In This Issue
- I share my thoughts on the state of the market, melt up theory, regulations are coming, projects are moving to Aptos, Layer 2s, another exit scam from Freeway, Dogechain burns & Axelar teams up with polygon.
- Rebecca breaks down the latest news.
- REKT has a TA report on Bitcoin possibly breaking its year-long downtrend.
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- 🧑🌾 The best DeFi Farms
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What’s On My Mind by Lark
The State of the Market
At the time of writing Bitcoin was staging a breakout beyond $21,400, which represents the top of the range that we have been stuck in for 6 weeks. Volume is looking decent as well. If we get follow through here then we could see a decent bear market rally forming up.
I always love a good market pump. Green days just make everyone happier. Just remember, this is a bear market rally until proven otherwise. Bear market rallies have a way of making you believe that the bull market is back on and gets you to chase the pumps and buy high before the inevitable correction.
Don’t forget in crypto that Satoshi giveth and Satoshi taketh!
I am looking for a break out over 25k before really saying that a market reversal is on. This would get us past key resistance and break us past the downtrend line that has been forming since November 2021.
That being said, there can be a lot of profitable moves in a bear market rally for traders and those who might want to lighten up some bags.
Melt Up Theory
“A melt-up is a sudden, persistent rise in the price of a security or market, often due to investor herding. Melt ups are not necessarily indicative of a fundamental shift and may reflect market psychology instead.”
That is the definition of a melt up. We are already starting to see some pundits calling for a big fat end of year melt up. This could see an across the board bear market rally for crypto and stocks.
To be clear, the macro fundamentals have not really changed. Things remain rough across the board in basically every market. But, bear market rallies do happen. When they do they can be pretty big.
This is all predicated on a potential pivot from the FED. On Friday last week rumors started to spread that the next 0.75% rate hike in November will be the last at that level and that subsequent hikes will be lower.
This is the kind of hopium that markets want right now. However many at the FED have said that 5% interest rates could be the end goal. Which is another 2% higher.
Regulations Are Coming
Over the last week, social media has been abuzz with regulations proposed by Sam Bankman Fried, the CEO of FTX. A man who has considerable influence having spent 10s of millions lobbying politicians and even more money getting people like Bill Clinton to keynote his conference. Translation – Sam has the money and connections to make people listen.
Anyway, let’s discuss.
His key points are:
- The industry needs regulatory oversight and customer protection.
- The industry needs an open and free economy for peer to peer transfers, code, and validators.
- Regulation is needed.
Diving in deeper we run into the points:
- Blocklists to allow for quickly blocking sanctioned addresses. Which includes citizens of entire countries… But also opens a dangerous road for wrong think being punished.
- Better protection is needed against hacks in crypto. Agreed!
- Clarity of the “securities” question about crypto assets. Something that the SEC has completely failed to do. Right now most crypto devs take the ask for forgiveness not permission attitude.
- Develop standards to protect customers which means better disclosures, better clearing models, and suitability to invest based on knowledge not wealth. I.E. doing away with “accredited investor BS”.
- Clarity for defi! However his recommendations that licenses could be needed for different node hosts as well as front ends for websites like Uniswap and others is quite problematic.
- Stablecoins should in fact be backed by dollars. So not more UST experiments!!!
At some point in the future crypto will be heavily regulated. The last few years, and perhaps the next few will be considered as the golden era of crypto in which any regular person could show up and make life-changing money.
Projects Moving To Aptos?
Solice, a Solana-based metaverse coin, has announced that they are moving from Solana to Aptos. They are not alone either. I suspect we will see a few different projects jump ship. In part due to likely big financial incentives from the Aptos team.
That being said, Solice did cite some very real issues with Solana like network congestion issues, downtime issues, timestamping issues, and other problems which made building on Solana challenging.
We also have Pancake Swap, the biggest DEX on BSC integrating with Aptos as well.
Apparently there are already 3 different NFT marketplaces on Aptos already too.
You can of course read Jesse’s review on Aptos here, but in spite of our reservations I suspect we will see a lot of companies jumping ship and moving over to Aptos which is being billed as the “Solana Killer”.
All that being said, don’t fade Solana. A team called Celestia is currently building a Solana Virtual Machine powered by rollup tech.
Ethereum Layer Two
Total value on Arbitrum and Optimism, Ethereum’s biggest layer twos, just keeps exploding. Both of these protocols are now ahead of Solana in total value in defi. Combined they would be ahead of Avalanche in 4th place just behind Tron.
It is incredible to see how insanely big the layer twos are getting. It is a warning shot for other chains. Why would developers and users go somewhere else when they can have all their favorite Ethereum applications for a fraction of the cost.
Other chains really need to push forward their unique value propositions. Part of the reason that Avalanche and Polygon have done so well is their EVM compatibility.
All roads lead to Ethereum it seems!
Think of it, these layer twos have the compatibility, low fees, and high speeds.
Layer two season is here and has been raging the entire bear market which is nuts when you consider how bearish everything else has been!
P.S. Remember there will still likely be an Abritrum airdrop coming to those who are playing on the layer two!
Freeway Runs Away
A crypto scheme called Freeway has apparently exit scammed.
The team said that due to forex and crypto volatility they would need to halt withdrawals for some time. That leaves 100 million worth of customer funds sitting at risk. They also removed all mention of the team from the website.
Freeway had been offering 43% APY on Bitcoin which was a HUGE RED FLAG. Sad to see yet another ponzi scheme take away millions from users. I am sorry if this has affected you, and I hope you get your funds back. This has been a tough year with Celsius, Voyager, Hodlnaut, Luna and others collapsing.
Bear market debutant Doge Chain has put forward a proposal to burn 80% of the supply of Dogechain including all of the team tokens! Wowsers!
This is a burn worth around 1.3 billion. Possibly making it one of the biggest burns in crypto history!
Will this be enough to reverse fortunes for Dogechain? Well, it is up a few hundred percent in the last week on the back of this news. At this time Dogechain remains pretty far on the speculative end of the spectrum. But this could be worth keeping an eye on if it passes.
Axelar Teams Up With Polygon
Axelar and Polygon are going to be working together for cross chain communication for Polyogn’s supernets.
Polygon’s supernets are a potential big plater in the scalability game and to find Axelar at the beating heart of that is cool. Cross chain communication is one of the biggest challenges in crypto right now. And a dozen or more high profile bridge hacks prove how problematic the tech is currently. For supernets to be successful they need to get this right.
In Case You Missed It by Rebecca
Crypto market news
Bitcoin is now less volatile than the S&P500 and the Nasdaq for the first time since 2020. Source
CashApp has added support for Bitcoin Lightning Network, but it does include a limit of $999 every 7 days. Source
Jack Dorsey’s Block is on a Bitcoin mining and wallet hiring spree, according to LinkedIn job postings. Source
10% of women choose crypto as their first investment, according to a BlockFi survey. Source
Apple discourages NFT buyers and sellers from transacting in-app so users can avoid its 30% charge. Source
Turkey has unveiled new details about its e-Human project powered by blockchain. Source
Jack Dorsey’s decentralized social app, Bluesky, is now accepting users for private beta and has plans to launch soon. Source
BitMex CEO, Alexander Hoptner, steps down with immediate effect after less than two years at the company. Source
JPMorgan reportedly appointed a former Celsius exec as its new head of crypto regulation. Source
Coinbase and industry leaders join the support for the conversion of Grayscale’s Bitcoin Trust to an ETF, by filing an amicus brief. Source
Kanye West wears a Satoshi Nakamoto hat after his bank account was shut down by JPMorgan Chase. Source
Fidelity Investments is set to hire another 100 people to boost its digital assets division – an increase of 25%. Source
Spain overtakes El Salvador to become the third largest adopter of crypto ATMs with 215 vs. El Salvador’s 212. Source
Ark Invest buys more Coinbase for its Fintech Innovation ETF, making it the fund’s third-biggest holding. Source
FTX US wins its bid to acquire bankrupt lender Voyager’s assets and is proposing a recovery plan that would return 72% of customer funds. Source
Vertu’s luxury Web3 phone was unveiled at a London event, with the entry-level model priced at $3,600. Source
Robinhood continues to add more cryptocurrencies to its trading platform, with the addition of Aave and Tezos. Source
Coins and Projects
The global Bitcoin payments market will reach $3.7B by 2031, according to a report published by Allied Market Research. Source
Trezor partners with Swan Bitcoin and BTC Direct to allow its hardware wallet users to automatically DCA into Bitcoin. Source
Ethereum has launched its testnet for the Shanghai upgrade, called Shandong. Source
Tether’s USDT will be available from 24,000 crypto ATMs across Brazil. Source
Binance is now the second largest entity by voting power in Uniswap DAO after delegating 13.2M UNI tokens. Source
BNB Chain introduces a $10M fund to help Web3 projects grow and onboard new users. Source
Solana-based gaming platform, Arcade2Earn, has raised $3.2M in a funding round led by CryptoCom Capital. Source
Polygon has partnered with Brazil’s fintech bank, Nubank, to launch the Nucoin token to 70M users on the network. Source
Polygon-based DEX, QuickSwap, closed its lending services after a flash loan exploit took over $220K of tokens. Source
Polygon-based Reddit NFTs have led to over 3M Polygon wallets being created by users to collect the NFTs. Source
Polkadot’s synthetic asset protocol, Tapio, has raised $4M in a seed round led by Polychain, Hypersphere, and Arrington. Source
Polkadot co-founder, Gavin Wood, steps down as CEO of Parity Technologies, a key developer behind the blockchain ecosystem. Source
MakerDao has partnered with Coinbase to custody $1.6B in USDC to become the largest holder of the stablecoin. Source
Tezos has partnered with Web3 automation platform, Taco, to allow Shopify users to access NFTs. Source
Near Foundation has created a $40M fund to bail out USN investors in case it collapses, resulting in the team deciding to shut down the stablecoin. Source
Aptos launches its mainnet with a 20M airdrop to its early testnet users. Source
BNB Chain, PancakeSwap, wants to deploy its mainnet on Aptos. Source
Helius, a Solana infrastructure start-up, has raised $3.1M to make building on the network faster and cheaper. Source
Terra developers release a 4-year plan to revive the LUNA ecosystem. Source
Rippe’s $250M fund is backing Web3 projects in the entertainment and media industry. Source
Gritti, a new move-to-earn app, has closed its $1.7M seed round and has plans to launch its full beta version later this year. Source
Axie Infinity price drops sharply ahead of its early investor token unlock, which will see 21M AXS tokens released. Source
The US Fed is looking to raise interest rates again in November but showing signs that they may slow the hikes from there. Source
A global recession could last until the Spring of 2024, according to Elon Musk. Source
CBDC supporter, Rishi Sunak, becomes the UK’s next Prime Minister following the exist of Liz Truss. Source
UK lawmakers vote to recognize crypto assets as regulated financial activities via the proposed Financial Services and Markets bill. Source
Israel’s government and stock exchange are preparing to issue a blockchain-based state bond. Source
The EU Commission has warned that crypto mining may be stopped in the event of an energy emergency. Source
Japan has announced the start of its CBDC infrastructure testing, with its international payments system set to test plastic cards. Source
Hong Kong has completed its retail CBDC prototype which is backed by a stablecoin. Source
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Market Analysis by Rekt Capital
Is Bitcoin Breaking Its Year-Long Downtrend?
There is reason for some excitement as BTC looks like it is breaking its year-long downtrend, as well as the multi-month downtrend dating back to this Summer.
But this is the normal scale.
The log scale paints a different picture:
The log scale suggests a revisit of the macro downtrend could even be months away.
For example, if BTC were to breakout strongly over the coming two weeks — the downtrend would represent the ~$26500 price point.
But if BTC’s current uptrend extends over a period of 70+ days, then the macro downtrend would occupy the price point of $23000.
As we can see, there is an element of time to where the macro downtrend resides for BTC; the longer is takes for BTC to move up, the lower the price the downtrend will occupy.
What’s curious about this log-macro-downtrend is its confluence with one of the Bull Market EMAs, specifically the blue 50-week EMA.
The confluence is almost picture-perfect, which shows that a break of the downtrend would likely see BTC challenge for a reclaim of the 50-week EMA as support, which is what is needed for BTC to confirm long-term bullish sentiment.
But of course, by that point the green 21-week EMA would also be reclaimed, which is the most immediate Bull Market EMA that price needs to first flip back into support.
And this 21-week EMA is a confluent resistance with the Summer 2022 highs (red boxed resistance) which BTC needs to break above to regain Bull-side momentum as well.
Essentially, this confluent resistance marked out by the 21-week EMA and the Summer highs if also confluent with the orange 200-week MA as well:
And the 200-week MA is actually touching the top Bollinger Band, which tends to be a resistance for price and subsequent rejection zone; price rarely stays beyond the top Bollinger Band for long before a rejection and downside takes place.
We’re seeing how the ~$23000-$24000 resistance area is crucial for BTC right now, and that’s the region that price needs to break beyond for this current bull-side momentum to turn into something more substantial than relief.
So until then, we can’t say anything definitive about a new Bull Market, especially since at this moment in time, price technically “bottomed” in June 2022…
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