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The Wolf Den #622 - SBF Does Not Get A Pass

November 16 · Issue #622 · 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. SBF Does Not Get A Pass
  2. Bitcoin Thoughts And Analysis
  3. Legacy Markets
  4. Human OS And Greed
  5. How Safe Is MicroStrategy?
  6. What Really Happened With FTX?
  7. My Recommended Platforms And Tools
SBF Does Not Get A Pass
Reporting on the FTX and Alameda collapse has been extremely difficult. The revelations have been arriving at light speed and changing by the minute. I may not be perfect, but I look like the world’s greatest journalist compared to The New York Times.
Have you had a chance to read their recent interview with SBF and summary of the events? It’s a doozy.
You can read the article HERE.
Before I get into why I am outraged by this article, I will briefly share with you some of the whitewashed lies that they put into print.
Plug your nose, because there’s a lot of bullshit.
Had I been a bit more concentrated on what I was doing, I would have been able to be more thorough,” he said. “That would have allowed me to catch what was going on on the risk side.
Mr. Bankman-Fried’s circle of colleagues was bound by a commitment to effective altruism, a charitable movement that urges adherents to give away their wealth in efficient and logical ways.
And in Washington, he was pushing an ambitious regulatory agenda while speaking critically about Changpeng Zhao, the chief executive of the rival exchange Binance, who eventually mobilized his extensive Twitter following to set off the run on FTX.
Attacking Mr. Zhao “was not a good strategic move on my part,” Mr. Bankman-Fried said on Sunday. “I was pretty frustrated at a lot of what I saw happening, but I should’ve understood that it was not a good decision of me to express that.”
As FTX has crumbled, Mr. Bankman-Fried has been “working constructively with regulators, bankruptcy officials, and the company to try to do what’s best for consumers,” he said on Sunday.
Sam is also getting plenty of sleep and playing video games, although not as much as he would like.
If I had zero knowledge of the situation and the New York Times article was the first piece that I read, then I would assume the following:
*Sam lost control of his exchange because he was too busy being an altruist while a rival tore him down. Furthermore, his largest mistake was in fact the rivalry. Luckily, Sam is doing his best to rectify the problem with regulators.
Could this New York Times synopsis be any further from the truth? Here is a more accurate summary.
*Sam purposely stole user funds and used excessive leverage because he was busy trying to bury the implosion of Alameda and his crimes of the past. He pretended to be an effective altruist to help hide his fraud. His bad acting was rightfully exposed by a rival, who knew that Sam was responsible for many of the implosions in crypto. Now Sam is trying to cover up the evidence while toying with his followers.
It is important that we get this story right. We have worshipped a seemingly endless line of young billionaires who got rich quick on the backs of easy leverage and fraud. If we whitewash the truth, then we are bound to repeat our mistakes again in the future.
It’s time to burn the dead wood so that the forest can thrive.
It is worth noting that The New York Times had no problem writing aggressive hit pieces about the arrested Tornado Cash developer, Brian Armstrong, and Jesse Powell, none of whom have done anything wrong.
Let’s start telling the truth.
If you want a far better account of the FTX saga, scroll down to the news section titled, “What Really Happened With FTX?” The tweet thread is the best synopsis I have seen so far.
Side note: Today will be my last livestream until Friday the 25th, and it is going to be a big one. My community has been asking, so I invited BitBoy to join. He was far ahead of the SBF saga and believes there is far more nonsense coming. While I know he is polarizing, I am interested in hearing his views.
Don’t miss it.
How BitBoy Predicted The Collapse Of FTX | Live With Ben Armstrong, Bitboy Crypto
Bitcoin Thoughts And Analysis
I shared the confirmed bullish divergence with oversold weekly RSI a few weeks ago, which helped push price back up to around the $22,000 level. This was only the third time in history that Bitcoin was oversold on the weekly chart. This bullish divergence was followed by hidden bearish divergence (red), which indicated that the bullish divergence was no longer valid.
Now price is working on another bullish divergence. It is NOT CONFIRMED yet and would require a clear elbow up on both price and RSI at the weekly close on Sunday. Even if it confirms, weekly divergence can take a long time to play out. We could even see price drop dramatically and still end up with a bullish divergence in the coming weeks.
Either way, this is a clear signal that selling pressure is waning.
Legacy Markets
Stock Market Today: Dow, S&P Live Updates for Nov. 16 - Bloomberg
“US equity futures rose in choppy trading after a rocket strike inside the Polish border reminded investors of the potential for escalation in the Russia-Ukraine war, though the euro and the Polish zloty recouped earlier knee-jerk losses.  
Stocks have surged in the past week as softer-than-expected US inflation data has raised expectations the Federal Reserve may be able to slow down its rate-hiking pace. The data has pushed the dollar and Treasury yields lower, while a raft of strong company earnings have added to markets’ ebullience. 
“I am more in the dollar-plateau versus the dollar-peak camp,” he said. “Inflation may have peaked but that doesn’t mean it’s coming down rapidly. We have probably seen the peak for the dollar but it wouldn’t surprise me if we go back into a period of softer equities.”
Key events this week:
  • US business inventories, cross-border investment, retail sales, industrial production, Wednesday
  • Fed’s John Williams, Lael Brainard and SEC Chair Gary Gensler speak, Wednesday
  • ECB President Christine Lagarde speaks, Wednesday
  • Eurozone CPI, Thursday
  • US housing starts, initial jobless claims, Thursday
  • Fed’s Neel Kashkari, Loretta Mester speak, Thursday
  • US Conference Board leading index, existing home sales, Friday
Some of the main moves in markets:
  • The Stoxx Europe 600 fell 0.4% as of 10:12 a.m. London time
  • Futures on the S&P 500 rose 0.4%
  • Futures on the Nasdaq 100 rose 0.4%
  • Futures on the Dow Jones Industrial Average rose 0.3%
  • The MSCI Asia Pacific Index fell 0.3%
  • The MSCI Emerging Markets Index fell 0.3%
  • The Bloomberg Dollar Spot Index fell 0.3%
  • The euro rose 0.8% to $1.0432
  • The Japanese yen was unchanged at 139.28 per dollar
  • The offshore yuan fell 0.4% to 7.0773 per dollar
  • The British pound rose 0.5% to $1.1923
  • Bitcoin fell 0.9% to $16,732.03
  • Ether fell 1.1% to $1,232.22
  • The yield on 10-year Treasuries advanced two basis points to 3.79%
  • Germany’s 10-year yield was little changed at 2.10%
  • Britain’s 10-year yield declined two basis points to 3.27%
  • Brent crude rose 0.5% to $94.34 a barrel
  • Spot gold rose 0.3% to $1,784.29 an ounce”
Human OS And Greed
In yesterday’s newsletter I wrote that the Human OS never had a greed update, well, Jared Tendler, a mental game coach for traders and author of the popular book The Mental Game of Trading, has some advice on how to debug our software.
Here it is:
As an investor or trader you want to make money. And then make more. Money is ultimately the goal, and the scoreboard measuring your success. Some would call that greed, but we would never say that Michael Jordan or Novak Djokavic were greedy because they wanted to win more championships. 
The problem with greed is not in your aspirations, the problem is that greed causes you to take risks that aren’t strategic well-thought-out moves, but instead are just gambles. 
Gambling like this exists in all performance arenas. 
It’s the outfielder in baseball who tries to throw a runner out at home when the right play is to second base. Or the NFL linemen who tries to pick up a fumble and run when he should just fall on it. Like them, your drive to win is incredibly high, but especially in a market like this, when many of you are emotionally jacked up, the last thing you want to do is make poor decisions. 
The question is: how can you become less greedy without swinging too far in the other direction and becoming risk averse. 
First, you need to find out what’s driving your greed beyond the money. Literally ask yourself why do you become greedy? Once you find that reason you can fix it and get yourself on solid ground. Here are a few examples I often see:
The most common reason is the drive to make a lot of money fast and easily. You want life changing money without putting in a ton of effort and convince yourself that you’ll trade/invest properly once you make it. This is horseshit. Even if you made a ton of money you never developed the right skills, so you’ll likely continue to gamble and make poor decisions. Want proof? Lottery winners rarely think about how to keep what they win and 70% of them are broke within 3 to 5 years. Sadly the same is true about retired NFL and NBA players. 
Another frequent reason many of you succumb to greed is that you think you know what’s going to happen. This doesn’t seem like greed, you just think making the money you envision is inevitable. And you’ll use Technical Analysis as false evidence, even though Scott has told you repeatedly that it only generates probability and is not a crystal ball.
I call this the shitty psychic. Let’s be real, if you were truly psychic you wouldn’t be reading this newsletter! You can’t predict the future. You don’t know what’s going to happen. So make bets based on probability, not mesmerized by your own certainty.
A hidden source of greed is high expectations and perfectionism. These common co-conspirators damage confidence and fuel an insatiable desire for more more more. No, I’m not saying lower your expectations. You have to correct the damage from them. Do that and you can drive hard for your goals, but in the right way.
So while the human OS never got the greed update, that doesn’t mean that we have to be seduced by greed. Many investors and traders have learned the right way to harness their ambition. That starts by looking for those ‘software bugs’ and understanding what drives your greedy decisions.
Written by Jared Tendler. Follow him!
How Safe Is MicroStrategy?
Michael Saylor⚡️
MicroStrategy has a $205M term loan and needs to maintain $410M as collateral. $MSTR has 115,109 BTC that it can pledge. If the price of #BTC falls below $3,562 the company could post some other collateral. See slides 11-12 in Q1 2022 presentation. #HODL
The price of Bitcoin is down, which means that people are once again circulating rumors that MicroStrategy will be liquidated. Much of the FUD stems from MicroStrategy’s June earnings call, when the CFO publicly announced the company’s “oh shit” floor. His announcement was a mistake and was quickly clarified… right before price broke that floor. Here is what he said at the time:
“As far as where Bitcoin needs to fall, we took out the loan at a 25% LTV, the margin call occurs 50% LTV. So essentially, Bitcoin needs to cut in half or around $21,000 before we’d have a margin call. That said, before it gets to 50%, we could contribute more Bitcoin to the collateral package, so it never gets there.
So if they are already contributing more collateral, then how much is left? In June, MicroStrategy announced that they had 95,000 unencumbered Bitcoins of their total 129,218 position. Furthermore, according to Saylor, the company needs to maintain $410M as collateral.
Doing some napkin math, 95,000 (Bitcoins) X $17,000 (Bitcoin’s price) = $1.6B. This is the current value of potential collateral.
As Bitcoin drops in value, the value of the collateral drops too. Things don’t get particularly dicey until Bitcoin hits $5000. Plus, Michael Saylor has said that he would risk his own position to defend MicroStrategy. This lowers the liquidation price even further.
These are the facts as presented. There could be more going on under the hood, but for now, Saylor seems safe.
And man do we need Saylor to stay safe!
What Really Happened With FTX?
Jason Choi
The Definitive Thread on FTX

I met SBF before FTX started, and witnessed their rise and fall. I can't stand @nytimes's puff piece.

If anyone wants to know what happened, send them this.
If you want to truly understand the story of FTX and Alameda, then this thread is for you. As court documents are released, we will have a clearer picture of what went wrong. Until then, this thread is by far the best recount we have.
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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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