A weekly news and trading piece by Scott “Shooter” Henderson covering crypto currencies. Read my Future Of Money Primer and Using Crypto Trade Shots for the basics to follow along.
It’s time to seriously consider what percentage of your portfolio should be held in the Cryptoverse. Crypto is still very speculative, but, the risk and rewards are unprecedented. Travel with me as I navigate crypto, NFTs, DeFi and the Metaverse.
Shooter’s & Kirk Spano’s Crypto Thesis
The short story is that most cryptocurrencies are going to zero, but there will be survivors that rise to much higher price ranges. This is a journey of separating winners from losers.
We expect Bitcoin and Ethereum to be among the biggest, if not the biggest, winners. Along the way, we can trade the larger moves for added gains.
We also agree that NFTs and the Metaverse will be have multitrillion dollar flows. That’s a total addressable market worth getting to know very well.
Crypto News Bytes
Here’s what caught our attention this week…
Bitcoin miner PrimeBlock to go public via $1.25 Billion SPAC
The merger with 10X Capital Venture Acquisition Corp II (VCXA.O) is expected to close by the second half of this year, after which the combined company will be listed on the Nasdaq and led by PrimeBlock Chief Executive Officer Gaurav Budhrani. (Reuters)
Opensea to Add Solana Support in April
Opensea has confirmed it will be adding Solana (SOL) support in April, according to a teaser video the company tweeted out on March 29. Opensea is the largest NFT marketplace in terms of all-time sales with $23.5 billion sold to date. The $23.5 billion was between 1,417,562 traders and the average NFT sale on Opensea this week is around $930.59 per NFT. (Bitcoin.com)
Bitcoin hit a new supply milestone at 19 million coins
Satoshi Nakamoto, alias or not created Bitcoin with maximum number 21 million coins. That leave just 2 million more coins to be mined. With a fixed supply the next halving the block reward will decrease from 6.25 coins to 3.125 coins in approximately 782 days, 1 hour, 52 minutes from this writing.
Bitcoin become a parachute for Hyper Inflated Turks as the Lira’s crumbles!
Turks are now suffering from 54.4% year-over-year (YoY) inflation. Now that we’ve entered the age of bitcoin, citizens all over the world have an alternative to turn to in order to protect their wealth against the detrimental effects of inflation. (BitcoinMagazine.com)
Bitcoin mining is recovered in March reaching $1.21 billion
After falling consecutively since October, bitcoin mining revenues had a month-over-month increase of 14%. Bitcoin miners brought in a total of $1.21 billion in revenue in March, according to data compiled on The Block’s Data Dashboard. Mining revenue came in at $1.06 billion in February. (The Block)
Goldman Sachs Co-Signs Bitcoin & Ethereum For High-Net Worth Clients
This is huge! Back in June, Goldman partnered with Galaxy Digital to launch and manage Goldman’s Bitcoin futures offering. Even though Goldman was not linked to Galaxy’s ETH fund when it launched with assets totaling more than $50 million, it will get an undisclosed finder’s fee for accounts sent to Galaxy. (Forbes)
Bitcoin’s ‘Guppy’ Indicator Flashes Green for Bulls
Developed by Australian trader Daryl Guppy. The guppy multiple moving averages (GMMA) indicator, which combines two groups of moving averages (MAs) with different periods to analyze market behavior on multiple time frames, has produced a bullish crossover on the daily chart for the first time this year. A bullish cross occurs when the green band representing short-term moving averages crosses above the red band of long-term moving averages and indicates the upward momentum is gathering pace. (CoinDesk)
More Good Reads…
Bitcoin Halving Cycle Resumes Less than 5 minute read
How Black Thursday Decimated Cryptocurrency Order Books Less than 10 minute read
What is Cryptocurrency Less than 10 minute read
Digital Assets / Investor.gov Less than 1 hour read (The Fed’s Opinion on Risk)
SEC Expands Alternative Trading Systems Definition (25 day to a vote) Less than 15 minutes
Internal Revenue Service (IRS) and Staking Less than 5 minute read
The Future of Crypto Banking Less than 10 minute read
Avoiding FOMO & FUD Less than 5 minute read
Regulation of Exchanges and Alternative Trading Systems Less than 1 hour read
Research: Supporting Evidence
Some Dormant supply becomes active?
Is inflation affecting certain HODLers differently? Glassnode proposed that USD denominated ‘wealth” were held a majority those newly activated coins. They further suggest that most investors make decisions regarding allocations in relation to fiat denominated value, etc. The below graph represents a rise of 9.4% of circulating supply over the last 8-months, largely reflecting accumulation from Q1 2021. What’s notable is that the owners have held through a 50%+ drawdown, and three all-time highs. Raises more questions than answers for me.
Realized Cap HODL vs. Pumps n Dumps
As an Elliottician I found (Glassnode) take on Realized Cap HODL perfect as tool to reflect the wave of buyers we see in the uptrends. This is a great assessment, and the chart below is filtered for these same 1yr+ old coins. We can see the following:
- Q2-Q4 of 2021 has many similarities to past bear markets where the total wealth held in 1yr+ coins reached a cycle minimum from May to Dec 2021.
- Bear Phase 1: When a low proportion of wealth is held by older, more experienced investors, it means the converse is true, and much of the wealth is held by newer, less experienced investors, which is top formation and bear market material.
- Bear Phase 2: This wealth disparity is recovering strongly as more coins transition into 1yr+ age bands, and more wealth, with a higher cost basis is is HODLed (setting a higher floor value than the last cycle).
The current market is in the process of recovering (Phase 2), however it can be seen in past cycles, this process can take many months for a price floor to fully form, and find sustained upside momentum.
As we look at who is holding Bitcoin this week, we see some alignment between HODLers and Shrimps finally. The HODLer coins have an unrealized loss as the average purchase price is above $45k. It is noteworthy that these investors are yet to liquidate at all in 2022, suggesting strong conviction to hold. While the Shrimp supply is held closer to the $38k and $45k range, which implies a similar conviction. It also implies all holders believe we are in a value zone and implies higher prices are on the horizon.
Shooter’s Crypto Picks And Sector Stocks
My conviction ideas on crypto and stocks with crypto exposure. Based on my AI assisted proprietary Elliott Wave technical analysis. Remember to follow along in chat if you are going to swing trade a portion of your account. I recommend trading no more than 20% of your account.
Make sure to adhere to a rules based approach to trading using technical indicators. And, we highly recommend trailing stops and/or stops at preset technical levels.
Crypto Elliot Wave Counts / Set-ups / Next Entries Long or Short
XBT/USD (BTCUSD) Bitcoin set a 13-week high this week at $48,208.49. Conversely, the 13-week low occurred in February at $32,990.72. The count seems destined for a back-test to around $45K as it seems the SEC news is weighted on price because the consequences are relatively unknown. Crypto leaders are even questioning how they could comply with the new EU regulation. On a very positive note, after the drawdown and after the news dropped, Bitcoin found a low right at the off number from the March 25th back-test candle. A relatively weak level of support and recovered nearly all except 3% of the 8.2% drawdown in the overnight session.
If you don’t have a Crypto account you can also buy Grayscale GBTC this is the prospectus.
GBTC (Bitcoin ETF)
ETH/USD On the other hand, Ethereum recovered all except $2 from the highs in the same period of time as Bitcoin. A very robust recovery where 50% of the move occurred in one 90-minute candle. In a similar look to Bitcoin, Ethereum looks destined to retrace to maybe $3305 and then resume the uptrend in an impulse wave ending near $3685 in early April.
If you don’t have a Crypto account you can also buy Grayscale ETHE this is the prospectus.
Grayscale Ethereum Trust (ETHE)
Flowground: (FLOW) (revised profile March 6, 2022)
FLOW/USD Sure looks like launching pad to me…Continue to cost average in.
LINK/USD (revised profile March 6, 2022) Its out! Continue to cost average in. I expect some type of Banking supervision soon. Once that drops Bank of America will be allover these contracts.
CRV/USD Talk about a turn around on Alt. coin strength. More on Curve here!
MANA/USD (Decentraland) I’ll say the back-test is in. Continue to cost averaging in.
ADA/USD Its out! Count reset! Next Entry Long 1.06…
AXS/USD Its ready, continue to cost avg. in.
SAND/USD Constructive! Looks like it wants to get out…continue to average in.
SOL/USD SOLONA has a Intermediate Wave Set-up. The with OpenSea launch in April will take this to all time highs. I don’t know if we see that deep of back-test to The Next Entry Long is $115.90. My high conviction trade in Crypto this week.
Crypto Stocks
Marathon Digital Holding, Inc. (NASDAQ: MARA) (revised earnings March 6, 2022)
MARA Currently, holding Jan 2023 $40 calls (Shooter’s Proxy for BTC leverage). I’ve been rolling 25% of gains into those $40 leaps. As the bottom becomes more defined I will increase that %. I regret not adding Quad Witching week even more now.
BLOK
HIVE
CORZ needs some time! (revised profile March 6, 2022)
Bitfarms (BITF) (A low cost producer under $7k a BTC) (revised profile March 6, 2022)
I will continue to cost avg. into Bitfarms (NASDAQ: BITF) now.
Metaverse Stocks
Roblex (RBLX) (revised profile March 6, 2022) —I’m leaving that alone—
Unity (U) Is Primary Wave Set-up with The Next Entry Long at $98.20. Start scaling in if don’t have piece on.
Scott Henderson’s Risk Disclosure & Disclaimers
Follow me on Twitter @swingtradenotes for charts, quick thoughts and smart remarks.
