The Wolf Den Crypto Newsletter

By Scott Melker aka The Wolf Of All Streets

The Wolf Den #551 - The Crypto Graveyard





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July 28 · Issue #551 · 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 Crypto Graveyard
  2. COIN Stock Crashes After SEC Investigation, While Ethereum Daily Active Addresses Records All Time High - IntoTheBlock
  3. Bitcoin Thoughts And Analysis
  4. Legacy Markets
  5. Unrest Grows In Harmony’s Community
  6. ARK Dumps COIN
  7. Coinbase’s Top Researcher On When To Expect Institutional Investors To Adopt Crypto | David Duong
  8. My Recommended Platforms And Tools
What Has Changed?
Take a look at this list.
#1 Bitcoin #2 Ripple #3 Ethereum #4 Bitcoin Cash #5 Cardano #6 Litecoin #7 Iota #8 Nem #9 Dash #10 Stellar
If you haven’t already guessed, these are the top 10 coins in order by market capitalization from 2017. In that year, these were considered the “blue chips” of the cryptocurrency space. Today, this list is almost entirely a graveyard of bad investments.
Bitcoin and Ethereum are up in value.
The rest of these coins have yielded negative returns since being featured on this list. Ripple and Cardano have managed to hold their top 10 positions (losing a few ranks), but the 6 others have fallen down to the 20s - 80s in terms of market capitalization.
Excluding Bitcoin and Ethereum (the only two coins up in price), the average percentage price decrease amongst the 8 losing coins is about -78%. When you factor in the top 20 coins (rather than 10) from 2017, the numbers are even worse. Almost every major coin not named Bitcoin or Ethereum has taken a bath. In blood.
What once was, no longer is.
Only 3 of the top 20 coins (Bitcoin, Ethereum and Tron) from 2017 have remained flat or increased in value. 9 out of 20 saw a -90% drop in value and 7 out of 20 coins fell 50 ranks or more in terms of market capitalization. You could literally have blindfolded an armless spider monkey and had him spit a dart at the entire list of coins in existence in 2017 and found a loser. Bitcoin and Ethereum were the only ‘get out of jail free cards’ for crypto investors.
As the saying goes, “past performance is no guarantee of future results.
To be fair, I could have written this intro back in late 2021 during the altcoin explosion and concluded that HODLING is the key to winning, but anyone following that advice and holding anything other than Bitcoin, Ethereum, or Tron (nobody) would still have likely lost badly. 2017 is only 5 years ago, so it is a more accurate view on the change in the market.
Simply HOLDing is not enough when we know that most projects will eventually fail.
Even Ripple, which was once the second largest coin by market capitalization, has dropped to number 8. The odds that it returns to its former glory at number 2 are slim to none - and slim just walked out the door.
Assuming the world hasn’t blown up by 2027, 2022’s most popular coins will likely also be a graveyard of failed projects. Picking winners isn’t easy. Remember that the next time you swear to never sell an altcoin. Most won’t make it.
As an aside, I have held bags of plenty of beaten down altcoins. I am far from perfect. This is why I maintain a strategy of 70% long term holds, which is almost entirely Bitcoin and Ethereum with the small remains of past successful trades there as well. I try to keep 15% or less in speculative investments with 15% in cash. That way my suffering is capped.
Either way, this is a lesson for me as well as all of you.
*Shoutout to Twitter user @SenCrypInvest for the chart, providing the data for this intro. You can see the tweet HERE.
COIN Stock Crashes After SEC Investigation, While Ethereum Daily Active Addresses Records All Time High - IntoTheBlock
The Wolf Den On-chain Analysis July 28, 2022
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.
COIN Stock Crashes After SEC Investigation, While Ethereum Daily Active Addresses Records All Time High
Traditional and Crypto markets are having a busy week. The Fed raised rates by 0.75 percentage point, making it the largest increase since 1994. These measures are focussed in fighting high inflation. In addition, Q2 Gross Domestic Product (GDP) advance estimates are being released today, which if negative may signal a recession. Furthermore, Apple and Amazon are reporting earnings after market, which may bring volatility.
Crypto exchange Coinbase faces an SEC investigation due to cryptocurrency listings. Coinbase Stock (COIN) has dropped 30% in the last 7 days.
  • The firm is facing investigation into whether it incorrectly allowed Americans to trade digital assets that should have been registered as securities.
  • This comes after a company former employee was accused along with two of his colleagues of insider trading by the United States Department of Justice.
  • Currently COIN sits 23% and 20% lower than ETH and Bitcoin respectively on the last 7 days price performance.
Ethereum daily active addresses reached a new all-time high. Over 1.1M addresses made an ETH transaction on July 26th.
  • In addition, a new all-time high for the total number of transactions processed by the Ethereum blockchain was also achieved, making a total of 1.64M transactions.
  • Furthermore, the active addresses ratio (active addresses/ addresses with a balance) reached 1.39%, recording a year-to-date high.
Bitcoin Thoughts And Analysis
We have been watching the 200 MA now… for 7 weeks. Price is currently back above, with 3 more days until the weekly close. We want to see a close above the red line. That’s about it!
In a rare instance where Bitcoin makes me look good instead of like a bad tarot card reader, price did in fact bounce from the red demand zone and oversold conditions. Now it is back above the 200 and 50 MAs on the 4-hour, as well as the 50 MA on the daily (not shown here).
At the end of the day, this all remains sideways chop.
Legacy Markets
Stocks, Bonds Jump on Glimpse of Slower Fed Hikes: Markets Wrap - Bloomberg
In our ass backward world, stocks once again rose when Powell announced a 75 basis point interest rate hike to continue the line of aggression against inflation. What’s notable about the ordeal, is that during the press conference, Powell said, “we are now at levels broadly in line with our estimates of neutral interest rates, and after front-loading our hiking cycle until now we will be much more data dependent going forward.”
Every word matters, including the way in which they are said, and it seems that risk assets are now breathing a bit easier knowing that large hikes aren’t necessarily a guarantee from here on out. The next interest rate decision isn’t until September 21st, so now all we have to go off of is the upcoming GDP announcement, earnings, and any new narrative that decides to present itself and break everything.
If you are trying to get a better idea of why risk assets are booming after the Fed rate hike, then here is a great thread for you. No reason for me to hash it out when Alf did it already.
Powell hikes 75 basis point and yet Nasdaq & Bitcoin are going to the moon.

What the heck?

While I disagree with the unfolding market narrative here, let me try to explain why we are witnessing such a rally.

A Fed thread.

Here are some key events to watch this week:
  • Apple, Amazon earnings, Thursday
  • US GDP, Thursday
  • Euro-area CPI, Friday
  • US PCE deflator, personal income, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
  • The Stoxx Europe 600 rose 0.2% as of 10:05 a.m. London time
  • Futures on the S&P 500 fell 0.4%
  • Futures on the Nasdaq 100 fell 0.9%
  • Futures on the Dow Jones Industrial Average fell 0.2%
  • The MSCI Asia Pacific Index fell 0.2%
  • The MSCI Emerging Markets Index was little changed
  • The Bloomberg Dollar Spot Index fell 0.2%
  • The euro was little changed at $1.0204
  • The Japanese yen rose 0.9% to 135.33 per dollar
  • The offshore yuan was little changed at 6.7454 per dollar
  • The British pound rose 0.2% to $1.2178
  • The yield on 10-year Treasuries was little changed at 2.79%
  • Germany’s 10-year yield advanced four basis points to 0.99%
  • Britain’s 10-year yield advanced three basis points to 1.99%
  • Brent crude rose 1.2% to $107.91 a barrel
  • Spot gold rose 0.7% to $1,746.41 an ounce
Unrest Grows In Harmony's Community
Harmony proposes minting billions of ONE tokens to pay back hack victims
A controversial proposal has been put forth to reimburse the victims of the Harmony hack from June, when roughly $100 million was stolen. The team has proposed a hard fork to create a new supply of $ONE tokens which can then be used to reimburse lost funds. The old “print out of thin air method,” which surely has never had any consequences… That is sarcasm, in case you missed it.
The two minting options presented are pretty straightforward. The team is asking if they should print enough tokens to compensate the victims for 50% of their loss, or print more to compensate them for 100%. Neither sounds ideal.
Cathie Wood's Ark Invest Offloads Over 1.4M Coinbase Shares as COIN Price Falls
Earlier this week, 3 separate ARK funds sold off a combined 1.4 million shares of COIN stock at ~$53. The average cost to acquire these shares was marked at $254.65, representing a -72% average loss on the position. With the stock down over 80% from its all-time high, the bad news for Coinbase continues to pile on: layoffs, Coinbase Pro ending, affiliate program suspension, insider trading, the SEC probe, and now Cathie Wood capitulating. Coinbase is a Goliath, but the company is feeling the wrath of the market. This is definitely Coinbase’s largest test yet.
*I continue to hold Coinbase stock as a long term investment.
Coinbase's Top Researcher On When To Expect Institutional Investors To Adopt Crypto | David Duong
Podcast - The Wolf of All Streets
When will Institutional Investors adopt crypto? David Duong, Head of Institutional Research at Coinbase talks about the future of institutions in crypto - what they need to know, where crypto fits in their asset allocation strategy, and what the future of regulation looks like.
David also talks about what trends and developments in the space have him excited, like Layer 2 technologies and Ethereum’s upcoming Merge, and the promise of crypto to the billions of unbanked people around the world.
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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