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The Wolf Den #608 - The Way To Win In Crypto

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October 27 · Issue #608 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. The Way To Win In Crypto
  2. Bitcoin Thoughts And Analysis
  3. Legacy Markets
  4. Canada Blinks On Inflation
  5. U.S. Senators Write A Letter To the Fed
  6. My Recommended Platforms And Tools
The Way To Win In Crypto
I read a Wall Street Journal investigative piece that was released yesterday.
The message was powerful.
There’s a clear way to win in crypto.
The story is about Andreessen Horowitz (a16z), the private American venture firm founded in 2009 by Marc Andreessen and Ben Horowitz. For those that don’t know, the firm has developed a reputation as one of the largest crypto whales and most impactful players in the industry. Andreessen Horowitz raised a record high $4.5 billion crypto fund (not their first) and was the second largest fund in terms of investing volume.
Were they perfect with their timing? No. They put A LOT of their eggs in the crypto basket at the height of the bull market.
Andreessen Horowitz Went All In on Crypto at the Worst Possible Time - WSJ
But make no mistake, Andreessen Horowitz is a firm that knows how to win. a16z might have been late to the party last year with certain investments, but they were early to the crypto party in the previous bull market and have proved to be a HUGE overall winner. By 2014, the firm had invested $50 million into the space. They took a giant leap of faith at a time when crypto was viewed as a fad at best or a scam at worst. Motivated by their famous mantra, “software is eating the world,” the firm showed up to Ethereum’s launch and continued to launch fund after fund the following years. They pushed the crypto pedal to the metal.
Andreessen Horowitz has been playing the crypto game for almost a decade. The concepts of “early” and “late” are distractions from what matters.
Take a look at the recent quotes from Chris Dixon, Andreessen Horowitz’s longtime partner.
“What I look at is not prices. I look at the entrepreneur and developer activity. We have a very long-term horizon.”
Making money in this space isn’t about being early or late, nor is it about picking correctly at the perfect time. Andreessen Horowitz’s record proves that the firm has failed tremendously at these tasks - yet they are still extremely successful. The key is simply taking part in the ecosystem and remaining extremely patient. 
Buy and wait.
By taking part and remaining patient, you will capture the long term upside of crypto, even if you have to wait an entire cycle or two to make a sizable profit.
This is the clear way to win in crypto,
Bitcoin Thoughts And Analysis
DAILY CHART
As discussed yesterday, the Bollinger Bands on the daily chart were as tight as they have ever been for an extended period of time. When this happens, you know that a volatile move is coming, but have little insight into which direction it will occur.
The good news for us is that price expanded upward, for now. There are no guarantees, but this is a good sign.
The last time the Bollinger Bands were as tight as they were over the past few weeks was July, 2020. I have highlighted this area above, to show you what happened. The rectangles on both charts show the tight bands. The circles compare the current upward expansion. As you can see, both charts show price breaking above the upper band as the bands widen. In July, 2020, price continued up, riding the expanding band upward, even after having a bearish candle like the one that is forming today.
History does not need to repeat, but at least we have a good example of what could happen.
I shared this idea on the livestream yesterday. $20,469 was the key local resistance that Bitcoin managed to break yesterday. With a move like that, you expect a retest as support. That has almost happened. If it does, it could be a good entry for those looking to ride the wave.
I am NOT saying the bottom is definitely in, although I believed it was in June and that has held for now. But I do think we should see at least a bit more upside on this move before having to draw any macro conclusions.
Legacy Markets
Stock Market Today: Dow, S&P Live Updates for Oct. 27 - Bloomberg
Stocks slipped and US futures wavered as traders digested a flurry of major earnings and prepared for another jumbo European Central Bank rate hike later Thursday.
Key events this week:
  • ECB rate decision, Thursday
  • US GDP, durable goods orders, initial jobless claims, Thursday
  • Bank of Japan policy decision, Friday
  • US personal income, personal spending, pending home sales, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
  • The Stoxx Europe 600 fell 0.3% as of 10:18 a.m. London time
  • Futures on the S&P 500 rose 0.2%
  • Futures on the Nasdaq 100 fell 0.2%
  • Futures on the Dow Jones Industrial Average rose 0.5%
  • The MSCI Asia Pacific Index rose 0.4%
  • The MSCI Emerging Markets Index rose 0.6%
Currencies
  • The Bloomberg Dollar Spot Index rose 0.2%
  • The euro fell 0.3% to $1.0050
  • The Japanese yen was little changed at 146.24 per dollar
  • The offshore yuan fell 0.9% to 7.2497 per dollar
  • The British pound fell 0.4% to $1.1581
Cryptocurrencies
  • Bitcoin fell 0.6% to $20,630.1
  • Ether fell 0.4% to $1,547.06
Bonds
  • The yield on 10-year Treasuries advanced six basis points to 4.06%
  • Germany’s 10-year yield advanced seven basis points to 2.18%
  • Britain’s 10-year yield advanced three basis points to 3.61%
Commodities
  • Brent crude fell 0.1% to $95.58 a barrel
  • Spot gold fell 0.1% to $1,662.44 an ounce
Morgan Stanley downgrades Meta after earnings miss, says higher spending will hurt the stock
If you have been living under a rock, you may have missed this news. Since I assume you are sleeping comfortably in a house, you likely know that Meta got absolutely DESTROYED after hours, based on poor earnings and overspending in the VR and metaverse space.
Meta reported a second straight quarterly revenue decline and is forecasting another drop in the fourth quarter. The company’s Reality Labs division, which houses its VR headsets, lost over $9 billion in the first three quarters.
Yikes.
The stock closed the day at $129.82 and was last trading premarket at $104. A 20% drop in a matter of minutes. Meta is down roughly 70% on the year.
And they say Bitcoin is too volatile.
Canada Blinks On Inflation
Bank of Canada surprises with 50 bps hike, says slight recession possible | Reuters
Canadians were expecting a 75 bps hike, in line with their southern brothers in the US. Instead the Bank of Canada went with a 50 bps raise. This could be considered an early sign of central banks beginning to pivot, which is what markets are seemingly waiting for to make a turnaround and head back up.
Here is what representatives of the bank had to say.
“This tightening phase will draw to a close. We are getting closer, but we are not there yet. How much higher rates need to go will depend on how monetary policy is working to slow demand, how supply challenges are resolved, and how inflation and inflation expectations are responding. We have several indicators suggesting that we’re playing with fire if we think we can follow the (U.S. Federal Reserve) all the way up to 5% or so. Inflation is expected to return to the top of the 1%-3% control range by the end of 2023 and to the 2% target by the end of 2024.”
Only time will tell if they are right, or if central bank policy has meaningfully affected inflation.
Markets only care about the news vs. the expectation. In this case, the market is taking the smaller hike as “good news.”
If you are quiet, you can almost hear the money printer powering back up.
U.S. Senators Write A Letter To the Fed
US Senators Write Letter to Fed and Regulators Seeking Clarification on Crypto Ethics Guidelines - The Daily Hodl
I can’t say I am surprised, but I can say that I am disgusted. 5 U.S. Senators penned a letter to regulators, once again attempting to derail crypto efforts. Written and endorsed by Senators Elizabeth Warren, Alexandria Ocasio-Cortez, Sheldon Whitehouse, Rashida Tlaib and Jesús García, the letter argues to the SEC, CFTC, OCC, and FDIC that the crypto industry is stealing regulators to acquire an unethical advantage.
Here’s what they said.
Just as powerful Wall Street interests have long exercised their influence over financial regulation by hiring former officials with knowledge of government’s inner workings, crypto firms appear to be pursuing the same strategy in order to secure ‘a regulatory system to the industry’s exact specifications.
The point they are making about Wall Street is valid. Wall Street and Washington have a wide open revolving door, between executives and regulators… AND POLITICIANS. They conveniently left out the parts about politicians coming from Wall Street or heading there after their term is done, raising massive amounts of money from the banks (oh hi Elizabeth) and generally controlling the actions of the US government.
Further, regulators have little to no understanding of the crypto industry. For regulation to be rational, it requires people with actual knowledge of the asset class and surrounding businesses. Should regulation of crypto be left to a few Senators and the banks that pay them?
This is yet another hit job by this group of Senators, targeting our sector in the interest of their donors.
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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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