A weekly news and trading piece by Scott “Shooter” Henderson covering crypto currencies.
Kirk & Shooter’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.
In the News
Here’s what caught our attention this week…
Things have gotten rocky. Russia saber-rattling over the Ukraine. The fear of rate hikes and then Powell dropping the ball without a cohesive tapering plan. This is coupled with House Democrats, proposing a bill Monday that would impose a “wash sale” rule on commodities, currencies, and digital assets. On another plain Elon Musk started another twitter storm by posting💎🙌”Diamond-Hands” signaling he was a long term holder. Going one step further, Elon even dared McDonalds that he would eat a happy meal on TV if McDonalds accepted Dogecoin. This garnered quite a few likes (404K) and substantial reruns on nearly every news channel. However, the biggest news of all was the Biden administration preparing an executive order to regulate digital assets such as Bitcoin as a “matter of national security,” Talk about an eventful week! Yet, this was a huge buying opportunity as Ethereum fell below my NEXT ENTRY WINDOW LONG label and we were able to fill some positions on Ethereum (ETHUSD) between $2,200-$2,430. We also opened a small position in ETHE (Grayscale Ethereum TR) between $18.50-$20.00 and I also opened a small starter position in MARA Jan leaps (higher risk) using it as a proxy for a Bitcoin run towards $75K later this year. Our direction was a little cloudy after Biden’s executive order. Anyhow, to put that price in perspective. Just a few months ago, $2,200 was unthinkable on Nov 10, 2021, when the best price was $4,452.63 for the day, and we hit an all-time high of $4,867.00.
Biden Crypto-Related Executive Order
Blomberg had the scoop when they ran Gensler Readies More Crypto Oversight to Protect Investors on the 21st nearly a week before the White House announced the executive order. While the tell was weeks earlier when The Securities and Exchange Commission and Commodity Futures Trading Commission and The Office of the Comptroller of the Currency (OCC), issued informal statements on different aspects of the crypto industry along with the thought of forming a “Sprint Team” to coordinate their efforts. The executive order will grant authority to do so. Yet, we did not get an outline of the next steps. That warrants caution! According to Investopedia the executive order emerged after the Federal Reserve Board (FRB) released a discussion paper that explored the pros and cons about how CBDCs can simplify the implementation of monetary and fiscal policy and promote financial inclusion in an economy by bringing the unbanked into the financial system seeks public comment through May 20, 2022. It looks like House Democrat’s are seizing the day to monetize the unbanked, by setting U.S. government policy around crypto-currencies under the banking umbrella. Stay tuned, we will post any plans in a special report as it becomes available.
Hold, because the whales are!
I suspect we will see at least one more “GET MY MONEY BACK” bleeding based on the role of this graph. Yet, I’ve heard of a few buys like Dave Portnoy, who posted a buy for 29 Bitcoin on Twitter this week. So, maybe I’m wrong! Tone is sure pumping Bitcoins here.
Historic Adoption Rate is on the Horizon
Adoption rates of cryptocurrencies and the internet. As we dig into methodology on estimating adoption rates, all we need to do is look at history for some insight. Shooter feels the best way to calculate adoption rates is to use known internet users divided by the active crypto wallets. To date, this seems to be the most accurate method to project future cryptocurrencies adoption rates. At the current rate, future adoption rates should be at least 3x from here.
What is PTE?
PTE (or “pay-to-Earn”) The idea of earning money through video games’ in-game economies is not new. As long as game economies have existed, players have found ways to make money.
What is Defi?
DeFi (or “decentralized finance”) is a sector term for financial services on the blockchains, primarily Ethereum. The idea of DeFi, is to create the ability to do most things that banks support and more — lend, borrow, earn interest, buy insurance, trade, etc. — it’s fast and doesn’t require paperwork to complete a transaction. Just like crypto as a whole, the DeFi concept is a global, operating on a peer-to-peer network, in an open to all decentralized concept.
What are NFT’s?
NFT’s (or “non-fungible tokens”) are the latest crypto phenomenon that transform digital works of art and other collectibles into unique one-of-a-kind, verifiable assets that are easy to trade on the blockchain. Christie’s auction house sold the first-ever NFT artwork. Beeple sold a collage of images for a staggering $69.3 million and even Crypto Kitty has a collection.
What is the Metaverse?
The Metaverse is a digital world, where users interact with each other much like real life yet in a virtual environment. You use an avatar versus your person. One neat feature is that you get the best of both worlds, business, pleasure, social, and even gaming. Some Metaverse crypto and stocks are pure plays, that is, companies who do nothing but the metaverse. Others are hardware companies that already have successful businesses but we’ve found they will likely benefit from a new revenue stream. In many instances, the metaverse requires the use of augmented reality (AR) or virtual reality (VR) headsets. Software companies can also be metaverse stocks. Several growth stocks are poised to benefit from the metaverse trend, while other stocks are already members of the Tech universe with history and new technology.
Shooter’s Not So Quiet Mind / Watch List
Note: MANA/USD (Decentraland) still needs some time while we added the charts and links this week. We also ADA (Cardano) because the whales doubled holding in 10 days. I will add additional content next week. I suggest you go create a profile and explorer Decentraland. FLOW will be next week.
Shooter’s Crypto Picks and sector Stocks
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.
Follow along in chat if you are going to swing trade a portion of your account. We recommend starting with trading 5% or less of your total portfolio and no more than 20% even as you gain experience.
Continue to scale in small on all entries!
“Next Entry Window Long label” or “Set-up Long Label”.
It’s time to seriously consider what percentage of your portfolio should be held in the Cryptoverse. Crypto is still very speculative. However, the risk and rewards are unprecedented. Stay tuned as I jump into DeFi, Pay-to-Earn gaming, and other shining stars in the new year.
Crypto Elliot Wave Counts / Set-ups / Next Entries Long or Short
XBT/USD Bitcoin closed the week at $37809.99. While we opened $2447.92 lower than last week and continues to show some relative strength vs. equities. Excluding the push into the close. The likelihood of further downside has diminished in the count. Though, we are not technically out of the woods yet, it was a very constructive week to build for the bull case. I need clarity on Biden’s executive order!
If you don’t have a Crypto account you can also buy Grayscale GBTC this is the prospectus.
ETH/USD Overshot my NEXT ENTRY LONG at $2,226.16 and put in a $2,160 print. This moved the fibs again. Should be a decent run now to maybe $2,934.14. We SHOULD get a better price, around $1,889.34 afterwards. Keep in mind that in nearly all back-tests in prior drawdowns, Ether came in shallow, so I will be scaling with that in mind in $50 lots.
If you don’t have a Crypto account you can also buy Grayscale ETHE this is the prospectus.
CRV/USD We have a bear flag. So, I’m glad I took the stop. And a confirmed low on RSI. So, at least one more low. Quite a bit of distortion in the count. The last time we got that we ramped. So, plan to add if a lower entry is given. If your still holding, I’d just Hold because its not that far down. NEXT ENTRY LONG is now $1.918. I also lowered my stop because I did not want to get taken out.
MANA/USD (Decentraland) has a bright future if you just consider the value proposition. I don’t know that I believe the NEXT ENTRY LONG at $1.29557. But, I’ll buy it when it prints. I’ve been cost averaging in since the ramp in 2021 and will continue to do so.
ADA/USD is the best looking chart of the bunch and you know I will continue to cost averaging into this again when it prints that 0.702222.
AXS/USD Next Entry Window Long is now $32.404. The Stop is $14.537. This also reset the levels to the upside. Again, use cost avg. to build a position once we reach $32.
SAND/USD Next Entry Window Long is now $1.9798. Should run to maybe $5.1582 from here and then retrace to put in a (C) around that $1.9798. The Stop is $0.5811. Should be able to chase up to $5.1582. Again, use cost avg. to build a position once we reach $1.9798.
Roblox (RBLX) Well, I’m in Shoulda / Coulda / Woulda land! I’m holding the starter position I have into Earnings on Feb. 15th. I will not sell until either it gets bought out or price is in $131-150 range.
The Future if Crypto Banking Less than 10 minute read
Avoiding FOMO & FUD Less than 5 minute read