The Wolf Den Crypto Newsletter

By Scott Melker aka The Wolf Of All Streets

The Wolf Den #548 - The Exodus To Ethereum





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July 25 · Issue #548 · 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 Exodus To Ethereum
  2. Bitcoin Thoughts And Analysis
  3. Legacy Markets
  4. NFT Volume Is Volatile
  5. FTX To Buy Bithumb?
  6. The Path To One Billion Users
  7. My Recommended Platforms And Tools
The Exodus To Ethereum
With fear near an all-time high, crypto market participants have largely exited the “altcoin casino” in search of “safer” assets - stablecoins, Bitcoin, and Ethereum. Of these three “havens,” (I use the word ‘haven’ loosely) Ethereum has arguably sparked the most attention, largely because of how hard it was hit, how strongly it has recovered, and that it harbors one of the last tangible bullish narratives in the short-to-mid term.
The Merge.
This gives me a good excuse to revisit some of the finer points of Ethereum. This isn’t meant to be a jab at Bitcoin or a bull case for Ethereum, but rather a quick primer on the second largest coin by market cap.
What Exactly Is Vitalik’s Current Role?
Vitalik’s role in Ethereum today is completely different from when he began with Ethereum in 2014, and also completely different from what he was doing just a year or two ago. When Vitalik started Ethereum, he was a disgruntled entrepreneur, looking to right and rewrite some of Bitcoin’s “wrongs.” He wanted cryptographic functionality that Bitcoin lacked. As Ethereum grew, Vitalik assumed the role of chief technologist, leading a competent team of core developers. Today, he is more of a protocol politician, occasionally giving direction, but letting others assume the more hands on roles. Vitalik has remained a brilliant polymath, with a vision for creating a general-purpose blockchain.
Ethereum Is Imperfect
The DAO hack is the most notable example of Ethereum’s imperfection. After less than a year in existence, the Ethereum community found itself forced to make a divisive decision: compromise protocol rules and values to save $60 million (5% of outstanding ETH at the time) or let a hacker take the funds and hold onto the core values. As we all know, the former was selected and a large subset of the Ethereum community felt violated. The bright side of this disagreement, according to Vitalik is this: “the decision put a controversial stake in the ground, it’s a moral statement that we can believe in principles without assigning an infinite amount of weight to them in all circumstances. This kind of moderation is morally and pragmatically important to me.” No further violations have taken place since, even when opportunities (ie. Parity Wallet hack) have arisen. Most of the community is now at ease and satisfied with the way things turned out.
Ethereum Is Continually Evolving
The same can equally be said about many of the protocols that are competing with Ethereum, but Ethereum continues to lead the pack. Ethereum is undeniably dominating in NFTs, DeFi, Web3, and smart contracts. Other blockchains might claim faster speeds, more throughput, or more scalability, but these cherrypicked attributes don’t change the fact that most of the crypto world desires to use Ethereum. NFTs were the single largest innovative craze this past year, which were dominated by ETH. ERC-20 is still extremely popular, DAI was built on Ethereum, and stablecoins developers love Ethereum… not to mention Uniswap, OpenSea, Compound, and many more, which are all Ethereum based. Ethereum developers are learning at an incredibly fast pace. The same can’t be said for developers of most projects. First mover advantage is everything.
Is Ethereum A Store Of Value?
When asked this question, Vitalik has said this: “ultimately, that’s a question for the community to decide, over time the community is more and more deciding Ethereum is an important asset, it’s a store of value, it’s a money, and it can be for transactions.” Bitcoin arguably makes better sense as a store of value. Bitcoin is more similar to gold and some see it as akin to a currency.
That said, the world stores its value in commodities, real estate, stocks, and collectibles, which might make Ethereum more desirable as time passes. Ethereum is a productive asset and it’s improving on current financial systems. It has all the design power to be a top contending store of value in the future.
The Urge To Merge
The merge is Ethereum’s cherry on top. Aside from all of the added benefits that will come to the network, staking funds are locked until the merge successfully happens. Staked Ethereum is illiquid until then, creating a massive incentive to improve Ethereum in the short term. I call this the urge to merge. 
It is clear that the attention Ethereum is receiving is well deserved. Don’t doubt this monster. This is not a comment on current prices, but rather on the long term potential of the asset. Do with this information what you will.
Bitcoin Thoughts And Analysis
I am writing this on Sunday night right after the weekly close… and it was disappointing. After a very promising week, BTC failed to close above the 200 MA on the weekly chart, turning this candle into a simple rejection at key resistance for the moment.
We will see what happens this week.
Legacy Markets
Stock Market Today: Dow, S&P Live Updates for July 25 - Bloomberg
Some of the main moves in markets as of SUNDAY NIGHT:
  • S&P 500 futures fell 0.3% as of 10:56 a.m. in Tokyo. The S&P 500 fell 0.9%
  • Nasdaq 100 futures slipped 0.2%. The Nasdaq 100 fell 1.8%
  • Japan’s Topix index fell 0.7%
  • South Korea’s Kospi index added 0.2%
  • Hong Kong’s Hang Seng index dropped 0.6%
  • China’s Shanghai Composite index shed 0.2%
  • Australia’s S&P/ASX 200 Index fell 0.2%
  • Euro Stoxx 50 futures slid 0.9%
  • The Bloomberg Dollar Spot Index rose 0.1%
  • The euro was at $1.0199, down 0.1%
  • The Japanese yen was at 136.14 per dollar
  • The offshore yuan was at 6.7599 per dollar
  • The yield on 10-year Treasuries two basis points to 2.77%
  • Australia’s 10-year yield fell 11 basis points to 3.34%
  • West Texas Intermediate crude was at $94.04 a barrel, down 0.6%
  • Gold was at $1,724.40 an ounce, down 0.2%
NFT Volume Is Volatile
In terms of all-time NFT volume, CryptoPunks lead the “blue chip” collections by a substantial amount. CryptoPunks have the most volume - 975 million ETH. BAYC are in second place with 640 million ETH traded and MAYC is in third at 435 million ETH. But just because these numbers are gigantic, does not guarantee large daily trading volume… or any. Over the weekend, CryptoPunks had a 0 volume day for the first time since November… but just a week ago, the volume-averaged between 1,000 to 4,000 ETH for seven consecutive days. Extremely volatile volume.
FTX To Buy Bithumb?
FTX Attempting To Purchase South Korea’s Second-Largest Crypto Exchange: Report - The Daily Hodl
FTX is reportedly in “advanced talks” to purchase South Korea’s prized crypto exchange, Bithumb . The deal has likely been in the works for months, but has slowed due to an investigation into the exchanges involvement with Luna.
Sam has hinted that his plans for acquisitions aren’t entirely profit motivated and that, “the bar is like, ‘this is not that bad of a return on our investment,’ or ‘we are incinerating a relatively smallish amount of money in doing this.”
Will Bithumb be next after BlockFi?
The Path To One Billion Users
1 Billion Crypto Users in Less Than 10 Years, Research Says
A study between Boston Consulting Group (BCG), Bitget (the sponsor of this newsletter), and Foresight Ventures revealed some interesting data points about crypto’s adoption.
  • Only 0.3% of the total individual wealth is distributed in the asset class. In comparison, 25% of people’s funds are allocated to equities such as shares of private companies.”
  • Retail investors have distributed around 4% of their wealth in it, while institutional investors have allocated 2% of their total portfolio.
  • North Americans are the most inclined to invest large sums in digital assets, while Africans are on the opposite corner.
  • Comparing the asset class to the Internet’s development in the 1990s, the entities calculated that the number of crypto users is likely to reach one billion by 2030.”
1.7 Billion People Are Unbanked. Crypto Fixes This | Staci Warden, Algorand
Podcast - The Wolf of All Streets
1.7 Billion People Are Unbanked. Crypto Fixes This | Staci Warden, Algorand
How do you fix the fraud problems of disaster relief and remittance programs? By bringing payments onto the Algorand blockchain. So the next time your living room floods, you can receive reliable emergency relief funds immediately. Staci Warden, CEO of Algorand, is on a mission to make the world a better place by helping both banked and unbanked people across the entire globe. She knows that crypto is so much more than the metaverse and NFTs, and is playing a vital role in making sure we solve important real-world problems. She joins me on the show to talk about how we thread the needle between crypto and our legacy systems, tokenization, the industry’s North Star, and several exciting projects on the horizon at Algorand.
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.
On-chain and fundamental analysis, research, predictions and indicators, all in one place. Highly recommend.
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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