and Ethereum at $500. You are basically acquiring at half of the current price. BIG multiples await you.
But don’t big multiples already await us? If you believe that $100,000 and $10,000 price targets are obtainable (or much higher), is it worth missing the move completely just to buy a bit cheaper? For some confident traders, that answer is a resounding YES. For the average investor, a 5x or 10x from here is likely enough.
If Bitcoin goes to 100K, it will not make a huge difference if you bought one at 10K or 20K. Buying one Bitcoin now will make you 80K. Buying one at 10K will make you 90K. Not such a huge difference. The difference, of course, comes if you buy 2 BTC at 10K instead. Then you have 180K profit with the same 20K investment.
Either way, there is plenty of money to be made long term by simply making sure you are in the market.
This is not your cue to ape in and it is also not your cue to become an expert at timing bottoms. This is simply your reminder of what the upside and downside look like. The upside is clearly more substantial. Everybody has their own strategy, whether it is using percentages, multiples or price levels. Regardless of your view, recognize that we have already gone deep. If the FED, inflation, and Jerome Powell give the signal, the bottom could be in before you jump on board.
Bitcoin Thoughts And Analysis
WEEKLY CHART
Surprising nobody, Bitcoin is currently trading sideways and back at the 2017 highs.
4-HOUR CHART
Bitcoin hit overbought with bearish divergence at the top. As I mentioned at the time and again yesterday, this meant that oversold conditions were likely.
We are already there. Now I will be looking for bullish divergence and a trip back to overbought.
Legacy Markets
Futures Drop as Dollar, Bonds Rise on Haven Demand: Markets Wrap - Bloomberg
What to watch this week:
  • Earnings due from JPMorgan, Morgan Stanley, Citigroup, Wells Fargo
  • BOE Governor Andrew Bailey discusses the economic landscape, Tuesday
  • Amazon.com Inc. kicks off its Prime Day event, Tuesday
  • South Korea, New Zealand rate decisions, Wednesday
  • US CPI data, Wednesday
  • Federal Reserve Beige Book, Wednesday
  • US PPI, jobless claims, Thursday
  • China GDP, Friday
  • US business inventories, industrial production, University of Michigan consumer sentiment, Empire manufacturing, retail sales, Friday
  • G-20 finance ministers, central bankers meet in Bali, from Friday
  • Atlanta Fed President Raphael Bostic speaks, Friday
Some of the main moves in markets:
Stocks
  • The Stoxx Europe 600 fell 0.2% as of 10:27 a.m. London time
  • Futures on the S&P 500 fell 0.7%
  • Futures on the Nasdaq 100 fell 0.6%
  • Futures on the Dow Jones Industrial Average fell 0.6%
  • The MSCI Asia Pacific Index fell 1.3%
  • The MSCI Emerging Markets Index fell 1.4%
Currencies
  • The Bloomberg Dollar Spot Index rose 0.3%
  • The euro fell 0.3% to $1.0006
  • The Japanese yen rose 0.2% to 137.15 per dollar
  • The offshore yuan fell 0.2% to 6.7398 per dollar
  • The British pound fell 0.5% to $1.1832
Bonds
  • The yield on 10-year Treasuries declined seven basis points to 2.92%
  • Germany’s 10-year yield declined 13 basis points to 1.12%
  • Britain’s 10-year yield declined 12 basis points to 2.06%
Commodities
  • Brent crude fell 2.4% to $104.49 a barrel
  • Spot gold was little changed
Where Are Kyle Davies And Su Zhu?
3AC founders in hiding, offices abandoned as court filing cites fear that assets may be "disposed of"
3AC founders Su Zhu and Kyle Davies are in the wind. The unknown whereabouts of the two men raises concerns that the fund’s assets may be disposed of outside of the official insolvency process. Their NFT fund “Starry Night” has already seen art moved from one wallet to another.
This poses serious questions as to what assets can and can’t be seized. More to come on this shit show of a sitcom.
EUR/USD Parity
EUR/USD Euro Dollar Parity Close as Dollar Runs Rampant - Bloomberg
Here is a live look at the dollar and Euro.
If you’re planning a summer trip to Europe from the U.S., your trip is now heavily discounted. The last time we had EUR/USD parity was 20 years ago.
The idea of our dollar becoming stronger is tricky to grasp, because it’s strength is determined relative to a basket of other currencies. Our dollars have lost much of their buying power, but the U.S. dollar is quickly strengthening against the backdrop of other major currencies.
A strengthening dollar puts endless pressure on other assets and on foreign debt.
Uniswap Phishing Attack
samczsun
To be clear, this is not a Uniswap V3 exploit. Rather, it seems to have been a very successful phishing campaign https://t.co/S7vWZmT1uW
Late last night, over 70,000 Uniswap users were sent a message claiming that they were entitled to receive a free airdrop. This led victims to a site that mimicked Uniswap, but stole their money. Over 4,000 ETH was stolen (last I checked) and CZ was personally calling attention to the issue. Luckily, Uniswap has not been hacked, but these are the types of scams that hold us back. Legacy finance might suck, but at least users aren’t inundated in a sea of sophisticated daily scams.
Wall Street Will Fail | Mike Belshe On Bitcoin, Institutional Investors, Regulation & US Dollar
Podcast - The Wolf of All Streets
Digital assets will soon drive the global economy. Mike Belshe is playing a big role in that future as CEO of BitGo, the first-ever US-regulated trust bank, where he’s working hard to ensure a safe future for digital assets. He joins us on the show to discuss his personal journey from money to technology, why digital dollars may rise above Bitcoin, the biggest questions institutions are currently asking, and why Wall Street will ultimately fail.
In this episode with Mike Belshe, we discussed:
  •  Mike’s path from money to technology
  • Crypto’s infrastructure
  • Custody: a new wave is coming
  • Pensions and Endowment Funds: How COVID changed the wealth landscape
  • The segregation of crypto funds
  • The inflation hedge argument
  • The adoption of Stablecoins
  • CBDCs
  • The Lummis-Gillibrand Digital Asset Bill
  • Link Marines
  • The biggest questions institutions are asking
  • The Innovator’s Dilemma
  • Risk mitigation
Thanks to BULLISH for sponsoring.
My Recommended Platforms, Tools And Podcast Sponsors
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Follow me on Twitter at @scottmelker. This is where I am constantly updating my trades and sharing ideas.
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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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