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 risks 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 have multitrillion dollar flows. That’s a total addressable market worth getting to know very well.
I’m going to recommend that you hold any further allocation until the $12.5K bottom is found in Bitcoin. Its up to you whether you hold current positions or trim. We are now off the radar and we could see crypto get totally spooked on little news.
Crypto News Bytes
Here’s what caught our attention this week…
Is Sam Bankman-Fried the Oracle of Crypto
Bankman-Fried’s crypto exchange (FTX), agreed to provide crypto lender BlockFi with a $250 million revolving credit facility. While Alameda, Bankman-Fried’s quantitative trading firm, committed $500 million in financing to Voyager Digital, a crypto brokerage. Sam Bankman-Fried has emerged as something of a savior for the $900 billion crypto market as it faces a deepening liquidity crunch. Yet, we can’t help but wonder if its Warren Buffet kind of deal. (CNBC)
New ProShares ETF shorts bitcoin (BITI)
ProShares Global Investment delivered BITO first and now BITI. BITI, the first short bitcoin strategy ETF, offers investors a way to obtain short bitcoin-linked exposure in a convenient, cost-effective and liquid ETF format. The ProShares Short Bitcoin Strategy ETF (BITI) seeks daily investment results, before fees and expenses, that correspond to the inverse (-1x) of the daily performance of the S&P CME Bitcoin Futures Index. You can find the prospectus here.
What’s up with Purpose Bitcoin ETF in Canada
First it lead in inflows and now it saw about $500 million in outflows. Purpose Bitcoin ETF (ticker BTCC) equaled about 24,510 Bitcoin, or around 51% of its asset under management on Friday, according to data compiled by Bloomberg and analysts. The selling came as the crypto market went through an intense selloff that carried into the weekend. Bitcoin tumbled as much as 15% to $17,599 on Saturday, the lowest level since late 2020. The largest cryptocurrency by market value is down about 70% from its record high in November. “The enormous outflows are likely caused by a forced seller in a huge liquidation. The forced selling of the 24,000 BTC could have triggered BTC’s move down towards $17,600 this weekend,” Vetle Lunde, analyst at Arcane Crypto, wrote in a research report. (Bloomberg)
Binance.US Starts Zero-Fee Trading for Bitcoin in Pricing War
Binance.US, the American affiliate of the largest global crypto exchange, is starting to offer zero-fee trading for Bitcoin, with plans to eliminate the charges for more tokens in the future. (Yahoo-Finance)
Crypto Winter is Getting Real!
Publicly traded Bitcoin miners, like Marathon Digital and Riot Blockchain, sold more Bitcoin than they produced last month, a big step up from the first four months of the year when they sold only about 30% of what they produced, according to a new report from Arcane Research. (decrypt.co)
More Good Reads…
The Complete Guide to Crypto Tax-Loss Harvesting less than 30 minute read
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
Rock Bottom Profitability
With the market trading below the $20k 2017 ATH, investor conviction and market profitability have been put to an extreme test. (Glassnode)
Glassnode has identified Miner Capitulation in Real-Time
A strong case can be made for Bitcoin to be considered a digital commodity, and like many commodities, it tends to have a relationship with its cost of production. By running a log-log regression model between Difficulty and Market Cap, we can estimate an all-in-sustaining cost for mined BTC.
This cost of the production model is currently trading at $17,600, which interestingly was the price low over the weekend.
Summing up the week
Miners are in trouble! It will not be long with increasing utility costs until we see miners shut down if these prices continue to drift below $20,000.00 a Bitcoin. The market had a realized loss of over $7 billion this week, while HODLers (long-term holders) sold 178k BTC. I don’t want to say we are at max pain because we were not. In other words, I see deeper counts than what’s on the surface. So my question now is, will $12,500.00 hold or will Bitcoin flush deeper to $10,000.00 or $7,500.00? All I’m sure of at this point is that we are not done. That ABC could clearly extend or become elongated. Please see my second BTC chart for those counts.
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 Major Pairs-Grayscale Trusts
XBT/USD (BTCUSD) The count is nasty at $12,460.90.
GBTC (Bitcoin ETF)
Grayscale Bitcoin Trust (OTC GBTC) is an alternative for non-crypto account holders. See the prospectus.
ETH/USD $800 is still holding!
If you don’t have a crypto account, you can also buy Grayscale Ethereum Trust.
Grayscale Ethereum Trust (OTC ETHE) is an alternative for non-crypto account holders. See the perspectus.
HOLD adding to all Alt. Coins until further notice. Its up to you if you trim.
LINK/USD (revised profile March 6, 2022) I expect some type of banking supervision soon. Once that drops, Bank of America will be all over these contracts.
ADA (Cardano) nice base!
MARA still sitting on my hands! We did not push up enough to give the risk reward I needed. So, lets see what next week brings.
Scott Henderson’s Risk Disclosure & Disclaimers
Follow me on Twitter @swingtradenotes for charts, quick thoughts and smart remarks.