The Wolf Den Crypto Newsletter

By Scott Melker aka The Wolf Of All Streets

The Wolf Den #545 - How Early Are We?





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July 20 · Issue #545 · 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. How Early Are We?
  2. Lido Brings Staked ETH To Layer 2s - IntoTheBlock
  3. Bitcoin Thoughts And Analysis
  4. Legacy Markets
  5. Celsius Network Lawyers Are Out For Blood
  6. The Bitcoin Mining Council Sees Early Success
  7. My Recommended Platforms And Tools
How Early Are We?
Bitcoin’s market capitalization is roughly $445 billion. Although it may not seem like it, we are absolutely “still early.”
When compared to the total value of financial assets on the planet, Bitcoin is like the Earth sitting next to the sun. Our beloved coin is just a tiny speck, barely visible to the naked eye.
Here are a few comparisons to put the size of Bitcoin in perspective.
Jeff Bezos and Elon Musk could team up and buy the entire supply of Bitcoin.
All of it.
Warren Buffett could buy a quarter of the supply. There are quite a few billionaires in the same boat. 
About 2,750 billionaires control 3.5% of the world’s wealth. Any combination of them could dominate the entire market without noticing the money is gone.
Bitcoin is a blip.
What about institutions? Warren Buffet is currently worth $100 billion, but Berkshire Hathaway has just shy of $1 trillion dollars in assets under management. Not impressed? BlackRock has everyone beat, because they manage $10 trillion. They make Warren Buffet look poor.
BlackRock has enough capital to buy the Bitcoin supply 20 times.
As of 2022, the top 20 largest money managers have over $65 trillion in combined AUM.
How does Bitcoin compare in size to gold? Gold is estimated to have a market capitalization somewhere around $11 trillion. If gold’s market capitalization never rises again, Bitcoin would need to be worth $500,000 a coin to surpass it.
And companies? Apple is a $2.4 trillion dollar company, Saudi Aramco, $2.2 trillion, Microsoft, $1.9 trillion , Google, $1.5 trillion…. the list goes on and on and on.
It was estimated that at the end of 2020, the size of the stock market was $93 trillion.
And then there is the m1 and m2 money supplies, plus the world’s money supply, which added together are said to be approaching $1 quadrillion dollars. 
At a market capitalization of $440B and a price of $23,000, Bitcoin is very small. I don’t think that Bitcoin is designed to completely replace these sectors or be the global currency of the world anytime soon, but it is absolutely stealing value as it carves out its own niche. The best part is that you can probably read this same newsletter next year, and three years from now, and it will still be early.
Bitcoin is on an ambitious mission to space that just cleared the launch pad.
Lido Brings Staked ETH To Layer 2s - IntoTheBlock
In this report, we bring to you the latest in on-chain cryptocurrency analysis. We look at the blockchain directly and analyze balances, transactions, and the overall activity of market participants. This gives us a unique insight into the future of the market.
This section is written in conjunction with IntoTheBlock (ITB).  ITB is an intelligence company that leverages machine learning and advanced statistics to extract intelligent signals tailored to crypto-assets. IntoTheBlock tackles one of the hardest problems in crypto: to provide investors with a view of a crypto asset that goes beyond price and volume data. 
The Wolf Den research team uses IntoTheBlock to dig deeper and get the most important insights about the crypto market.
Lido Brings Staked ETH To Layer 2s
Lido has recently announced the launch of wrapped stETH (wstETH) for use on layer 2 networks. This comes at a time when users are continuing to add more stETH to their wallets and holding it for longer, waiting for the right time to deploy. Enter wstETH, a token that will help enable users to hold on to their stETH and put it to use in DeFi protocols on L2s such as Optimism and Arbitrum.
The charts above highlight a few important things:
  • Mid to long-term hodlers are growing in numbers. They have held onto their stETH through the recent tumultuous months
  • Retail users are the largest growing group of holders (especially addresses holding between 0 and 10 stETH)
Though gas costs on the ethereum network have been relatively low compared to the gas wars seen last year, the costs for the multiple transactions needed to enter an LP position or other DeFi products is still prohibitively expensive on mainnet for many users. The combination of the indicators above, alongside gas costs suggest there is an untapped pool of stETH waiting to be deployed that could flood the L2 markets.  
  • High gas costs on mainnet present an opportunity for Lido to launch wstETH on L2s
  • ETH could be staked for under a dollar worth of fees, broadening the user base of people staking
  • This would be mutually beneficial for Lido, which would earn higher revenues from more staking, and Ethereum, which would benefit from increased security
Wrapping stETH is already live and can be done through Lido’s Website. Read more about wstETH on their blog.
Bitcoin Thoughts And Analysis
Bitcoin is currently trading above the 200 MA on the weekly chart - but it is only Wednesday. Bulls want to see a close above that red line on Sunday, which would signify a likely reversal.
Bitcoin price is trading above the 50 MA on the daily chart for the first time since April. This is a key line that many traders and algorithms watch for a flip in bias. You can see that it broke yesterday and was perfectly retested as support (so far) today. Things are really starting to look up, but it is still very early.
There’s quite literally no resistance between the current price and Marge (28K).
Big vacuum to potentially fill. This is a result of the velocity at which price dropped from that level to current prices. It was relentless, so it never stopped to add resistance.
Legacy Markets
Stock Rally Set to Extend to Asia Amid Dollar Drop: Markets Wrap - Bloomberg
There are increasing signals that the bottom in markets may be in for a while, or entirely. Many analysts are pointing to various reasons that this may be the case, including the significant drop in gas prices, the fact that future hikes may be “priced in” and more. The truth is, everyone continues to guess and nobody knows for sure what is coming.
As I have pointed out a number of times, the bottom being in would line up with the history of previous tightening cycles. 11/12 cycles have ended with stock performing well, and election years tend to be bullish in Q4, which is coming in October.
U.S. Stocks Historically Deliver Strong Gains in Fed Hike Cycles
Then there is this…
Jason Goepfert
The bear market is over.*

In modern markets, the S&P 500 has never lost ground over the following year when advancing volume was 87% or more of total volume for 2 out of 3 days coming off a 52-week low.

It has a perfect track record. **
Again, nobody knows what is coming, but you should at least be open to the idea that the bottom COULD be in and markets have corrected enough for now.
Key events to watch this week:
  • Earnings this week include Tesla
  • 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:
  • The Stoxx Europe 600 rose 0.1% as of 9:58 a.m. London time
  • Futures on the S&P 500 were little changed
  • Futures on the Nasdaq 100 rose 0.2%
  • Futures on the Dow Jones Industrial Average were little changed
  • The MSCI Asia Pacific Index rose 1.3%
  • The MSCI Emerging Markets Index rose 0.8%
  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0232
  • The Japanese yen was little changed at 138.26 per dollar
  • The offshore yuan fell 0.2% to 6.7568 per dollar
  • The British pound was little changed at $1.2002
  • The yield on 10-year Treasuries declined four basis points to 2.99%
  • Germany’s 10-year yield declined five basis points to 1.23%
  • Britain’s 10-year yield declined seven basis points to 2.11%
  • Brent crude fell 1% to $106.25 a barrel
  • Spot gold fell 0.2% to $1,707.88 an ounce
Celsius Network Lawyers Are Out For Blood
Celsius Network Lawyers Argue That Users Have No Right To Their Crypto |
Court proceedings have begun for Celsius, and the bankruptcy lawyers were quick to refer to specific texts that users agreed to in the “Risk Disclosure” and “Terms Of Use.” If the lawyers are basing their arguments on these documents, then it’s pretty evident that they don’t have the best interest of the users in mind. Outside of these documents, Celsius has made countless claims contrary to these texts, but ultimately, it all comes down to what actually holds true in court and how the law reorganizes the remaining money.
Let’s take a look at what the lawyers are arguing based on.
Risk Disclosure:
Your Earn Account is not a checking or savings account, and it is not covered by insurance against losses. We will pledge, repledge, hypothecate, rehypothecate, sell, lend, or otherwise transfer or use the digital assets in your Earn Account to counterparties, and such digital assets will be exposed to various risks as a result of such transactions.
TLDR: Celsius can do whatever it wants with your Earn Account funds.
Terms Of Use:
  • You will not be able to exercise rights of ownership;
  • Celsius may receive compensation in connection with lending or otherwise using Digital Assets in its business to which you have no claim or entitlement; and
  • In the event that Celsius becomes bankrupt, enters liquidation or is otherwise unable to repay its obligations, any Eligible Digital Assets used in the Earn Service or as collateral under the Borrow Service may not be recoverable, and you may not have any legal remedies or rights in connection with Celsius’ obligations to you other than your rights as a creditor of Celsius under any applicable laws.
TLDR: You don’t own your funds and they can be lost in the case of bankruptcy.
So what about funds in a custody wallet? Are those safe?
Well the Terms Of Use Say This: (Pay close attention to the bottom)
Title to any of your Eligible Digital Assets in a Custody Wallet shall at all times remain with you and not transfer to Celsius. Celsius will not transfer, sell, loan or otherwise rehypothecate Eligible Digital Assets held in a Custody Wallet unless specifically instructed by you, except as required by valid court order, competent regulatory agency, government agency or applicable law.
TLDR: All it takes is a competent regulatory agency for custody funds to not be yours.
The counter argument to these texts is that none of these statements align with everything else said by Celsius outside of their official terms of service. Alex Mashinsky and other executives went on the record a billion times to praise Celsius in all the ways it gives total control to its users. Even Celsius’s official blog contained written material contrary to what’s quoted above.
The situation sucks. It’s a battle of he says vs. she says and now the court has to decide what happens.
The Bitcoin Mining Council Sees Early Success
Q2 Bitcoin Mining Council Survey Confirms Year on Year Improvements in Sustainable Power Mix and Technological Efficiency 
The mining council, spearheaded by Michael Saylor and Elon Musk, seems to be making sustainable improvements on Bitcoin mining. It was estimated that year-over-year, there was a 6% increase in sustainable electricity mix added to the global mining energy usage, which puts the number at 59.5% for global Bitcoin mining sustainable energy. Furthermore, the network’s technological efficiency grew by 46% YOY.
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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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