The Wolf Den Crypto Newsletter

By Scott Melker aka The Wolf Of All Streets

The Wolf Den #609 - Miner Capitulation?

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October 28 · Issue #609 · 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. Miner Capitulation?
  2. Bitcoin Thoughts And Analysis
  3. Altcoin Charts
  4. Legacy Markets
  5. PayPal Doubles Down On Their Own Stupidity
  6. Google Cloud To Support Various Nodes
  7. Elon Initiates The Purge
  8. Regulators And Legislators Attack Crypto | What It Means For The Market Moving Forward
  9. My Recommended Platforms And Tools
Miner Capitulation?
Two days ago I made a wild prediction. Today it came true.
A major Bitcoin miner is on the brink of collapse.
That was fast.
Something strange has been afoot in the Bitcoin mining industry for the past few months. And the time to sound the alarm is now.
Bitcoiners continue to celebrate hash rate hitting all-time highs, while ignoring the fact that mining stocks are plummeting into the abyss.
Cognitive dissonance is a hell of a drug.
The situation is problematic and, this time, continued all time highs in hash rate are not necessarily a good thing.
Core Scientific, the world’s largest Bitcoin miner, “will not make payments due in late October and early November 2022.” According to the filing, “the payments are in respect to several of its equipment and other financings and that creditors may decide to sue the company for non-payment or take action with respect to collateral.
Yikes.
Their stock is already down 98% this year.
Crypto Miner Core Scientific’s Stock (Nasdaq: CORZ) Is Down Nearly 98% This Year | Cryptoglobe
I secured some top secret footage of Core Scientific creditors arriving at the office to collect.
I Want My Two Dollars!
The road to bankruptcy is paved with good intentions.
Barring a Bitcoin pump or major bailout from an investor, that’s the exact road that CS is traveling.
I dug into the SEC filing to learn more about Core Scientific’s financial situation. It doesn’t look good.
As previously disclosed, the Company’s operating performance and liquidity have been severely impacted by the prolonged decrease in the price of bitcoin, the increase in electricity costs, the increase in the global bitcoin network hash rate and the litigation with Celsius Networks LLC and its affiliates (“Celsius”). In the event of a bankruptcy proceeding or insolvency, or restructuring of our capital structure, holders of the Company’s common stock could suffer a total loss of their investment.
This disclosure confirms previous suspicions and brings to light new ones. Rising global hash rate is compounding the existing pain, as expected. It is also clear now that the contagion from Celsius is a legitimate factor in Core Scientific’s default. Bad news for crypto has settled down over the past couple of months, but there are clearly still skeletons in the closet.
Those skeletons are shaped like Alex Mashinsky, Do Kwon, Su Zhu and Kyle Davies.
Let’s explore the options that creditors have, as per the SEC filing:
As a result, the creditors under these debt facilities may exercise remedies following any applicable grace periods, including electing to accelerate the principal amount of such debt, suing the Company for nonpayment or taking action with respect to collateral, where applicable.
The options above would require approval from a bankruptcy court, but seemingly all possibilities are on the table.
So what’s the takeaway?
If the mining dominos do start to fall, chances are we see contagion and further companies impacted. In the crypto lending crisis it wasn’t just Celsius that went under. It was also Voyager, Vauld and a slew of other off-brand over-leveraged lenders. When the model breaks, weak participants pay the price.
The second takeaway is that this situation could be powerful enough to fuel another leg down for crypto prices. Since June, crypto has chopped sideways, with few major stories to drive price lower. Logically, if more miners shut down, it could stoke fears around the infrastructure of the industry and send prices south.
Or not.
Markets tend to price in news long before it happens, and weak miners are likely to be replaced by stronger entities. It’s a free market.
Either way, not enough people are talking about this story, which is all the more reason to pay attention.
Remember how quickly the Celsius situation crept up on us?
The same could happen here.
There’s nothing to do but wait. But this is a story that is worth tracking closely.
*** I woke up today in the mood for memes, so beware.
Bitcoin Thoughts And Analysis
DAILY CHART
Bitcoin became boring again. Price failed to find support at $20,469 for now, although lines should be viewed as areas and price is still in that area. I don’t really view this as a breakdown yet.
If it can’t hold here, the descending black line and the rising 50 MA are obvious areas to look for a bounce.
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.
ETH/BTC
ETH outperformed BTC on the move up and is unsurprisingly retracing a bit. There’s a key area of support marked, where I would be looking for a bounce if price continues to correct. RSI has now hit overbought, so no surprises that the move is stalled.
Legacy Markets
Stock Market Today: Dow, S&P Live Updates for Oct. 28 - Bloomberg
After reporting earnings last night, Amazon was down 14%.
One of the biggest companies in the world is trading like an illiquid shitcoin, a day after the same happened with Meta… and all AFTER HOURS when most retail can’t react or do anything.
It would be nice if the market was open 24/7/365, right?
The stock market is a bigger shit show than crypto. Can someone please replace the Bitcoin in this famous meme with the Amazon or Meta ticker?
In case you were wondering just how bad earnings have been for big tech, here’s a look at the META chart, a day after the carnage.
The pain train has left the station. Interestingly, you can see the death cross on the weekly between the 50 MA and 200 MA just a couple of weeks ago. This is illustrated by the blue line crossing below the red line.
Look at that selling volume.
The drop was so bad that Jim Cramer literally cried on national TV.
He cried. Actual tears.
unusual_whales
Jim Cramer begins to cry and apologizes on being wrong on $META https://t.co/c8qoB8iv3m
You can’t make this shit up. I guess that the Cramer Inverse ETF is a decent investment after all.
Key events this week:
  • 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 1.1% as of 8:28 a.m. London time
  • Futures on the S&P 500 fell 1.1%
  • Futures on the Nasdaq 100 fell 1.4%
  • Futures on the Dow Jones Industrial Average fell 0.5%
  • The MSCI Asia Pacific Index fell 1.7%
  • The MSCI Emerging Markets Index fell 1.8%
Currencies
  • The Bloomberg Dollar Spot Index rose 0.3%
  • The euro fell 0.2% to $0.9947
  • The Japanese yen fell 0.4% to 146.91 per dollar
  • The offshore yuan was little changed at 7.2596 per dollar
  • The British pound fell 0.4% to $1.1518
Cryptocurrencies
  • Bitcoin fell 1% to $20,204.5
  • Ether fell 1.6% to $1,503.98
Bonds
  • The yield on 10-year Treasuries advanced six basis points to 3.98%
  • Germany’s 10-year yield advanced eight basis points to 2.04%
  • Britain’s 10-year yield advanced five basis points to 3.45%
Commodities
  • Brent crude fell 1.3% to $95.73 a barrel
  • Spot gold fell 0.6% to $1,652.74 an ounce
PayPal Doubles Down On Their Own Stupidity
New PayPal Policy Lets Company Pull $2,500 From Users’ Accounts If They Promote ‘Misinformation’ | The Daily Wire
A couple of weeks ago, PayPal “accidentally” updated their term of service to include an “unapproved update.”
Unbelievably, the update is back. PayPal will once again be able to remove up to $2,500 from your account if you share anything deemed “misinformation” or hate speech.
WTF.
If you’ve been searching for a reason to opt-out of traditional finance, let this be your cue. Your freedom is more important than their rules, and this situation once again reminds us how important it is to be your own bank and control your own finances.
#DeletePayPal
Google Cloud To Support Various Nodes
The Block: Google Cloud announces blockchain node service starting with Ethereum
As part of their ongoing effort to stay competitive with Amazon and other major players in the crypto space, Google has announced plans to streamline the process of setting up and hosting nodes. The first supported asset on the platform will be Ethereum. Google claims that this process is as easy as completing a single operation through their platform. Done on your own, the process is complicated and said to take several days.
Earlier this year, Google created a Web3 team with the mission to help companies scale.
They are delivering.
Elon Initiates The Purge
Watcher.Guru
BREAKING: Elon Musk fires Twitter CEO Parag Agrawal and CFO Ned Segal.
Elon Musk entered the Twitter building carrying a sink and a bad attitude.
He reportedly went office to office, grilling employees about their role at the company, before firing all of the key executives.
Bye.
I wonder if he brought these guys.
If you missed Elon’s texts with then CEO Parag Agrawal, they are astounding.
What did you get done this week? LOL.
Elon has made it clear that restoring free speech is his number one priority, but we all know that crypto will find its way into the plans. Twitter should become far more crypto friendly.
Since Twitter is the defacto crypto hub, this is a win for all of us.
Regulators And Legislators Attack Crypto | What It Means For The Market Moving Forward
Podcast - The Wolf of All Streets
Regulators And Legislators Attack Crypto | What It Means For The Market Moving Forward
My special guests today are Charlie Shrem, the host of UntoldStories.com crypto podcast, Charles Jansen, the Head of DeFi Transformation at S&P Global, and David Nage, Portfolio Manager at Arca.
In this episode, we discussed:
  • Legislators vs defi
  • Crypto lacks marketing
  • How much regulation is needed
  • What regulators should focus on
My Recommended Platforms And Tools
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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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