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The Wolf Den #546 - I'm Still Skeptical

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July 21 · Issue #546 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. I’m Still Skeptical
  2. Bitcoin Thoughts And Analysis
  3. Legacy Markets
  4. NFT Volume By Chain
  5. The U.K. Proposes An Important Crypto Bill
  6. Tesla Sold Bitcoin
  7. Institutions Want Ethereum
  8. From Losing Everything To Helping People Understand Bitcoin | Natalie Brunell
  9. My Recommended Platforms And Tools
I’m Still Skeptical
Bitcoin is up roughly 32% from the June 18th low. Ethereum is up about 73%. Bitcoin dropped to $17,700 and Ethereum to $890. Prices are currently around $23,000 and $1,510.
You probably already know this. 
But what exactly is responsible for this recovery? What narrative explains the rally?
First off, narratives are just stories that we tell ourselves to make sense of price movement. Occasionally there are powerful fundamental shifts that logically drive price, but most of the time, narratives are simply folklore and old wive’s tales that we share to make sense of our sporadic human emotions.
Remember Wall Street Bonuses? Chinese New Year? China Bans? India Bans?
All false narratives used retroactively to explain price movement.
The dominant narrative of this drawdown was initially amorphous - the idea that “things suck” and “things are breaking” sent prices below the previous cycle’s highs. Then we saw some fundamental shifts, namely the contagion from Luna to Celsius, 3AC, and Voyager. Prior to these implosions, crypto was already in a corrective phase, cooling off from 2020 hype and caught in macro headwinds.
So why exactly did price recover 33% and 75% from last month’s lows?
I think the honest answer is that the recent rebound can fundamentally be attributed to… a whole lot of nothing.
What do I mean?
When things are really bad, a slowdown of bad news or period of no news is often interpreted as “good news.” Bitcoin literally set a record by printing red candles 9 straight weeks in a row. Ethereum had 11. To say that a technical bounce was overdue is the understatement of the century. Assets were wildly oversold and the prior sell off was relentless. Relief was inevitable, if not delayed.
A renewed rally does not require good news, but it certainly helps. What good news do we have to work with (other than the Ethereum merge)? Will buyers continue to outpace sellers? Do cheap prices count as good news? Hopes of Celsius, Voyager, 3AC, and Luna righting their wrongs are certainly not driving price. We are still in the midst of a looming global recession, a potential housing correction, historic inflation, and aggressive rate hikes. Our only “good news” is predicting that the carnage will stop sooner than later, not that it has stopped. 
Just because we had a strong technical bounce does not mean the bull market is back on track. A bull market requires buyers outnumbering sellers for an extended period of time, not just a couple of weeks. It’s going to take more than a technical bounce and the absence of bad news to be sure of a “turnaround.”
The bottom very well may be in. I am inclined to believe this is the case. But that does not mean we are back in a bull market. We could be down here a while.
I’m still skeptical. 
Bitcoin Thoughts And Analysis
WEEKLY CHART
Price is trading just above the 200 MA, after dropping on the news that Tesla sold 75% of their Bitcoin holdings. Considering how much Musk used to influence the market, I would consider this small drop a big win for the moment. We will see what happens heading into the weekend, but bulls really want a close above that red line.
DAILY CHART
Bitcoin broke above the 50 MA on the daily chart for the first time since April, and is now retesting it as support. Still looking decent here, all things considered. We have a long way to go to be back in a bull market.
Legacy Markets
Stock Rally to Pause in Asia as Dollar Advances: Markets Wrap - Bloomberg
Key events to watch this week:
  • European Central Bank rate decisions. Thursday
Some of the main moves in markets:
Stocks
  • The Stoxx Europe 600 rose 0.1% as of 11:04 a.m. London time
  • Futures on the S&P 500 were little changed
  • Futures on the Nasdaq 100 were little changed
  • Futures on the Dow Jones Industrial Average fell 0.2%
  • The MSCI Asia Pacific Index fell 0.1%
  • The MSCI Emerging Markets Index rose 0.1%
Currencies
  • The Bloomberg Dollar Spot Index was little changed
  • The euro was little changed at $1.0181
  • The Japanese yen fell 0.4% to 138.77 per dollar
  • The offshore yuan was little changed at 6.7798 per dollar
  • The British pound fell 0.2% to $1.1948
Bonds
  • The yield on 10-year Treasuries advanced two basis points to 3.04%
  • Germany’s 10-year yield advanced two basis points to 1.28%
  • Britain’s 10-year yield advanced five basis points to 2.19%
Commodities
  • Brent crude fell 4% to $102.65 a barrel
  • Spot gold fell 0.8% to $1,683.53 an ounce
NFT Volume By Chain
NFT Charts: Transactions, Users and Trading Volumes
Ethereum is the undisputed king of all things NFs. It’s not even close. I found a bar chart that layers each blockchain’s volume over others for a visual comparison of volume over time. I picked a few data points from this year and last year to illustrate just how dominant Ethereum has been. I could have closed my eyes and picked 10 more points and the data would be almost identical.
Ethereum’s NFT Volume vs. Total NFT Volume:
5/02/21 - ETH $176 million vs $204 million
9/12/21 - ETH $506 million vs $662 million
1/02/22 - ETH $919 million vs $1.08 billion
2/13/22 - ETH $490 million vs $611 million 
5/08/22 - ETH $557 million vs $620 million
Blockchains like Solana and BSC have grown in NFT volume, but in comparison to Ethereum, nothing seems to be making a meaningful dent in market share - it is not even close. NFTs live on Ethereum.
The U.K. Proposes An Important Crypto Bill
UK Markets Bill Extends Banking Rules to Crypto Assets
A crypto-specific bill was presented to the U.K. Parliament yesterday, potentially extending existing laws for banks and payment systems to digital assets. In the bill, digital assets are referred to as “digital settlement assets” (DSAs) and are loosely defined as, “a digital representation of value or rights.” Considering cryptocurrency is largely a misnomer, the naming here isn’t that bad.
Stablecoins are the main focus of the legislation, supposedly to ensure that consumers can use and enjoy them with confidence and clarity. The goal of the bill is to extend the central bank’s oversight to DSAs, including issuers, exchanges, and wallet providers. In addition, the bill aims to involve the Treasury in necessary amendments, “as it considers appropriate.” The first round of debates for the bill starts today. Mainstream adoption, here we come.
Tesla Sold Bitcoin
Tesla Sells 75% of Its Bitcoin (Because of COVID Lockdowns) but None of Its Dogecoin | Cryptoglobe
Wondering why we saw a temporary dip in Bitcoin price? It is because Tesla had their earnings call, and revealed that they sold 75% of their Bitcoin position. So much for diamond hands.
The irony should not be lost - people panic selling their Bitcoin when Tesla already sold in the past quarter. Humans are funny.
Is Tesla selling Bitcoin a big deal? No. Read Musk’s exact wording on the subject below.
It should be mentioned that the reason we sold a bunch of our Bitcoin holdings was that we were uncertain as to when the COVID lockdowns in China would alleviate. So it was important for us to maximize our cash position, given the uncertainty of the COVID lockdowns in China. We are certainly open to increasing our Bitcoin holdings in future. So this should not be taken as some verdict on Bitcoin. It’s just that we were concerned about overall liquidity for the company given COVID shutdowns in China. And we have not sold any of our Dogecoin.
Elon Musk is still a founding member of the Bitcoin Mining Council and clearly still cares about the asset. Tesla managing their balance sheet in the best interest of the company has nothing to do with Bitcoin’s future. It is actually their fiduciary responsibility to shareholders.
Interestingly, the 2021 bear summer was sparked by Tesla canceling their acceptance of Bitcoin as payment for cars. This opened the selling floodgates, sending price from the 60Ks down to the 30Ks.
This time is sparked a mild sell off.
Clearly the market is stronger.
Institutions Want Ethereum
Galaxy Buys $75 Million ETH – Trustnodes
Galaxy just purchased $75.6 million in ETH on behalf of 21 major investors in their institutional Ethereum fund. This purchase happens to be one of the largest recorded buys for Ethereum and is supposedly servicing Galaxy’s most popular product right now. Another fund that Galaxy offers (not ETH) saw only $3.25 million in buying interest over the same time. The merge probably has a lot to do with this.
From Losing Everything To Helping People Understand Bitcoin | Natalie Brunell
Podcast - The Wolf of All Streets
The end of fiat currencies is inevitable, but are we prepared for what that transition will look like? TV Correspondent, Emmy-Winning Journalist, and Podcaster Natalie Brunell is not shy in speaking out about our corrupt financial system and wants everyone to believe in the incredible power of Bitcoin. She shares how the 2008 financial crisis influenced her views, what she’s doing to help lead people down the rabbit hole, and why she believes crypto will help bridge the massive political divide in the United States.
In this episode with Natalie, we discussed:
  • Natalie Brunell: making crypto easier for everyone to understand In the world of news, why Bitcoin?
  • Getting through another financial crisis
  • How Bitcoin fixes our massive debt problem
  • Educating the masses and helping people find their way down the rabbit hole
  • Lessons from El Salvador
  • Getting to know the President of El Salvador
  • Where does resistance stem from?
  • Which countries will be next?
  • How the average person can help evangelize Bitcoin
  • Can Bitcoin help bridge our giant political divide?
  • Our kids will grow up in a Bitcoin native world
  • Peter Schiff
  • The end of fiat
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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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