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The Wolf Den #590 - Focus

September 29 · Issue #590 · 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. Focus
  2. The Slow Burn - IntoTheBlock
  3. Bitcoin Thoughts And Analysis
  4. Legacy Markets
  5. MiCA Strikes Again
  6. UK Money Printer Goes Brr
  7. The SEC Is Suing Hydrogen
  8. Punk Sells For $4.5M
  9. My Recommended Platforms And Tools
Some of the best traders that I have ever met only trade a single asset.
If you have ever dabbled in Forex, you will find these people - fixated on a single pair and oblivious to every other unrelated asset in the world. They identify as such - I am a EUR/USD trader, and AUD/JPY trader etc.
In the crypto market, there are plenty of traders who have made millions only trading Bitcoin with leverage, completely ignoring altcoins and legacy markets. Then there are those who solely traded a single altcoin through 2017 and made generational wealth. I had a friend who only traded AION and turned thousands into millions focusing on this single coin.
There are a lot of ways to skin a cat as a trader. There are endless opportunities for profit on thousands of assets and equally endless strategies for trading them. This can be a problem, especially in crypto where the casino never closes and there’s always a coin that is pumping harder than the one you are trading. It’s emotionally exhausting and inevitably causes FOMO.
If you are overwhelmed with the amount of opportunity (especially in a bull market), then find a few assets that you prefer and study their price action and fundamentals. Get to know them better and focus on making money investing in and trading them. Eliminate the noise of crypto twitter and other traders screaming about huge green candles on other coins - they become irrelevant to you if you are focused. This will inherently force you to slow down, waiting for the right opportunity on a chart that you know like the back of your hand. You will likely trade less and make more.
Everyone has a different approach - find one that works for you. If you are always jumping in and out of coins and “missing out,” this may be worth trying.
The Slow Burn - IntoTheBlock
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.
The Slow Burn
Low activity on Ethereum since the merge means it has not quite become a deflationary asset. While deflationary ETH could be the norm in the future, currently its supply is still growing each day, though at a substantially slower rate compared to before the merge. With lower activity, gwei gas prices are lower as well. Looking at last week’s hourly gas prices below can help one track how often Ethereum becomes deflationary. Here are some insights we can see from this chart:
  • The average gas price for ETH to become deflationary is about 16 gwei
  • The red rectangles mark the hours where the average gas was higher than the 16 gwei threshold
  • In the last week, only 32% of the time was ETH burning more ETH than it was issuing
Lower activity also often indicates less interest in DeFi. This is confirmed by declines in ETH being supplied into DeFi and slowly decreasing TVLs across the space. With TVL in DeFi below $75B, down $5B since the merge, it has been relatively quiet. However, the graph also shows an uptick in TVL since the nearly $10B drop that occurred around the merge. This could indicate that investors are slowly recreating the positions they had disassembled in preparation for the merge and ETHPoW fork.  
Another reason that it could be so quiet on-chain is that with inflation, many traditional assets are beginning to have rates similar to the average yields on Ethereum. Below we can see the average yields from different pools across Ethereum (blue line) have been ranging between 4% and 6% APY over the last month. With the current  2-year treasury note at 4.3%, some investors will prefer to leave crypto for traditional assets.
The flipside to a low activity chain is that it is the perfect time for everyone still here to consolidate positions and seek out the pools that best match their risk profile. In the chart above, we see that while the average yield across all pools is low, if you look just at average yields of pools that include ETH in them, yields start to increase up to 8% APY. Depending on one’s risk profile, there are plenty of higher yield opportunities around for users that are still here.
Bitcoin Thoughts And Analysis
Astoundingly boring. As you can see, Bitcoin is basically just trading sideways between ~$17,600 and ~$25,000 and hugging the 2017 high around $19,600. There is really nothing to see here, nothing to do here.
Legacy Markets
Risk-Off Sentiment Returns With Focus on Inflation: Markets Wrap - Bloomberg
Key events this week:
  • US initial jobless claims, GDP, Thursday
  • Fed’s Loretta Mester, Mary Daly speak at events, Thursday
  • China PMI, Friday
  • Euro zone CPI, unemployment, Friday
  • US consumer income , University of Michigan consumer sentiment, Friday
  • Fed’s Lael Brainard and John Williams speak, Friday
Some of the main moves in markets:
  • The Stoxx Europe 600 fell 1.6% as of 9:50 a.m. London time
  • Futures on the S&P 500 fell 1.2%
  • Futures on the Nasdaq 100 fell 1.4%
  • Futures on the Dow Jones Industrial Average fell 1.1%
  • The MSCI Asia Pacific Index fell 1.7%
  • The MSCI Emerging Markets Index fell 1.8%
  • The Bloomberg Dollar Spot Index rose 0.6%
  • The euro fell 0.8% to $0.9657
  • The Japanese yen fell 0.4% to 144.72 per dollar
  • The offshore yuan fell 0.5% to 7.1990 per dollar
  • The British pound fell 0.9% to $1.0792
  • Bitcoin fell 1.1% to $19,358.56
  • Ether fell 2% to $1,323.37
  • The yield on 10-year Treasuries advanced 11 basis points to 3.85%
  • Germany’s 10-year yield advanced 14 basis points to 2.26%
  • Britain’s 10-year yield advanced 15 basis points to 4.16%
  • Brent crude fell 1.7% to $87.77 a barrel
  • Spot gold fell 0.9% to $1,644.38 an ounce
MiCA Strikes Again
Non-euro stablecoin transaction cap revived in MiCA
Bad news.
“The newly reinstated provision puts a cap on how much foreign currency-backed tokens are allowed to be transacted within one day, according to Dimitris Psarrakis, head of EU affairs of XReg Consulting. 
“This effectively means e-money tokens will have problems settling transactions of EU-based crypto-asset service providers, negatively affecting the market in the EU,” Psarrakis told The Block.”
This would effectively make it impossible to use USDC and USDT in Europe.
UK Money Printer Goes Brr
Bank of England to buy 65 billion pounds of UK bonds to stem rout | Reuters
QE has quietly returned to the UK, even in the face of hawkish central bank tone and interest rate hikes.
This is a likely foreshadowing of the path that other countries will be forced to take as the economy worsens and financial conditions become unruly. Will the Fed pivot next? It remains to be seen.
But the Bank Of England stepping in to buy bonds in the middle of massive inflation is a signal of just how bad things have become.
The SEC Is Suing Hydrogen
SEC takes aim at crypto project and its 'market maker' over alleged manipulation
The SEC is clearly not playing games anymore with the crypto industry, and is reaching back to the 2017 and 2018 ICO era in search of people to sue.
“The Securities and Exchange Commission is taking aim at a crypto token for alleged market manipulation, as well as its distribution via bounty and airdrop. 
The SEC announced its case against Hydrogen and market maker Moonwalkers Trading as well as the CEOs of the two firms. The SEC alleges Hydrogen distributed its Hydro token through bounty programs and airdrops in 2018, while also selling to users directly through its trading platform in an effort to fund the Hydrogen project. 
Upon discovering that mass sales of Hydro would depress prices on its platforms, CEO Michael Kane hired Moonwalkers to wash trade the token, creating a veneer of market activity that stabilized its price and increased user interest, the SEC alleged. 
According to the SEC, Hydrogen’s actions constitute both market manipulation and, despite Hydrogen’s avoidance of an initial coin offering in favor of airdrops and bug bounties, an unregistered securities offering. 
“Companies cannot avoid the federal securities laws by structuring the unregistered offers and sales of their securities as bounties, compensation, or other such methods,” Carolyn Welshhans, of the SEC’s enforcement division, said in a statement.”
Things are getting nuts.
Punk Sells For $4.5M
Someone Just Paid $4.5M for a CryptoPunks Ethereum NFT Despite Bear Market - Decrypt
There’s no bear market for rare CryptoPunks. In ETH terms, this is the 4th largest sale in history, even amidst a massive downturn in volume and interest in NFTs.
Proof that the high end projects can still continue to perform.
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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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