← The Wolf Of All Streets
The Wolf Of All Streets
Bitcoin Supply Shock Incoming! Institutions Are Buying BIG!
00:53:54
Bitcoin Supply Shock Incoming! Institutions Are Buying BIG!
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- [00:01]
Scott Melker
Bitcoin on exchanges is hitting historic lows and a lot of other indications that a likely supply shock is coming. Last I checked, when demand is rising and supply is dropping, the number should go up. But bitcoin does seem to be in a holding pattern at the moment while altcoins get absolutely decimated. We're going to talk about all of this Deep Seek, of course and more with James Butterfield and Marcus Thielen, Texas West Capital at 9:30. Let's go.
- [00:30]
Christopher Inks
Let's do.
- [00:44]
Scott Melker
Let'S do. What is up everybody? I'm Scott Melker, also known as the Wolf of all streets. Before we get started, please subscribe to the channel. Hit the like button. Steve would like to know why say you'll be on at 9am Eastern, not be on 9am Eastern. Because I love your comments because I just love to see how passionate you are about an on time start. We just never start on time. It's a rule on YouTube. Guys. Anyways, gonna go on. Bring on our amazing guest. We got James from coinshares, Marcus from 10X Research, our crack team of researchers. You know we used to do this alone. Now we're a squad. We're a wolf pack if you will. So thank you for joining my wolf pack. Guys, let's talk about what's going on here. I actually want to start with Deep Seek because James, you sent me some notes right before the show saying basically no way, right? They definitely stole something from ChatGPT to train their models. There's no way they did this for $6 million. And literally four minutes ago I found this story saying that OpenAI has evidence that Deep Seq legally used their proprietary models to train its own open source. In quotes. I like that competitor. I guess no surprise here for you, but didn't take long for this trade war on AI as they say here to get going.
- [01:57]
James Butterfield
Yeah, we've been quite close to Coinshares because we've been seeing a lot of bitcoin mining companies recently and they're all going headlong into AI. So naturally we're looking quite deeply into it. And there are two parts of AI. There's the reasoning and then there's the training. And it's the training that takes a huge amount of GPU compute power and what on the face of it, when you see what Deep Seats done, Deep Sea 3.5 or something is on a par to chat GPT4 or Claude 3.5 sonnet. So it's, you know, it's quite impressive and it seems like it's this Kid in almost kid in a garage spending 5 million or 6 million dollars or whatever it was that's beating the AI Titans. And but what we thought was it was highly likely that ChatGPT was being used for the training part of Deep Seek. And so all the deep seat's doing predominantly is just inference right now, which the inference is when you go onto ChatGPT you ask a question, that's the inference stuff. But obviously the really heavy work is the training. So yeah, it looks like it's just a kind of a clone of chat GPT4, but that I don't think we should just purely dismiss it on that because it does look like it has achieved something quite impressive and that it's. So ChatGPT uses what they call 16 bit floating point calculations and whereas so Deep seq uses 8 bit floating point calculation. So they essentially halved the compute demand for doing actually a very similar thing ChatGPT is doing. But this look in a way the way they've done it, that's a great innovation now. But this is classic China playbook of information rather than developing the IP themselves.
- [03:53]
Scott Melker
Okay. I guess the real question. Yeah, so that brings the real question. Markus, maybe I'll direct this at you. We obviously saw this massive market dip on Monday. Nvidia losing almost 15% at one point, hundreds of billions of dollars of market cap. But that was based on the fact that China or Deep Zeke had allegedly done this on their own. If that's not the case, shouldn't markets just absorb this and continue right back up?
- [04:21]
Marcus Thielen
Well, I think the market is probably bouncing back and it has bounced back already. But of course, as James was saying, there's been some technological improvement here and I think it just lowers the cost, it lowers the spending. I think coming into this week we actually were worried a little bit because of the tax, the tech earnings that we're getting on, you know, on Wednesday, today and tomorrow, that there might be actually some kind of pushback from investors, from shareholders about all this spending without any revenues really in, in clear sight. And, and maybe that's what we're going to get. And that's maybe why we had this aggressive sell off on Monday because people kind of were front loading this, this sell off. But I think what we have seen is some of these, you know, bitcoin mining companies that have been, you know, dipping their toes into mining or AI data center hosting. I think they have dropped actually a lot on Monday and they have not really yet rebounded. So I think that's actually a great Opportunity and you know, maybe James has a couple of names there, but I think something like Terra Wolf has, you know, dropped. I think they dropped like 30% on Monday, which is, you know, a lot more than, you know, than Nvidia. But it looks pretty cheap now relative to, you know, where the bitcoin price is well overhanging.
- [05:31]
James Butterfield
A lot of these mining companies is actually getting concrete deals with AI. So most of them have not got these deals with a hyperscalers yet. So Applied Digital being a really good example. The only one that really has is Core Scientific and did suffer quite a bit on Monday, but it's the only one with actually a concrete AI deal with the contract with COR for the next 12 years. But it does. I think what's interesting in all of this is let's say it is. Deepseak genuinely has created a computer science breakthrough and half the compute power needs to do the same thing. We could well end up with a supply glut of AI compute power. If you look at what the kind of plans Donald Trump has, you could argue that they might fill that glut very quickly, but you won't need as much hardware to do it.
- [06:24]
Scott Melker
So let's talk about then the effect on bitcoin. So obviously we've had some volatility, but in a very, very tight range here. In my opinion we can call it 90 to 106, you know, 99 to 106, whatever it is. Obviously we've seen consolidation here and we saw bitcoin drop and bounce very hard on Monday sort of on this news. What's going on with bitcoin? I guess we had some disappointment with the structure of the executive order. So we don't have clarity on a strategic reserve. Maybe that was going to be the next narrative that was going to send us. But I think a lot of people very disappointed with how the market is performing right now. I'm not one of them. Six figure bitcoin is a dream to me, but I think it's because people are massively overexposed to altcoins. But I guess we should just take a step back here and say what's going on with bitcoin at the moment? What's going to send us clearly in either direction? Marcus, I know you take a deep look at seasonality. You know, February generally good. So what's going on here? Is this normal or do we need some, some action?
- [07:25]
Marcus Thielen
No, I think it's normal that we have consolidated basically after the FOMC meeting in December where Powell was Hawkish. But you know, we had Christopher Waller coming out after the CPI data release in January, really in mid January and pushing back against really this hawkishness. So I think we're seeing that the Fed becomes a little bit more, more dovish. I think there are still two cuts priced in. So I think the market shouldn't be carried away. And you know, as you said, you know, we coming into February where usually we have seven out of the last, the 10th of February is being positive and average returns is around like 11%. It's the third strongest month of the year. So I really wouldn't dismiss it. We look back at last year, we were also struggling in January after the ETF inflows started really and then we had a strong rally in February. And when you actually look back that the ETF flows, they kind of stopped after the December FOMC meeting but after the CPI data release they started to pick up again. And then when you can see the seasonality there on the top right chart with a white bar, so the second chart is really the February and when you look at the bottom right chart is actually the Chinese New Year which officially is today really. And if you would have bought Bitcoin the 10 days before the Chinese New Year and held it for the next 10 days afterwards for like a 20 day holding period, you actually have done pretty well over the last kind of like 13 years. There's only one down year. And then on top of this we have the chart on the left which is sort of like another breakout level that we reached last week when we made a new closing high and the last three closing highs had the minimum return of like something like 26%, 26% return over the next month. So I'm not predicting this but the market has moved in these 16,000 increments as you can see at the bottom left chart really where we had this trading range from you know, 90,000 now to 9 or 6,000 and then the next trading range if we can go above it would be like you know, 106 to 122,000. So I think, you know, we are on the way there. I think it's actually quite strong that the market is holding up so well and has really bounced back quite aggressively I think, you know, on Monday really. So I think it's actually quite, quite bullish right now.
- [09:39]
Scott Melker
Yeah, I think it's interesting how kind of when you look at it, sorry, the other one, but how bad January have actually been, right? I mean January is as I can see it here, just Visually the second worst month after September. So I guess there should be no surprises here. But James, I mean, what's your take on where bitcoin is? And then after we do that, I want to kind of talk about what's happening with the altcoin market. What's your take right now on bitcoin?
- [10:02]
James Butterfield
It doesn't matter what the crisis, what crisis is in the markets, regardless of bitcoin. Bitcoin tends to react negatively to kind of bad news and we saw that. But it's been remarkably resilient in terms of bouncing back very quickly. I think from a macro perspective there are a couple of headwinds that bitcoin faces. So today we've got fomc. They may start to acknowledge the inflationary pressures that Trump policies may cause. So if you imagine you're having a big crackdown on immigration and therefore you don't find all the farm workers and other workers in some of these lower paid jobs that could be inflationary in that respect. On the other hand, we could well see the Fed mentioning the market weakness such as Nvidia and therefore they should be a little bit cautious. I'm not saying I've got, there's no one handed economist here or anything like that, but I think generally we saw the markets panic a little bit. We saw about $450 million of outflows from bitcoin this week. But then yesterday they started rebounding again. We started $50 million one flow. So generally, I think given what's happened in the broader markets, bitcoin's been quite resilient. I do like the point you made about the executive order. I think the markets were unreasonable to expect him issue an executive order which just said buy bitcoin now.
- [11:31]
Scott Melker
Sure.
- [11:32]
James Butterfield
And in fact, I would have been disappointed if that's what he created. What's incredibly encouraging, he's creating a working group that's got 180 days to come up with policies. And one of those obviously is the Bitcoin Act. So we don't have. Yes, they're going to create the Bitcoin Policy act now. But you know, Cynthia Lummis is leading this. She was the one that proposed this. It's her baby. But if she can get this passed through Congress, that has far more greater longevity than just an executive order that says buy bitcoin right now. So I actually think this is a really positive outcome what's happened from the executive order. And as time goes on and the markets understand that and absorb it, I think it will provide far Greater benefits, greater credibility.
- [12:16]
Scott Melker
Exactly what I've been saying. Like if you guys were there or watching Nashville Bitcoin conference, Trump gave a large speech, he alluded to it, and they brought Lummis immediately out on stage to propose the bill. Right. The strategic reserve bill. So there's clearly a structure and idea in place as to how this would pass and be pushed forward. And Trump was very unlikely to step on her toes when they allowed her to make that announcement there. Right. I mean, they're working together to get this done the right way. Whether it will or not, I obviously can't say.
- [12:49]
James Butterfield
Trump's been remarkably consistent in his promises towards crypto and in fact, a lot of things he'd been remarkably consistent this time around in delivering on a lot of what he's proposed in the election. So he's sticking true to his word for now.
- [13:05]
Scott Melker
Yeah, yeah.
- [13:06]
Marcus Thielen
And something, Scott, that you said earlier about the, you know, the supply squeeze, really, that all these BTCs are going to be removed from exchanges. I think that's really an incredible chart. And we have, you know, we look at this chart like every week basically. And, you know, when we analyzed who is actually buying bitcoin, it's really these wallets between 10 million to 100 million, they're really the most aggressive. You know, it's not really small retail and we don't, maybe we don't really need retail in this, in this move for BTC and, you know, and these wallets, between 10 to 100 million, they don't need to sell. I mean, what we have seen really over the last couple of months, you know, 12 months really, that there has been, yes, maybe ETF buying has paused, but there have not really been a lot of liquidations really, you know, in the market. And I think that's really quite interesting. So I think it's really going to not only just stable hands, but there's no incentive for people to kind of like liquidate or sell ETFs. I mean, you know, we have Larry Fink, of course, going around saying this is a long term asset and, you know, he looks pretty good.
- [14:02]
Scott Melker
700,000. He had never given a price target before that I can recall, and that Davos, of all places. Right. Yeah.
- [14:09]
Marcus Thielen
So I think it's, you know, really quite bullish and I think it's actually quite constructive that we're holding up here. So I think we can see this squeeze higher and I think there is an incentive to keep prices high.
- [14:19]
Scott Melker
What you just described though, might be the problem with altcoins and why this time has been different so far. I won't say this time will necessarily be different. I don't know what's coming. But in the past if you had Bitcoin make an all time high and consolidate, you would have seen massive action across altcoin markets, which we know is retail. Right. We would have seen Ethereum following potentially certainly would not see coins returning to their bear market lows, which is what we're seeing right now, literally tokens down 60, 70% in a matter of weeks. But maybe that's because retail is not really here and it is these institutions that are driving and they're driving strictly in bitcoin. I mean we do have some positive news on Ethereum. Their active addresses surged 37% as institutional and DeFi interest grows. But Ethereum continues to languish. I mean, James, what do you make of all this?
- [15:07]
James Butterfield
Yeah, I mean, aren't investors being a lot more discerning at the moment at this time, this time around this cycle? You see that in Ethereum. I think in the past Ethereum would have really rallied hard and yet it hasn't this time. And I think it's addressing a lot of concerns around Dame Kuhn and the profitability on Layer ones and Layer two is already having quite a lot of great success, but it's not translating into any kind of value for value accrual for Ethereum itself. So actually that news is really encouraging. I mean we do, I mean Ethereum over the last three months has accrued around $4.7 billion worth of inflows. So investors are buying and I think they're seeing this kind of. Some of these challenges proposed by Dan are going to be surpassed, particularly this beam chain proposal where they're reordering some of the ips. You know, I think investors have seen that quite favorably and I'm seeing actually Ethereum's kind of on sale at the moment. It's quite cheap relative to sort of the massive rises that Solana's seen. You know, I'm, I'm concerned. I mean Solana has been very popular and it's seen in the survey I've just written. I've not published it yet. It highlights that actually a big uptick in Solana holdings by institutional investors. But you know, don't Forget Solana is 80% of Solana's volumes are meme coins. That is kind of a house of cards. And if you've got discerning institutional investors coming in, I think they're much more likely to favor something like Ethereum over Solana because it's got much more substantive, you know, we see risk, I keep on calling it risk. Protein assets, real world assets are rising or at 16 billion and counting. So that's really encouraging.
- [16:51]
Scott Melker
Is that what's driving the active addresses? I mean, listen, Ethereum still, for all the FUD around it, it's got by far the most developers, it's got by far the most tvl, it's clearly got by far the most institutional adoption. Solana's just become the casino. And I don't say that in a negative way, but it's a casino. I mean at least now I did see this story which is very important. You can now buy Trump sneakers and watches with your Trump meme coin. So we are getting utility from that very important meme coin.
- [17:22]
James Butterfield
But otherwise, well, I mean the success or the interest in Ethereum, the rise in the active addresses may be an offshoot of base. So looking at GitHub data and active devs, bases just seen an explosion in depths. It's like two and a half thousand active devs. There's only a thousand active devs on Solana and obviously bases all on Ethereum and that could, so that, that growth, that explosion of growth and usage through base could be an offshoot of the rising active addresses on the layer one.
- [17:57]
Marcus Thielen
Yeah, I mean I think there's like a few interesting aspect that maybe the, the amount of ETH that's being staked is actually sort of like peeking out. So I think that can be sort of, you know, a risk factor. But when we look at the, the fees that are generated on Ethereum or within the Ethereum ecosystem, they you know, had like a mini peak in December of like US$240 million for, for the month and this month we sort of like have halfed it and I think we had like consecutive months since May, since August last year of higher and higher. So that kind of like supported the rally in ease basically. But we are now, you know, in January at the same level basically as in, I think in October last year when east was like at 2500. So you know, from that perspective and I think the, the ease fees being generated is more and more, I think it's quite correlated actually to the price of, of Ethereum itself. So we look at this quite closely and I think it indicates that the market is overvalued. Yes, maybe the, the number of addresses, maybe there's an uptick, but not actually how much they're doing. So when fees are lower, it just tells me that there's not too much demand and I think we're seeing it also in gas fees. I mean gas fees are 6, 7 gray.
- [19:08]
Scott Melker
Right?
- [19:08]
Marcus Thielen
I mean we are like super low. Yes, that has to do with the upgrade last March, but I think there's just less activity, unfortunately. I think that was kind of the big disappointment after sort of the Trump inauguration where many people expect some defi renaissance. And when you look at the derivatives markets, where suddenly actually this week there was a flipping, where suddenly the implied volatility for puts has been rising above the ones for calls. So there is more demand for puts now than there is for calls. So people actually more worried about the downside protection than really the upside opportunity here. So I think the market structure looks a little bit weak and we all agree that there's huge potential, but more needs to happen.
- [19:52]
Scott Melker
But are we at the point now where most of these tokens may not ever catch a bid? I mean we have the barbell, right? Memes on one side, bitcoin on the other side. A few other things have gone up, but I think we had an encouraging moment when XRP and hbar and Algorand and some of these dinosaurs had that moment of 6, 7 Xs that gave people hope. But it definitely feels like altcoins should have been performing exceptionally well in this period, that's all.
- [20:18]
James Butterfield
So how many altcoins now are revenue generating? That's the question we should be asking. Like if you were to invest into a company and seven years later they're still saying, oh yeah, I'm not bringing in any revenue, you have serious concerns and there are plenty of altcoins out there that fit in that category. How long does an investor have to wait before this? Before this altcoin is a success? You know, Tezos is a really interesting example where technically it's brilliant, but it just hasn't had the kind of the user growth that you require, you know, that sort of, that kind of Metcalfe Law sort of thing. A growing number of users really to add value. And I think this is a challenge that many of them are facing. If they can't differentiate themselves against Bitcoin or Ethereum or Solana, then how are they going to have any kind of success in the longer term? You know, particularly if you've been around for seven years. Yeah, it's time to throw the talent as an investors and find something that's more interesting. I think, you know, the crypto is human nature to just get wrapped in up in a great story and all the hype around something, but then at some point, you know, the tide rolls out and you see who's naked and you know, and this is where we are possibly right now in the altcoin space, we need to see true revenue generation and true user growth in some of these initiatives.
- [21:45]
Scott Melker
And to Marcus, I mean, and the money just doesn't trickle down, right? You have the same DGENs who were trading these utility tokens in the past cycle, pretending it was about utility, but it was really speculation, right? And those people are trading memes and there's no new people to buy the rest of these altcoins because they're buying Bitcoin ETFs.
- [22:03]
Marcus Thielen
Well, one of the best charts from last year is really how the bitcoin dominance went from 40% to 60% and we are still at 57%. So it's still like, you know, like a smooth sailing for, for Bitcoin here. But I do think, you know, with the FTX implosion, you know, from a few years ago and some other, you know, coins going down, and I think we had a huge correction with Solana back then. I think a lot of the VCS actually got burned and I think they didn't really come back where people sort of like moved on then to sort of, you know, the, the I, the AI revolution, as you might call it. So I think there's sort of like a lack of capital for a lot of projects and you know, they depend on some, you know, marketing budget and, and have longer lasting themes. And I think this cycle we sort of like struggling. What is really the real narrative? The real narrative memes? Yes, maybe, but it's not going to bring in the big capital. Last cycle it was all about how Defi is going to take over Tradfi and it's going to take out the back office and middle office of these large banks and financial institutions. I mean that was a real story last time. And there was also of course, you know, the advantage of really higher yields being paid in, in crypto than in, sorry, in crypto than in Tradfi. And when you look at, you know, Ethereum staking yield, it's just like 3%. I mean it's literally, you know, 150 basis points lower than the treasury yield. I mean, why would anybody risk, you know, capital into that? And I think that's how the market has sort of like evolved where, you know, the biggest narrative for, you know, for the outcomes, altcoins with Ethereum is really just like staking and staking is like 3% yield. And then Ethereum horribly underperforms bitcoin for the last two years. I think that it lost completely its beta function. So I think investors are right to just focus on bitcoin predominantly and just put some money into some speculative tactical moves. I think that was the trade last year and I think it's just a trade this year where we just need to be patient.
- [24:00]
Scott Melker
Yeah, I mean, on the bitcoin side, James, just quickly, here was the story about the reserves plunging. We talked about that. Right. And I just want to make sure we mention these things. Meta Planet's going to buy 21,000 bitcoin by 2026. We're going to definitely see more institutional adoption adding to the balance sheet. I have zero question about that. And you have the Czech central bank. This is the chief. So not just some guy proposing it's actually going to be on the docket up to 5% of reserves to bitcoin. Now I'm not saying that's going to happen, but this momentum, the fact that this is on the docket in so many places seems really compelling for bitcoin.
- [24:36]
James Butterfield
I wrote an article called Strategic Reserve FOMO and this is maybe what we're having. It was on our blog, you're welcome to read it. And we were kind of doing a saying actually quite a few years ago we wrote an article about valid bitcoin and guessing that some central banks would buy it fundamentally makes sense that they will and maybe they fund it through selling some gold or something like that. So last year we saw $100 million of outflows from gold, $44 billion of inflows into bitcoin. So clearly people are. And we had clients actively saying, yeah, I'm selling some gold to buy bitcoin. So it kind of makes sense that a lot of central banks would propose this. I did an estimate looking at if they bought, if they took 5% out of their gold reserves and bought bitcoin with it, that's $110 billion worth of Bitcoin demand of all the sort of key central banks around the world. So that's a really positive outcome. And then yeah, you've got. So in our fund and our blockchain equities fund, we have an active theme identifying what we call a bitcoin yielding companies like Microstrategy, like Meta Planet and there's some other really interesting companies such as Sema Scientific and others that starting to do this now. And I do think this is, this trend has been beginning to catch on and we'll just hear more and More news are doing this. A lot of these, A lot of these companies are doing it because they want to hedge currency risks. And actually bitcoin is quite a good hedge against fiat currencies that are printing a lot of money.
- [26:07]
Marcus Thielen
And I think there's also like two stories that sort of like nobody really talks about right now is of course the FTX payout, right? It should be around 16 billion or maybe something like 4 to 6 billion will be paid out eventually. I think that can be, you know, some, some trigger. But we also think there's going to be, you know, several IPOs this year. I think the chance is quite high. And when you look at there's like 10 companies that are probably could go IPOs, you know, anything from, you know, from, from Kraken to Circle, you know, potentially maybe even Ripple or something. I mean they could fetch something like you know, 100 to 150 billion if all these 10 companies would IPO. So I think there is a, is an incentive to keep the bitcoin price high this year because that's, you know, how Wall street has played the game, you know, during the previous cycles, right with the Coinbase IPOs peaked out in, you know, the bitcoin price peaked out then in April 2021 and you know, some other listings, you know, the, the December 2017 BTC listing at the CME. I think there is some incentive so I think we can paint a positive story. It's just unfortunately that the higher beta currencies are just not performing where usually more the action is and what the fun is.
- [27:14]
Scott Melker
I guess we'll see what's going to happen there. It's going to get crazy, I can tell you that. Regardless, I mean we might get a Doge etf, right? I mean we're gonna probably get a Solana etf. I think very high chance we get an XRP etf. Maybe these could be catalysts for all coins. I personally doubt it. I think all coins will still do exceptionally well. You're just gonna have to be more selective. But I do think later in the cycle, you know James, to your point, the ones that actually have utility may shine this time. I guess we will wait and see and pray because it's 9:31 and I've kept you guys a minute over your time. I'm sorry guys. Everybo in the description you can follow Both Marcus from 10X Research and James Butterfield from Coinshares. I love the insight that you always bring. Fed should. We were going to talk about the Fed, but I think it's just going to be kind of a nothing burger today and maybe if Powell sneezes in the wrong direction, we'll call him too dovish or too hawkish and then we'll move on with our lives in the next few days. So maybe unpack that after it happens. Gentlemen, thank you so much for joining.
- [28:16]
Marcus Thielen
Thanks for having us.
- [28:18]
Scott Melker
All right guys, before we move on to Mr. Christopher inks himself, I'm going to tell you all about Aptos. So Avery, the new CEO of Aptos and I did a amazing podcast conversation which is coming out this Sunday that will unpack a lot of the reasons why I'm so bullish on Aptos, why I've accepted them as a sponsor, why I'm working with them on this long term deal. Obviously the price alongside all coins. We don't really usually talk about coin price, but a lot of people have pointed out that it's dropped. Also dropped when Moshe left and Avery took over. But those are complete nothing burgers because they're doing exceptionally well. I mean, just to put some data to it, no ecosystem is really growing faster than Aptos. Factually over the past week these are some of their milestones. 2.751 million new wallets in seven days, which is record breaking. Total number of wallets now exceeding 49.8 million. I think it was literally like 100,000 in in August. Daily active users increasing 1.43 million wallets using it. 39.4 million transactions in one week. And weekly active wallets an incredible 6 million. Setting another all time high and seeing stories. I don't really care about the price of the token, but here's why. Aptos price may jump 85% as active addresses soar. This just speaks to the idea that they just had that the platforms and the projects and the layer ones that are actually bringing utility and growth and seeing DAP development and seeing increased, you know, see increased adoption, those are the ones that should perform exceptionally well. We already saw a huge move on Aptos. The suis, all these kind of new blockchains everyone's talking about, I firmly believe are going to have a major, major move later in the cycle when people get done playing, playing with their little meme coins. So guys, that is what we've got for you on Aptos today. I really highly encourage you to check out the conversation that's coming out on, on Sunday because we dive deep into it. And also just an incredible conversation on the future of AI and crypto, which seems to be what everyone wants to talk about. Without further ado, Mr. Christopher Inks.
- [30:29]
Christopher Inks
What's going on, man?
- [30:31]
Scott Melker
We're dead again. 102,000 dead.
- [30:33]
Christopher Inks
Oh, I know. It's so awful.
- [30:35]
Scott Melker
Every time you come on, we're dead.
- [30:37]
Christopher Inks
Hey, man, you know, I can only control what I can control, right? You know, I like to start off with the, the DXY here because I, I do continue to believe it looks like that top may be in. And so you can see that we had this nice impulsive breakdown and close here below that support rallied up rejection, which is important, and continued to fall lower here. You know, I think we get a bit of a bounce here, but overall looking for rejection and to continue down lower. And if we can get that, you know, again, it just kind of puts toward that idea that the, the dollar is going to weaken against the other currencies and. But, you know, it's what we've been looking at for, you know, a year and a half years. We kind of develop what, what looks like a flat correction here before coming down. So, you know, we'll see how we can get with this follow through here. If it doesn't, it doesn't. You know, it is what it is. But right now, you know, we've been doing all this kind of just sideways. I mean, really, we've been sideways since what, since November of 2022. And now we got this little deviation to the upside here, right back bouncing into it. You know, it's kind of, uh, it's been tough for people that are looking for instant gratification, you know, and not that I'm talking about anybody in crypto, Twitter or anything, but, you know, is what it is, right?
- [32:00]
Scott Melker
Nobody could be.
- [32:02]
Christopher Inks
Let me see here. We've got bitcoin. Nothing's changed. Again, you know, we had this, you know, you can look here as a descending wedge here with a throw under. Again, you know, based on the, the volume and price action relationship here, this does look like accumulation. We had a slight thrust up here over the top. As I continue to talk about, you know, most often what we have when we have an accumulation or reaccumulation range is once you print this spring, or sometimes it's just the last point of support, which means there's not enough to push it down below the range support. You usually get a rally up into the swing high area, a rejection and pullback, and then you get the big break in terms of Elliott wave. You know, it's a first wave up, second wave pullback, and then you get, you know, your third wave, which is your participation Wave, which is where everybody goes, oh crap, you know, I'm, I'm, I shouldn't be shorting it. I need to get out of my shorts, I need to go long. And so that's why I usually get that. Third wave is the longest, largest wave. But yeah, it looks like we got a one up here and then we got an A and then a B is a triangle C coming down here again. You know, great, you know, candle right here at the low. Another great candle at the low right here. Basically, guys, if you're looking at this, you need to get above whatever this is, whatever exchange you're looking at. This is the index, the bitcoin all time index. So this is what day is that? That's January 26th. So that swing high in this case it's 105, 430 and 70 cents here. If you break out above that, that should indicate that that low is in and you're headed up. Wave three off. This low here has a minimum expected target of 135,812. That'll give you five waves up around 148, 150,000. I don't believe that's the top though. I think we just get a decent pullback from there and then we break out higher again and that's when you can look, you know, potentially 180, 200,000, something like that. So nothing going on here that's freaking me out at all. Nothing when I should be freaking anybody out. Even the pullback right here, you can see it's just right back this low volume node acting as support as we would expect. So you know, if, if it drops down below this swing low Here at about 97, 738 on this chart here, then maybe we can look at, okay, maybe something else might potentially go up. But even then, which it's still such a, you know, such a small pullback overall with this over with this whole rally here, which does appear to be 1, 2, 3, 4 and 5 waves up. So looks pretty clean, looks pretty good. Not worried at all. You can see the daily stochastic RSI has reset down and oversold here. RSI remains bullish.
- [34:54]
Scott Melker
Dead. Why are our altcoins dead? Why are they dead?
- [34:57]
Christopher Inks
Why are all coins?
- [34:58]
Scott Melker
I will say some of these altcoins, the slaughter has been pretty impressive. I mean these things are like back to their, you know, last year, mid last year, summer lows. I mean and it's then they were like doing great at the beginning of December. 70, 80% since December, some of these and Bitcoin's $102,000. That's not my previous cycles so far.
- [35:19]
Christopher Inks
Yeah, yeah, exactly. But you know, again, I, I can't even act surprised here. You know, I said it last year around this time, I said, you know, it was likely to be a different style, you know, a different look at the cycle this year because of, you know, the Bitcoin ETFs we weren't going to see. I didn't, you know, at the time, I said, I still kind of think we're not going to see the same kind of cycling that we see. Or it may still be there with, you know, with what, you know, the crypto bros, the ones that are trading through the cycles. But the fact is we've got all that kind of money flowing into bitcoin. You know, I see some people saying, oh, it's just old holders of Bitcoin buying ETFs and, and I don't see that because we have a significant, you know, influx of, of money coming in, you know, into, into the ETFs and Bitcoin itself is still going up. I mean, if all you were doing was moving from one to the other, I mean, you know, price isn't really going to do a whole lot. You need more money coming in to kind of push that price up. So I think that's a misnomer. I think people are, you know, kind of lying to themselves about that. You know, everybody's out there trying to find something to make them feel better about why they don't understand what's going on. But you know, again, I think you talked to Matt Hogan over there bitwise, don't you?
- [36:34]
Scott Melker
All the time.
- [36:35]
Christopher Inks
Yeah. See they, he, I believe it's him that said the same thing a little bit after I said it. When we're talking about this idea that this cycle would be different, that you know, you're going to see all its go, but it may not be what you're used to with, with cycling from bitcoin into, into those alts, you know, and it's been what we've seen so far now does that mean we can't have a, a similar off season to what we've seen in the past? I mean that's still possible but you know, I wouldn't necessarily hang my hopes on that if I'm trading also, I'm looking, I'm just looking for what's rallying. I mean, you know, everybody tries to do it, you know, tries to, to be really simple about it and go through the cycles and and that's fine. But you know, if you're still sitting around going, man, where's alt season? Where's alt season? And you haven't made money with alts over the last year. What are you doing? Like you said, there's been huge meme coins were huge last year. There'd be huge run up in that. Right.
- [37:25]
Scott Melker
I mean you had the XRP that moment where XRP and Algorand and HBAR pulled 6, 5 to 7 X's each. You had these coins like Aptos and Sui and all these kind of the new shiny layer ones all had their huge moves. You had everything that was AI related. We just have had bubbles and they've been a lot quicker and there hasn't been the dart throw moment where everything just goes up.
- [37:46]
Christopher Inks
Yeah. And I think that's what's throwing people off. And you know, I was listening with the earlier the show earlier with the guys you had on there and yeah, you know, I think it's the same, I think, I think a lot along the same lines of what they're saying as far as, you know, retail involvement and you know, what's going on with all that, you know, and you know, because of what I do and you know, and I teach here, you know, we still get a lot of the same questions from new retail participants and whatnot, you know, about all season and all these things going on and you know, I mean, what are you going to do? You know, you're in the market. The idea is to find the trades and, and there's always trades to be found. You know, again, we got, we got 17 billion all coins. Right. So I mean the, the hard thing is try to go through all the charts. But there's always something to be found, as you said, even with the other ones coming down. Look at things like, you know, look at how Solana's done, look at how, you know, so some of the others have done. So they're there. You just have to pay attention and stop just waiting for all season. Because if alt season as we've known in the past doesn't come, you've just waste an entire cycle just sitting on your rear end waiting. Right. So that with that said, I've got a few charts here. CHZ is interesting to me. It looks like we might get a pullback a bit further here maybe to the daily S1 pivot at around 5 and a half cents somewhere between where we are in there. I think that'll be about a 78. 6 pullback. But it looks like we've got a leading diagonal here. It looks like we've got an A, A B working on a C. So like it's somewhere between where we are and here. Looking for an impulsive breakout. And close above that descending resistance. That's going to be my first clue that'll say wave two is likely complete. Breaking out above wave B which just so happens to be right around the daily pivot. That's about, it's, it's just about 10 cents if we can get a breakout above that doesn't have to close. We can just get a wick above it on the 15 minute. It's fine if we can do that. Wave 3 minimum expected target up here at almost 38 cents. 0.3387. So you can see here daily RSI just about to get oversold. Stochastic RSI bottomed and oversold on the daily here. Looks good. Looks like it may be gearing up for that move. So. But you know, definitely want to at least wait till you break out here. Unless you're zooming in a smaller time frame and you see a reversal happening at this low. And then we've got, you know, a few, we've got this kind of across different also. I just picked some of them here. We've got Gala here. Looks like we've got a descending wedge. You can see we're finding support right in this previous resistance area here, right prior to the low volume node. Well, wherever you're looking there. And then there is this above it here, this support resistance area right here. And so, you know, breaking out through that area, that descending resistance should send us off. That would give us a pattern target minimally here of, of about 11 and a half cents. So right now, you know, we're kind of sitting here at about just under three cents, but breaking out through here just over maybe three and a half cents here. So that's a pretty good run up there toward 11 and a half cents if we can get that breakout there. But again, just kind of pulling back in wedge form to previous resistance as support. And like I said, you're seeing this across a lot of vaults on this daily time frame. So this one's Gala. Here's another one right here. Track USDT tracing again, descending wedge into this previous resistance support area low volume node. So, you know, again with this and finding some support right now here at that S1 pivot on the daily. We did have this pump up on this current daily coin and drop back down. We'll see how the daily ends out. But if we can get it, you know, impulsive breakout and close above this descending resistance minimally pattern target. Again get us a target up there of about A$58 and that gets us right about. Is that the all time high? Yeah, right up there at that all time high area on this kucoin chart. So definitely some setup there for that as well. And by the way, these pattern targets aren't necessarily like the high that I expect them to go. These are just quick, easy targets based on the structure. Let me see here, we've got this one right here. Again, same kind of idea. This is CRO CRO USDT previous resistance support level area right here. And then again it is that once we pull this back here a little bit gives us that low volume node acting as support. So we're getting these wicks down into it again though, descending wedge. So if we can get an impulsive breakout and close above that descending resistance, that's a good indicator that the low is likely in there. And then we would look for again pattern target up here around 35 cents on this one. So right now we're around 12 cents and about 13 cents. Could run it up there to 35 cents, maybe even higher on that. But you know, it continues to look good here overall. We just have to a little patience, wait for, you know, don't try to jump in before and, and get that done. This one's deep. This one I don't like. It was setting up good here at the beginning. I was looking at maybe, you know.
- [43:20]
Scott Melker
It could be at support to be fair. Yeah, everything's dumping again. I said it could be at support to be fair but I mean, you know, I think we're seeing dominance is rising again as we speak once again, so making another kind of new local high.
- [43:34]
Christopher Inks
So yeah, which is why you know, again we're looking for, you know, we're waiting for the impulsive breakout, you know, and close above those descending resistances to kind of signal. Okay, maybe that lows in a lot of times when I post these chart, you know, people get overly excited like oh my God, that means I need to get in now. No, wait for the setup. Right. That's why we end up losing a lot of money as traders is because we jump in before we get some sort of confirmation. But even when you get confirmation, it doesn't necessarily mean that you're gonna, that you're gonna be successful. Right. There are no guarantees in trading other than you're gonna lose money. And the newer you are, the more money you're gonna Lose and the more often you're gonna lose it. Other than that there are no guarantees. This one right here, maybe we got, we got a deeper pullback here. But you know, if we can get a rally back up through here without breaking down. This is KNC on the, the one hour break got above that 49.69 area. That would actually get us. I'm not sure we're gonna get it because it dropped back here more. But 0.5181 would be the initial target there. That'd be the third wave, fifth wave up here at.05268. But importantly, what would happen from then would, would be, you know, you get this move up here for one, you get the pullback for two and then you'd look for a three. Probably getting up there around 60 cents up here. So you know, at the top of this kind of low volume node here. But that's only if that holds. Obviously if that breaks down, you know, that gets invalidated. You could probably watch for a break out of this descending resistance here. Again, impulsive breakout. And close, you know, to me to maybe say that the low may be in if it does break down here. But we did have, you know, we did have some bullish diver or you know, we got lower lows here with price, we got higher lows here with the oscillator. So we did have that bullish divergence. Just got rejected around that S1 pivot here on the hourly and the pullback. But we'll see if this low holds here and we get the rally up, pull back and a rally up. Some of these might be slower rallies than what people are going to be waiting for. You know, a lot of people, they expect, you know, the V shaped bottoms and recoveries. But these might take steps like I'm showing you here. You know, again you get the, the kind of the, the, you know, the move up the pullback and the breakout kind of come down and it may not move as quick as people might want it to. So it's just about paying attention. But you know, we're seeing the same similar structure there across a lot of different alts with those descending wedges into potential reversal points it supports. So we'll see if we can get them.
- [46:18]
Scott Melker
Love it. I mean we just need to see something. I think we just need to see an Ethereum pump and then everybody will be happy or will be like a disbelief. Then all coins will go.
- [46:28]
Christopher Inks
Yeah. I mean, still don't hate Ethereum. I know you're, you're bullish On Ethereum as well. I don't see any reason to freak out.
- [46:36]
Scott Melker
It's a gross chart. But, like, you know, like, we're back to 20, 21 here on eth. BTC, this, I mean, you know, easily let go if you're wrong. That's a great position. We just saw 37% increase in active wallets, institutional adoption. It's got an ETF. I mean, I get it, but, man, like, I love. I just love 99% of the time when everyone says something's dead that actually has. That isn't a beanie baby. You do?
- [47:02]
Christopher Inks
Well, yeah, yeah, exactly. You know, it's that point where, you know, everybody starts finally giving up on it and throwing a fake. You know, we've had that on Ethereum a few times already, and then we've had the big moves from it. So, you know, the hardest thing, I think, as a new trader is to understand what you just said really means, because they'll look on their timeline, they'll go, oh, everybody on my timeline's bearish. And so we got to do it, but. Or everybody's bullish. So this is going to happen. But, you know, we got to remember these. These social media timelines are curated for you, you know, based on what their algorithm thinks you want to see, you know, which is based on your post, maybe your direct messages to people, all that kind of stuff. So, you know, you don't want to directly go off that and go, okay, everybody's bearish. Everybody's bullish.
- [47:47]
Scott Melker
Yeah, for yourselves. So, yeah, don't insult baby babies by comparing it to eth. More of that. Give me more of that. Come on, algorithm. Make me feel better with the.
- [48:01]
Christopher Inks
You know, it's. It's tough if you're, if you're new to trading, if, you know, there's one thing, you know that, you know that a lot of, you know, people that have come into crypto really don't understand, you know, they're newer to crypto is, man, when you have years in the market and you've seen multiple cycles, you know, especially across multiple markets, and you start seeing that, hey, a market isn't, you know, crypto isn't really special compared to, you know, to stocks or whatever. It's the same type of people that come in, do the same things the same way we did when we first came in to the markets, and you just see it over and over again. And usually it takes a few cycles before you start catching on, but most traders are out before them because they lose all their money. They don't get it. They, you know, they don't prop. Practice proper risk management, you know, so. Oh, look at that. I love it. I love it.
- [48:50]
Scott Melker
By the way, my other biggest position is Solana, outside Bitcoin. Ethan Slaughter right there.
- [48:55]
Christopher Inks
But at least Solana, you've got it going up, so they can't give you too much heck about that.
- [48:59]
Scott Melker
You can. They can, they can call me a shitcoining degenerate, something or other. I don't know. But more of this, I have been saying it for a long time. I have believed that ETH would do well. But listen, to be fair, I didn't say it would do well during that time, generally during first bitcoin and it has gone up, it's just underperformed. Bitcoin.
- [49:17]
Christopher Inks
Yeah.
- [49:18]
Scott Melker
No, I mean, you know, we were in the tooth out like. Well, you know, where were we to, you know, beginning of 2024, Bitcoin was 20. I mean, Ethereum, 2200 bucks. You know, two years ago, 23, we're talking about 1200 bucks. So, yeah, maybe it didn't outperform Bitco, but damn, if you were looking at stocks like a normal person, you wouldn't be like, I only went up three times, but Amazon went up four times. I suck.
- [49:41]
Christopher Inks
Yeah, right. Yeah, exactly that. Exactly that, man. You know, it's not that it hasn't.
- [49:46]
Scott Melker
Done bitcoin since it was under, I mean, Ethereum since it was under a thousand, you know, and holding it from 82 bucks from the last cycle.
- [49:54]
Christopher Inks
Yeah. I had a discussion with Juan Leon over there at Bitwise last Friday on my show. And you know, he's really bullish on Ethereum as well. He kind of holds the same, I think, thoughts that you and I hold.
- [50:06]
Scott Melker
It wise is generally.
- [50:07]
Christopher Inks
Yeah, yeah. But you know, looking at it, really, it's going to take off and it's going to leave a lot of people behind because they are of the sentiment that you're showing here and world.
- [50:15]
Scott Melker
I mean, not that Trump, like, not that World Liberty Financial is actually Trump. But listen, when you see how much he's involved in this market, he's buying tens of millions of Ethereum in a clip right now. Now, yeah, maybe that's because they're going to need it to see liquidity for a new meme coin on Ethereum or something. But it's not like nobody's out there buying this stuff.
- [50:35]
Christopher Inks
Exactly, exactly.
- [50:37]
Scott Melker
Man. I can be wrong, but I'm still way up. I'm just not up as much as if I had done Something else. I can live with that.
- [50:43]
Christopher Inks
Yeah, exactly. As long as, See that, that's, I think, the one thing that most people aren't getting here. Everybody's trying to get on the new shiny thing and they're usually as a result of jumping from shiny object to shiny object, most are losing money. Right. The reality of it is, the way I look at is that I don't worry about jumping on shiny objects. If I catch one, great. But all I care about is that my portfolio continues to do this right? It just continues to go up. That's all I care about. As long as it's going up, I'm good. I'm not trying to turn a hundred dollars into a million dollars overnight. And because of that, it means that I take less risky trades. It means that, you know, I, I wait for my entries, I wait for my setups. I don't just jump in because there may be a chance. And yeah, so it means I take less trades throughout the year than maybe some other brand new people into trading. But it also means that the trades that I do take are more likely to play out and with the great risk management anyway, when they don't, it's, it's nothing. So, you know, my portfolio continues to do this and that's what you, you know, what everybody should be looking for instead of trying to get rich overnight. It's that getting rich overnight mentality. That's, you know, breaking most traders.
- [51:48]
Scott Melker
Yeah, totally agree. Yeah, totally agree. Someone said check. Latest tweet from watcher guru. Now I gotta see. I hope you're not trolling me, but this means we got some news. Justin Trump. That's a pretty good story. Let me see. Yeah. What we got here?
- [52:07]
Christopher Inks
Show us, man. Don't keep us in suspense.
- [52:08]
Scott Melker
I'm working on it, man. I got a lot of screens. Trump. Justin. Trump Media to invest in bitcoin and similar cryptocurrencies. There you go. Corporate adoption from djt. Take some of that money and put it in. I mean, that's, that's pretty big news.
- [52:24]
Christopher Inks
That's, that's good news. If, if you're looking for a reason that's not chart related to do it. I mean, there you go.
- [52:32]
Scott Melker
I mean, there, that's, that's, that's putting bitcoin and others on the balance sheet. I mean, it should, I'm looking now. I'm reading it. Trump Media to invest in Bitcoin as truth fi is officially announced. Okay, we'll dig more into this, but there you go, right? The core. Everyone's coming. They're coming. Ethereum's gonna go up a billion percent. And if you missed it, you're gonna come back here crying bear tears. I'm just kidding, Chris. Everybody follow Chris at Texas West Capital. Chris and I are working on something. We'll get to it very soon, I promise. We're to have a very big announcement, but you're gonna see a lot more of us together, I can assure you of that. So get ready. But. But I'm not ready to announce it yet. Almost.
- [53:14]
Christopher Inks
Yeah. Yeah, but I love the thing I love about it, you know, all our birthdays right there in that same area. I think your wife's mine and yours right there. Right? So.
- [53:22]
Scott Melker
Yeah, but give Chris a follow. TX West Capital, TX westcapital.com I gotta run and get ready for spaces. Check out Aptos. Check out Chris. Thank you, guys. Have a good one, Chris. Bye.
- [53:35]
Christopher Inks
Take care.
- [53:37]
James Butterfield
Let's dope.