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The Wolf Den #543 - Your Fantasy Is Not Reality

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July 18 · Issue #543 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. Your Fantasy Is Not Reality
  2. Bitcoin Thoughts And Analysis
  3. Altcoin Charts
  4. Legacy Markets
  5. The Otherside Has Opened
  6. NFT Trading Slows Down
  7. Can Crypto Actually Scale For Mass Adoption? | Sandeep Nailwal
  8. My Recommended Platforms And Tools
Your Fantasy Is Not Reality
Unpopular take: it wasn’t actually obvious that major platforms and funds like Luna, Celsius, Voyager and 3AC would implode. If it was obvious, these companies clearly would have been avoided by the majority. Instead, countless people, from retail to “smart money” were massively exposed.
Hindsight is 20/20.
This begs the question as to whether or not we are capable of seeing the gaping cracks before we step in them. We can learn, study, and self-correct, but the fog is still extremely thick.
I do think that we are capable of at least determining the difference between solid ground and what could be the next sinkhole. It is possible to discern basic facts from fiction.
Yet here we are, suffering through more unfounded speculation.
More specifically, a rumor has started to gain traction - that Coinbase may be the next domino to fall in the line of collapsing centralized exchanges.
Here’s how it started.
Coinbase suspended its affiliate program, Coinbase Pro is ending, Coinbase consolidated its platform, $COIN stock is down big, and 18% of employees were laid off. This was enough to send Coinbase bears into a speculative frenzy about the future of the company. But the question remains - is this enough? Coinbase is a behemoth, and it would take a mountain of shit to send them reeling. If that happened, it would be catastrophic for the industry.
Their 2022 Q1 balance sheet showed Coinbase had $21B in assets, $7B in cash, and $14.5B in liabilities. They did operate on a net loss for income in the first quarter, but it was negligible for the size of the company (-$4M) and will likely be corrected by the cuts the company is making.
During their earnings call, CEO Brian Armstrong said this: “so before we dive into our results this quarter, I think it’s worth just addressing the elephant in the room, which is that, of course, the broader markets are down. Ironically, I’ve never been more bullish on where we are as a company. And I think it’s really important to separate our performance, how we are executing towards our goals versus how is the broader market doing. And I think in terms of how we’re executing, towards our goals, there are a lot of bright spots. 
You can expect volatility in our financials given the price cycles of the cryptocurrency industry. This doesn’t phase us because we always take a long-term perspective on crypto adoption. We may earn a profit when revenues are high, we may lose money when revenues are low. But our goal is to operate the company at breakeven roughly, smoothed out over time, for the time being. We’re looking for long-term investors who believe in our mission and will hold through price cycles.”
As far as I know, Coinbase does NOT have any outstanding risky loans to degenerate trading desks. They are not offering yield. Furthermore, just because a niche group of bears want a major exchange to implode, does not mean minor adjustments should be taken for red flags. As you can see above, Brian Armstrong talked at length about the strength of Coinbase in the last quarter’s report. You can read the transcript HERE
Coinbase going down is a bear fantasy. I am not saying it is impossible, but for now, it remains highly improbable. If Coinbase does fail, critics will point out that the above reasons listed were obvious, much like they are saying that we all should have known that other platforms would fail.
Fantasies can be fun, but it’s important that we remained anchored in fact. Until we have further material evidence, Coinbase is fine. 
Bitcoin Thoughts And Analysis
WEEKLY CHART
Things are looking decent across many markets, with a relief rally in progress. Bitcoin is no exception. That said, price action is still sideways, albeit at the top of the range. Price is still trading below the 200 MA on the weekly, with 5 weekly closes below in a row. We can start to feel a bit more optimistic with a break above that red line, although we are a long way from breaking bearish market structure and making a higher high.
Weekly volume was unimpressive last week, so we will see what this week has in store for us. Either way, as discussed on Friday, this move up in the short term was relatively predictable, with the 4-hour golden cross and break above the 200 MA.
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.
With Ethereum looking decent, Layer 1s and 2s starting to move, now could be a decent time to look for shorter time frame setups in this relief rally. It’s too early in my mind to call the bottom and become euphoric, but things are looking up. Here’s Ethereum, which usually gives us a signal that alts are looking respectable.
ETH/USD
Beautiful.
As you know, I have utterly ignored altcoin charts in the newsletter for weeks… until Friday. Both Bitcoin and Ethereum were setting up for this move, with bullish MA breaks and crosses on lower time frames. Now we want to see real follow through, which at the moment looks promising with volume spiking on low time frames.
Let’s take a quick look at the daily chart.
Zooming out a bit, we can see that ETH also broke above the 50 MA on the daily, which acted as a launchpad for today’s action. It has been trading below this line since April, much like the 200 MA on the 4-hour that I showed on Friday.
I am NOT SAYING that what I drew will happen, but that’s the trade that many bulls who are not in yet will be looking for. This would be a simple retest of resistance and the area of the 50 MA as support, which is something you “expect” on a bullish move. There’s basically no resistance up to $1700, as you can see… we would just be passing through a vacuum from the drop.
Whether the bottom is in or not, this does look great for at least a sizable continued relief rally.
Much of this is likely a result of the Merge timeline being released…
Ethereum’s Merge Projected for September According to 'Soft' Timeline
Legacy Markets
Stock Market Today: Dow, S&P Live Updates for July 18 - Bloomberg
Key events to watch this week:
  • Earnings this week include Bank of America, Goldman Sachs, Tesla
  • US Treasury Secretary Janet Yellen visits South Korea. Tuesday
  • Reserve Bank of Australia releases July minutes. Tuesday
  • UK Chancellor Nadhim Zahawi and Bank of England Governor Andrew Bailey speak at event. Tuesday
  • Bloomberg Crypto Summit in New York. Tuesday
  • Bank of Japan, European Central Bank rate decisions. Thursday
  • Nord Stream 1 pipeline scheduled to reopen following maintenance. Thursday
Some of the main moves in markets:
Stocks
  • Futures on the S&P 500 rose 1% as of 7:44 a.m. New York time
  • Futures on the Nasdaq 100 rose 1.2%
  • Futures on the Dow Jones Industrial Average rose 1.1%
  • The Stoxx Europe 600 rose 1.4%
  • The MSCI World index rose 0.6%
Currencies
  • The Bloomberg Dollar Spot Index fell 0.5%
  • The euro rose 0.6% to $1.0144
  • The British pound rose 0.9% to $1.1966
  • The Japanese yen rose 0.2% to 138.24 per dollar
Bonds
  • The yield on 10-year Treasuries advanced three basis points to 2.95%
  • Germany’s 10-year yield advanced seven basis points to 1.20%
  • Britain’s 10-year yield advanced three basis points to 2.12%
Commodities
  • West Texas Intermediate crude rose 1% to $98.60 a barrel
  • Gold futures rose 0.5% to $1,711.60 an ounce
The Otherside Has Opened
We went to the Otherside First Trip, here's what Voyagers Experienced!
This weekend, “Voyagers” took the “First Trip” into the Otherside metaverse. Behind the highly anticipated event is Yuga Labs, the creator of BAYC, Otherside, Apecoin, and other NFT-related experiences.
For those not up to speed on the lingo, “Voyagers” are players in the Otherside metaverse game, and the “First Trip” is the celebratory beta that happened over the weekend. Over 4,500 players attended what seemed to be a successful launch. But an important question remains - is the hype justified?
Feedback from players was wildly positive, but in the spirit of fair reporting, there was also a lot of outside criticisms worth covering. While the game did impressively support a few thousand players with clean visuals and NFT incorporation, there was a lot of doubt as to whether the game is actually unique or better than what currently exists.
Critics of the launch said the game is no different from other MMOs (massive multiplayer online games) and isn’t going to come close to the detail or sophistication of current popular games that have been in existence for years. Many also pointed out that the hype was only coming from players who have sunk a lot of money into NFTs, eager to praise any product that will help support their bias.
Both sides make fair points. Otherside was a success, but the game has a high bar to exceed to be successful long term. Innovation has to start somewhere, so it’s not fair to expect Yuga Labs and Otherside to have a perfect product this early, especially since they are among the first to incorporate the “metaverse” and NFT technology. If you want to play, you will have to follow the Otherside Twitter account HERE for an announcement regarding the next trip, and you have to own an Otherdeed NFT.
NFT Trading Slows Down
Monthly NFT trading volumes fell 74% from May to June
The largest month-over-month decline in the history of NFT volume took place from May to June of this year - 74%. May of this year saw $4B in trading volume, while June’s was $1.04B. This even includes Magic Eden and LooksRare carving their own market share, contributing to overall growth.
By no means are NFTs losing long term popularity, but they certainly appear to be slowing down in hype. This is probably a good thing, considering there were seemingly a thousand iterations of Punks, Apes, and Penguins taking turns pushing through the hype cycle.
Can Crypto Actually Scale For Mass Adoption? | Sandeep Nailwal
Podcast - The Wolf of All Streets
Is Ethereum the cryptocurrency of the future? Sandeep Nailwal, Co-Founder of Polygon, says without a doubt that it is. Tune in to hear why he feels so strongly and why he continues to have a positive outlook for the future of crypto. In this episode, we also cover the upcoming merge, the future of big businesses, and how Layer 3s, 4s, and 5s will play a role.
In this episode with Sandeep, we discussed:
  • Sandeep Nailwal: How we are going to reach billions of people
  • Polygon is everywhere
  • Instagram’s NFT integration
  • A positive outlook for the future
  • Layer 2: Room for growth
  • Are we ready for mass adoption?
  • Layer 3: more centralization
  • Layer 4, Layer 5!?
  • Ethereum and the upcoming merge
  • Will every big business soon have a Web3 presence?
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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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