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The Wolf Den #568 - The Market Gods

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August 29 · Issue #568 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. The Market Gods
  2. Bitcoin Thoughts And Analysis
  3. Legacy Markets
  4. Europe’s Electricity Crisis
  5. More Mt. Gox Fake News
  6. These 4 Ideas Are Driving Crypto Adoption | Matthew Roszak, Bloq
  7. My Recommended Platforms And Tools
The Market Gods
The success or failure of any trade or investment comes at the mercy of the market gods. If the market wants to punish the hedge funds, investment banks, and money managers, it will. If the market wants to punish the Robinhood traders, diamond hand-HODLERs, and shitcoin maximalists, it will do that too. Punishment is dished out to everyone, but the pain is never equal.
This intro today is designed to help you avoid the mistakes that anger the market gods.
Boredom
Boredom is a seed planted in each of us that the market gods quietly water. Boredom can drive you to “just do something,” when simply doing nothing is usually the more profitable decision. Wall Street’s most profitable traders/investors, like Buffet, Soros, Icahn, and Druckenmiller, made a career out of avoiding this temptation. If you look at their resumes, it’s a short list of intentional decisions with high conviction. Boredom is usually the enemy. Less is more.
Panic
If boredom had an evil cousin, it would be panic. When the market gods fail to steer you wrong with boredom, panic is often the next available trap. Boredom creeps in, but panic comes at you at the speed of light. By the time panic sets in, it’s almost always too late to make a rational decision. This is why panic buys and panic sells almost never work out. Ironically, the only thing worse than a failed panic buy is often a successful panic buy.
The bad behavior is reinforced, amplifying the pain further down the road. Panicked traders almost always make their moves at the deadest of tops and bottoms. There’s no faster way to redistribute your wealth to someone more patient than by making a spastic financial decision.
Heroism
There’s a special torture chamber for those who believe that they have the market figured out. Heroes fail to see their flaws and usually end up paying the ultimate price. It’s the overconfident that fail to use stop losses or to change their bias in fear of being wrong. They always have to be right, which inevitably leads to losing everything. Most heroes in crypto die on a single hill, erasing months and years of profit.
Leverage
Using too much leverage is like walking across a battlefield in a neon jacket with a propane tank strapped to your back. NGMI. Spot traders/investors are not necessarily safe either, as overexposure is just as dangerous. One step in the wrong direction and a single trade can destroy your entire portfolio.
By no means is this an exhaustive list, but it’s the starting line for the road less traveled, camouflaged from the wrath of the market gods.
Avoid these trap, and maybe you will eventually ascend to Valhalla.
Bitcoin Thoughts And Analysis
WEEKLY CHART
Not looking great. It appears that the 25K recent high was just another lower high in a bearish structure. As you can see, price is now trading back around the 2018 all time high at $19,666. This is the key support for the moment.
The rejection at the 200 MA was brutal. Not much to get excited about on this time frame.
DAILY CHART
Daily RSI hit oversold, which can be an early sign of reversal. That said, I usually look for another push down and bullish divergence before even considering RSI in a situation like this. RSI can go much lower, and that can be alongside another huge dip in price. Hitting oversold can mean that the ugly price action is just getting started.
As you can see, price also broke the ascending support and appears to be coming back up for a retest from the bottom.
6-HOUR CHART
The SEC Will Stop At Nothing
There is bullish divergence with oversold RSI on the 4 and 6 hour charts… sort of.
I’m not playing these and not particularly excited, although they could be bottom signals. Why?
These divs occurred over a much longer period than the 14 candles measure by RSI. That’s ok, but weakens the case. Further, any move up will likely give hidden bearish divergence. Finally, the daily and 12 hour both looked likely to have bullish divergences but ended up with lower lows on RSI. I wanted to see it across time frames.
Grayscale, Disclosing SEC Queries, Says Cryptos XLM, ZEC, ZEN May be Securities
Legacy Markets
The SEC might not win against Ripple’s XRP, but that won’t stop them from going after anything they deem an easy target. A recent CoinDesk article has been brought to my attention in which the contents discuss the SEC questioning Grayscale’s “security law analysis.” The coins in question are ZEC, XLM, and ZEN, which combined account for $40 million of Grayscale’s roughly $18.7 billion AUM.
In a recent memo to the SEC, Grayscale acknowledged that their decision-making (regarding securities) could be wrong, which if it turns out to be the case, would mean these three trusts would be delisted from the brokerage. If Grayscale did ever delist these tokens, it would be a pretty strong signal for other major brokerages to reconsider their assumptions. More to come I guess.
Global Stocks Hit One-Month Low as Dollar Advances: Markets Wrap
Here are some key events to watch this week:
  • US consumer confidence, Tuesday
  • New York Fed President John Williams due to speak, Tuesday
  • ECB Governing Council members due to speak at event Tuesday through Sept. 2
  • China PMI, Wednesday
  • Euro-area CPI, Wednesday
  • Russia’s Gazprom set to halt Nord Stream pipeline gas flows for three days of maintenance, Wednesday
  • Cleveland Fed President Loretta Mester due to speak, Wednesday
  • China Caixin manufacturing PMI, Thursday
  • US nonfarm payrolls, Friday
  • UK leadership ballot closes Friday. Winner announced Sept. 5
Some of the main moves in markets:
Stocks
  • The Stoxx Europe 600 fell 1.1% as of 10:55 a.m. London time
  • Futures on the S&P 500 fell 0.9%
  • Futures on the Nasdaq 100 fell 1.2%
  • Futures on the Dow Jones Industrial Average fell 0.8%
  • The MSCI Asia Pacific Index fell 2.2%
  • The MSCI Emerging Markets Index fell 1.5%
Currencies
  • The Bloomberg Dollar Spot Index rose 0.4%
  • The euro was little changed at $0.9961
  • The Japanese yen fell 0.7% to 138.62 per dollar
  • The offshore yuan fell 0.5% to 6.9267 per dollar
  • The British pound fell 0.5% to $1.1684
Bonds
  • The yield on 10-year Treasuries advanced seven basis points to 3.11%
  • Germany’s 10-year yield advanced 12 basis points to 1.51%
Commodities
  • Brent crude rose 0.5% to $101.47 a barrel
  • Spot gold fell 0.9% to $1,722.78 an ounce
Europe’s Electricity Crisis
Europe's electricity prices hit record high as Russian supply cuts begin to bite
My heart goes out to my European readers who are preparing for a potentially hard winter.
Inflation, geopolitics, and Covid have absolutely sent European energy and gas prices flying. Prices are heavily dependent on what country you are in, but estimates have shown they are up anywhere from 5x to 10x. As the crisis becomes more severe, consumers panic and consumption numbers greatly increase, further driving up prices. In addition, gas providers are being forced to buy gas on the spot market instead of on long-term contracts.
Without a doubt, the main priority is making sure families are taken care of for the winter, but the secondary effects are bound to roll in soon. The crisis raises more questions about how entrenched inflation has become and also about Bitcoin mining. Not to make everything about Bitcoin, but with prices this high, aren’t we bound to hear that miners are being forced to shut down or sell more coins to sustain operations? I don’t want to try and predict how governments might try to climb out of this hole, but if you listen really closely, you can start to hear the hum of the printer revving up.
More Mt. Gox Fake News
Mt. Gox rumors panic Bitcoin Twitter as BTC price returns below $20K
Oh, the market is dropping? Let’s spin a wheel and whatever narrative we land on, use it to tank the market. Yes, it is true that Mt. Gox creditors will soon be partially reimbursed, but it is not conveniently happening at this moment while prices are already unstable. The rumor caught fire but is simply not true. Reports from creditors have shown that the repayment system is not live, Mt. Gox hasn’t asked for addresses yet, and the coins are going to be released in tranches, not all at once.
These 4 Ideas Are Driving Crypto Adoption | Matthew Roszak, Bloq
Podcast - The Wolf of All Streets
These 4 Ideas Are Driving Crypto Adoption | Matthew Roszak, Bloq
Matthew Roszak, Co-Founder of Bloq, talks about his Four Pillars of Generational Shift, the ideas driving the adoption of crypto: Tokenization, Financialization, Coordination, and Automation. He’ll tell us what those are, how to take advantage of them, and what they mean for the future of finance.
Matthew also shares his thoughts on the recent downturn, why he thinks now is the time to buy, and what recent developments excite him. Matthew is one of the greatest minds in the crypto space and this interview is one of his best - a can’t miss.
In this episode with Matthew, we discussed:
  • 4 Pillars of Generational Shift
  • Risk Appetites in Crypto
  • Is Now the Time to Buy?
  • Exciting Developments
  • DeFi and TradFi
  • Staking Yields
  • Innovation and Regulation in the U.S.
  • International Adoption
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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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Mt. Gox rumors panic Bitcoin Twitter as BTC price returns below $20K
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