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The Wolf Den #542 - The Most Important Question

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July 15 · Issue #542 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. The Most Important Question
  2. Bitcoin Thoughts And Analysis
  3. AAVE Rallies On Stablecoin Development
  4. Altcoin Charts
  5. Legacy Markets
  6. USDC Opens The Hood
  7. OpenSea Downsizes
  8. My Recommended Platforms And Tools
The Most Important Question
Imagine this.
You’re smart - really smart - and you’re hungry to disrupt the financial world. You’re a brilliant coder. You see the obvious gaps within the crypto industry and seek to improve scalability, speed, and security. With the right adjustments, a few long nights, and the right lines of script it all comes together.
You have just created a coin.
But it’s not very different from 19,900 of the 20,000 coins that already exist… so what’s next?
This is the problem.
It’s a common tale, the genesis story of 99.99% of coins on the market. It’s the story that has proliferated in our space. A brilliant coder or group of coders collect their brainpower to create a solution in search of a problem.
I am not an entrepreneurial genius, nor can I create $SCOTT coin, but what I do know is that one of the necessary principles of cracking into any industry is finding a real problem and then creating a tailored solution - not the other way around.
Here’s an example:
If you have kids, you have probably seen firsthand how crafty they can be. Maybe they drew something unique, mashed up some Play-Doh into a weird shape, or tied a bunch of sticks together into an imaginative weapon. They can be creative little devils, but these aren’t life-changing innovations. What they made melts or falls apart by the end of the weekend. They made a cool toy and then went looking for a way to play with it.
The same principles ring true for many of the coins in our industry. When a creative genius sparks a weird concoction of code and out pops a coin with a clever name, it’s cool. But it’s not going to change the world, because it has no real purpose and it sure as hell isn’t built to last. 
So here’s a question I pose to you.
Is the coin you love a solution looking to find a problem?
Or did the problem come first and your coin is the solution?
The former is going to fail 99% of the time, while the latter stands a chance to make a lasting impact. Bitcoin was designed to solve a particular problem and so was Ethereum. But can the same really be said for a random altcoin?
I doubt it.
As a long-term investor, all research should start and end here. It is the true litmus test for the possibility of future success. Most coins will be wiped out, largely for this simple reason. As creative and attractive as a coin may be, don’t fall in love with a solution looking for a problem.
Bitcoin Thoughts And Analysis
WEEKLY CHART
Bitcoin is trapped between the weekly 200 MA (could close below for 5 weeks in a row) and the 2017 highs.
That’s it, that’s all on the higher time frame.
Notably, the inflation print sent prices down immediately after the announcement, but then up for the next few days. As I mentioned was likely, the first reaction is usually the opposite of what happens with a bit of time.
4-HOUR CHART
Low time frame trend traders who use MAs are actually starting to get interested here.
We just had the first 4-hour candle close above the 200 MA since early June. Before that was April when the trend broke. As you can see, price also broke above the blue 50 MA, which is currently crossing up the 200 MA. This is called a golden cross. It is generally a lagging indicator, but is interesting when price is directly interacting with the MAs, which is the case here. This actually looks quite bullish on the 4-hour.
AAVE Rallies On Stablecoin Development
This report is written by Daniel Ferraro, formerly of IntoTheBlock.
AAVE Rallies On Stablecoin Development
Following the CPI announcement on Wednesday, which announced a June print of 9.1%, the highest in over 21 years, the crypto market reacted positively and has posted 3 days straight of gains, with OG DeFi tokens such as AAVE, Matic and AAVE leading the way.
More specifically, AAVE has experienced a positive sentiment since they announced the creation of their decentralized, collateral-backed stablecoin, known as GHO.
The proposal would allow users to mint GHO tokens while using the tokens supplied to the protocol as collateral. Naturally, as the news had a positive impact, on-chain data has also reflected significant momentum.
Multi-month high - The aggregated Perpetual Swaps volume for AAVE has reached its highest volume since early April
  • The volume on Perpetual Swaps has increased by 6x since the proposal was announced on July 7.
  • As well, the number of open positions (Open Interest) spiked to $152.96m today. The last time this happened, the price of AAVE was trading above $240.
At the same time, not only has AAVE been experiencing explosive momentum on the Derivatives side, but is showing a significant increase in retail interest once again.
Is DeFi retail interest back? - Following a steep decline in accumulation by traders, it appears that AAVE was able to spark the interest again.
  • The number of traders - addresses holding <30 days, increased from 5.36k addresses on July 6 to 5.68k addresses yesterday.
  • The accumulation trend started on May 9th, when the local bottom was spotted.
  • These accumulation patterns by retail buyers are not only showing on AAVE, but on major assets like BTC. 
  • Users have been slowly buying the dip, while HODLERS continue to remain unfazed
  • This doesn’t mean that bottom is in, but it does shows a positive short-term outlook
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.
ETH/USD
The Ethereum 4-hour chart is showing the same trend change as the one shared above on Bitcoin. Ethereum actually looks stronger, already reacting to the golden cross of the 50 and 200 MAs and leaving them behind in the dust.
Notably, Bitcoin was able to break above the 200 MA in June. Ethereum has not even SNIFFED it since April, so this is a meaningful trend change.
Ethereum also has higher lows accumulating towards a flat top - a potential bullish ascending triangle. A break above $1284 should send prices flying, as there’s almost no resistance until the $1700s.
Legacy Markets
Asian Stocks Set for Choppy Open Amid Dollar Surge: Markets Wrap - Bloomberg
Some of the main moves in markets:
Stocks
  • The S&P 500 rose 1.3% as of 9:31 a.m. New York time
  • The Nasdaq 100 rose 1.1%
  • The Dow Jones Industrial Average rose 1.5%
  • The Stoxx Europe 600 rose 1.3%
  • The MSCI World index rose 1.1%
Currencies
  • The Bloomberg Dollar Spot Index fell 0.2%
  • The euro rose 0.4% to $1.0063
  • The British pound was little changed at $1.1830
  • The Japanese yen rose 0.1% to 138.76 per dollar
Bonds
  • The yield on 10-year Treasuries was little changed at 2.96%
  • Germany’s 10-year yield declined two basis points to 1.16%
  • Britain’s 10-year yield was little changed at 2.11%
Commodities
  • West Texas Intermediate crude rose 2.7% to $98.36 a barrel
  • Gold futures were little changed
USDC Opens The Hood
Circle
Circle continues enhancing our transparency and today we shared a detailed look at the assets backing the USDC reserve. https://t.co/1tuaFWZhIO
Following Tether’s footsteps, Circle is committing to full-month breakdowns of USDC reserve assets. In their first report, it was shown that $42B (75.6% of Circle’s reserves) is held in U.S. Treasuries and $13.5B (24.4%) is held in cash at regulated financial institutions.
According to the official blog, “the USDC reserve is held solely in cash and 3-month U.S. Treasuries, held in segregated accounts for the benefit of USDC holders, and is entirely separate from Circle’s operations.
As far as new trends go, this has to be one of the most positive developments of recent. If there is one thing we have learned, it’s that transparency will go a long way from here on out.
OpenSea Downsizes
OpenSea Lays Off 20% of Its Staff to Prepare for 'Prolonged Downturn' - Decrypt
Until the layoffs cease, we are indefinitely in a crypto winter. According to the official note shared with employees, the changes being made, “put the company in a position to maintain multiple years of runway under various crypto winter scenarios (5 years at the current volume), and give us the confidence we will only have to go through this process once.
The tricky part about this news is that although the company slims down to stand stronger, it largely hinges on current volumes, which is not a guarantee. For OpenSea fans, the good news is that CEO Devin Finzer seems 100% committed, this is a company that should make it.
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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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