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The Wolf Den #586 - No Narratives Left

September 23 · Issue #586 · 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. No Narratives Left
  2. Bitcoin Thoughts And Analysis
  3. Altcoin Charts
  4. Legacy Markets
  5. Was Coinbase Trading?
  6. Kraken CEO Steps Down
  7. Metaverse Real Estate Is In Bad Shape
  8. How Human Behavior Drives Markets | Jim O'Shaughnessy
  9. My Recommended Platforms And Tools
No Narratives Left
Do you know that feeling of depression that you experience when you finish a favorite book, movie, or tv series? You invested your time and energy into a universe of unique characters, relationships, and journeys… and it comes to an end. Even a picture-perfect finale can’t help you overcome the need for a little more.
But the show is over and there is nothing left to be said.
That feels like where we are with crypto.
Our show is not entirely over, but now that the merge has passed, there are no obvious narratives left. The writers of our script are no longer deeply invested in the story… for now.
Is regulation next? Could be.
Is a recession next? Very possible.
Will the energy crisis worsen? I hope not.
Is the money printer next? Eh, probably not.
Is a crash in housing next? Perhaps
Will inflation rise? Maybe, maybe not.
Could Russia or China start a war? Sure.
None of the items on this list are positive. Our story is being written by legislators and regulators, none of whom seem to have any idea what they are doing.
Yet despite all of these unpleasant side plots, crypto is still here.
And that is the real story.
In the past couple of weeks, we have seen massive news from institutions. None of it has moved the needle or garnered much attention. Fidelity, Charles Schwab, Sequoia Capital, Citadel, Nasdaq, and Mastercard all made serious commitments to building out institutional infrastructure. Nobody batted an eye.
Crypto lacks flashy narratives for the moment, but all signs are pointing to monstrous capital inflows in the next couple of years. Wall Street would not be piling in if crypto was “going to zero” or if they lacked conviction in the future of the asset class. They are all hands on deck, building a fleet for the next inevitable bull run and for the long haul.
I hope you’re ready.
Bitcoin Thoughts And Analysis
The landscape can change quickly in technical analysis. Unfortunately, Bitcoin followed the oversold bullish divergence with hidden bearish divergence (higher high on RSI, lower high on price), which effectively cancels the bullish divergence and is a continuation signal down. We often see this preceding a small drop and another bullish divergence, so this is now more sideways chop and a time to be patient.
The macro is dominating everything.
Altcoin Charts
I do NOT share signals in this section. I share setups and charts that I am watching, in an effort to help show you how I view a chart and what criteria would be necessary for me to consider taking a trade. NEVER blindly buy something because it is listed in a newsletter or posted on twitter. You need to have a plan when you enter a trade. These are just ideas, and are almost always “if, then” scenarios. If a certain set of things happen, then I would consider a trade.
See the description of Bitcoin above!
Legacy Markets
UK Stimulus Plan Fuels Rout in Global Risk Assets: Markets Wrap - Bloomberg
“Global bond yields surged and stocks tumbled at the end of a week that underscored expectations for tighter monetary policy and a slowing economy.
UK bonds and the pound plunged as markets priced in a more aggressive pace of tightening to offset the government’s growth plan. A dollar gauge rose to yet another record and 10-year Treasury yields to the highest in more than a decade.
US equity futures dropped at least 1%, with major internet and technology stocks solidly lower in premarket trading. Europe’s Stoxx 600 Index tumbled to the lowest since December 2020 and was poised to enter a bear market as mining and energy shares fell alongside gold and oil. Credit Suisse Group AG fell to a record after denying a report that it’s considering exiting the US. 
Goldman Sachs Group Inc. slashed its year-end target for the S&P 500 Index to 3,600 from 4,300, citing a higher interest-rate path from the Federal Reserve, and strategists gave up on a year-end rally for European stocks as private-sector activity in the region continued to contract.”
Here are some of the main moves in markets:
  • The Stoxx Europe 600 fell 2.4% as of 12:30 p.m. London time
  • Futures on the S&P 500 fell 1.3%
  • Futures on the Nasdaq 100 fell 1.4%
  • Futures on the Dow Jones Industrial Average fell 1.2%
  • The MSCI Asia Pacific Index fell 0.5%
  • The MSCI Emerging Markets Index fell 1%
  • The Bloomberg Dollar Spot Index rose 0.7%
  • The euro fell 0.8% to $0.9757
  • The Japanese yen fell 0.3% to 142.82 per dollar
  • The offshore yuan fell 0.7% to 7.1333 per dollar
  • The British pound fell 1.9% to $1.1051
  • The yield on 10-year Treasuries advanced seven basis points to 3.79%
  • Germany’s 10-year yield advanced 10 basis points to 2.06%
  • Britain’s 10-year yield advanced 27 basis points to 3.77%
  • Brent crude fell 3.2% to $87.56 a barrel
  • Spot gold fell 1.4% to $1,647.80 an ounce
Was Coinbase Trading?
Coinbase denies The Wall Street Journal's proprietary trading allegations
A Wall Street Journal hit piece made the rounds yesterday, claiming that Coinbase hired four senior Wall Street execs to speculate on crypto markets. According to the report, four traders were hired to form a “Risk Solutions Unit,” whose mandate was to generate profits for the firm and conduct “proprietary trading.”
Within two hours of the piece hitting the wire, Coinbase released a blog with the following statement: “Earlier today, the Wall Street Journal published an article highlighting client-driven activities, which they seem to confuse with proprietary trading. Unlike many of our competitors, Coinbase does not operate a proprietary trading business or act as a market maker.
Honest mistake or malicious intent? Impossible to know, but poor reporting nonetheless.
Coinbase, unlike some of the bankrupt pseudo crypto banks, is highly scrutinized by regulators. It would be wildly irresponsible to hit trading activity.
Just another example of fake news from the mainstream media.
Kraken CEO Steps Down
Kraken’s Powell steps down, incoming CEO says culture will not change
After a decade of steering the ship at Kraken, CEO Jesse Powell is stepping down. He has been a fierce advocate for the crypto industry, less concerned about profit and power and more with securing the future of the asset class. When asked about what’s next, Powell said, “for me, this is about spending more time on stuff which I’m good at and enjoy doing, like working on product and industry advocacy stuff.” Plus, he said that he has “11 years of unopened mail to catch up on.
In other words, Powell is becoming a mailman… just kidding.
Thank you, Jesse, for all that you have done.
Metaverse Real Estate Is In Bad Shape
Metaverse land trading volume drops 98% from its peak in 2021
It turns out that spending six or seven-figures on digital property might not have been the best way to spend your money. According to Delphi Digital, trading volumes have dropped by 98% across 18 different metaverse land projects.
It is reasonable to think that digital land can be successful down the road, but owning a random digital plot to interact with on your phone, computer, or tablet right now just isn’t particularly compelling. If price is the most exciting feature, it’s unlikely to last.
How Human Behavior Drives Markets | Jim O'Shaughnessy
Podcast - The Wolf of All Streets
Jim O'Shaughnessy is one of my favorite recurring guests. He is a renowned investor, the founder and chief investment officer of O'Shaughnessy Asset Management and the host of the Infinite Loop podcast. Jim shares his wisdom about financial markets, the key to which is human behavior. Listen to learn about how markets work, how to study them, and what to study to better understand the psychology behind them.
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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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