00:00 Scott Melker
Bitcoin did not drop 10% in 48 hours because Michael Saylor and Strategy sold 32 coins. I’m going to tell you some of the immediate cast catalysts that may have been responsible for Bitcoin’s drop in price, but I’m also going to make a longer-term case for why Bitcoin may be bottoming. Stick around and I’ll tell you all about it. Let’s go.
00:27 Scott Melker
What is up everybody? Welcome to the Daily Wolf on Yahoo Finance. I’m your host, Scott Melker, also known as the Wolf of All Streets. Now we’re going to spend the next 15 minutes diving into the crypto market and talking about the price of Bitcoin. Usually, we try to just talk about the news, but sometimes when you have a big event and a flush of leverage and price dropping, it’s worth discussing why that might be happening. We’re also going to talk about some stable coin news, some Clarity Act news, and quite a few things towards the back half.
01:05 Scott Melker
But first, I wrote a newsletter about this just this morning, kind of following up on yesterday’s show, and I want to continue discussing why Bitcoin price is down. So, here you go first. This is my newsletter, The Wolf Den. You can subscribe to it on Substack.
01:21 Scott Melker
Bitcoin did not drop 6% because Saylor sold 32 coins. That was 6% in one day. We obviously have a 10% drop now in 48 hours, 12% on the week, 200 billion in crypto market cap gone, and a lot of people saying that the February 60K bottom now is back in place. So, listen, uh just to do some math, right? Uh 32 coins is a couple million bucks, right? Bitcoin daily spot volume is 20 to 50 billion a day
01:58 Scott Melker
in volume. That’s 290,000 to 700,000 Bitcoin a day. Saylor sold 32 Bitcoin and he did it over 5 days. We’re talking about 0.005% of one day’s of volume. So clearly Saylor’s sale did not have a massive impact here on the market. I mean, blaming this crash on 32 coins is like blaming a hurricane on a guy who spits in the ocean.
02:22 Scott Melker
Right? So, maybe there’s a bigger narrative there, but the sale itself that everybody’s talking about should largely be irrelevant. Now, I would say that there’s probably five major catalysts right now for why Bitcoin price has dropped in the last 48 hours. This is very, very zoomed in. The first one we’re seeing now all over the media. I talked about it yesterday. Bitcoin plunges below 66,000 as global stocks AI trades hit fresh records. So, this is the story that I’ve been telling you about about the AI capital rotation, but there’s some big news that actually supports this.
03:00 Scott Melker
Alphabet’s $80 billion raise, including 10 billion from Berkshire, who’s sitting on a historic level of cash, but deploying 10 billion into this is one of them. But, of course, SpaceX’s road show is beginning as well. We have Anthropic announcing that they will IPO. We have OpenAI lining up for their IPO as well. We are talking about hundreds of billions of dollars in capital that will be chasing the hottest narrative, the biggest FOMO narrative that we have on Wall Street.
03:36 Scott Melker
That is going to reasonably take a lot of liquidity out of anything that people can sell. Now, if that story ends up being true, we are not just going to see Bitcoin selling off, but we should see a lot of other assets selling off with people looking for dry powder to deploy into all of these. But you are once again talking about hundreds of billions of dollars of money that is going to go into these IPOs, whether we like it or not, and the AI narrative is exceptionally hot.
04:09 Scott Melker
Now, we had another story, I’m just going to kind of cook through these and nothing to show here. Mount Gox moved 10,422 Bitcoin. That’s the 2014 exchange that crashed the market back then. These are not for sale, but it always spooks the market when this happens. Of course, we have Iran headlines and it seems like uh things are kinetic overnight, right? We’ve got uh Iran bombing multiple countries when we’re supposed to be in a ceasefire. That always spooks the market.
04:40 Scott Melker
We have ETFs now on a historic 12 straight days of bleeding. I told you about the 11 days yesterday at $3.5 billion total. And to update the leverage numbers, which were at like 700 million yesterday, now $1.8 billion liquidated in 24 hours. That’s the most since February, which uh was when Bitcoin, you know, went down to 60k.
05:12 Scott Melker
Uh obviously, we have sort of this macro spark, but as usual with crypto, we have gasoline, the leverage being the gasoline, right? So, I think that uh that’s telling a lot of the story here. Now, remember, when FTX collapsed, the liquidation numbers were only 1.2 billion. Now, we do 1.8 billion on news like this. And listen, we’ve got the receipts because the same days that Bitcoin’s bleeding, we have S&P at a record, Dow Jones, uh you know, all these things are massively up, making new all-time highs.
05:51 Scott Melker
And we have this chart here, Bitcoin’s break from tech stock widens. So, I love this because I’ve always said that Bitcoin is uncorrelated and by the way, if you have an uncorrelated asset, sometimes it goes down when everything else goes up, but that still is the the holy grail of your portfolio, to have an idiosyncratic risk on an asset that is likely to move differently than all the other assets in your portfolio.
06:18 Scott Melker
But it’s very clear right now if we want to talk about what’s likely to happen with all these IPOs, if we’re already getting this massive departure in price, uh or or an action on tech stocks versus Bitcoin, imagine how much that is likely to widen if these IPOs uh capture as much FOMO as we expect they will.
06:44 Scott Melker
Now, I told you at the beginning that they’re not that the Saylor selling 32 coins is not the major story, but there still is a Saylor story here, right? And it’s this one right now. I mean, take a look here on Yahoo Finance, Strategy Inc, STRC, stretch, trading at 96.56. So, I’ve told you many times, this is supposed to trade at $100, supposed to trade at par.
07:15 Scott Melker
Every time it goes over $100, that’s when Saylor is able to buy Bitcoin. Well, right now, we have MSTR trading below the value of its own Bitcoin. So, a .94 MNAV. That’s one of the machines that he uses to buy Bitcoin. The other is obviously STRC and there’s questions whether he will be able to buy Bitcoin using that and whether it will return to par. So, it’s fair to say that right now, a lot of skeptics are viewing this and saying that the flywheel for buying more Bitcoin
07:50 Scott Melker
is running on fumes. So, the mechanics for getting STRC back up to par would be to slightly raise the dividend. That is not going to happen right now because the volume weighted average price is still in the 99s. But if STRC continues to trade dramatically below par, they are going to have to raise that yield. So, right now, yes, the 32 coins are the noise, but if you assume right now, which I don’t think it’s fair to assume, but
08:24 Scott Melker
there’s evidence that it could be the case that the biggest buyer in the market who buys billions of dollars a month in Bitcoin every month could be running out of dry powder and what happens to the asset if confidence in Saylor buying Bitcoin runs out. That could be part of what’s happening. Now, in my same newsletter today, I made the case for why we might be approaching a a Bitcoin bottom. Now, I used to put charts in the newsletter every single day.
08:58 Scott Melker
Then it got really boring and every day was the same chart. But this is a very, very zoomed out chart that I can show you here because I’ve been watching it here for years. And I brought this up back in May when when we bottomed February, May. But you can take a look, there’s a four-year cycle. I believe it’s largely broken, but you know, history can still rhyme. But if you take a look generally at this chart, you will see a few things.
09:30 Scott Melker
First of all, weekly RSI, which is down at the bottom, has only been oversold four times in history. The previous three times were the dead bottoms of every cycle. We hit oversold in this cycle recently when Bitcoin bottomed at around 40k. Now, the first cycle for halving, which is when Bitcoin supply changes, all the way to the bottom took 777 days. The second one took 889 days. The third one took 924 days.
10:04 Scott Melker
We are now 770 days past the April 2024 uh halving. So, that is really interesting because we’re now within the zone of how long it’s generally taken to bottom on these charts. Now, there’s other reasons to believe that we could potentially be bottoming here. I’m going to go ahead and just bring up one more chart for you, which is this one right here. And you can see that if Bitcoin drops below 65,771
10:39 Scott Melker
on a weekly chart here, that we will have what’s called bullish divergence. At the most simple level, it means price is lower while a momentum indicator is rising. In this case, you have that oversold weekly RSI I told you about, likely to make a higher low, if price makes a lower low. That’s exactly what we saw at the dead bottom of FTX after seeing weekly divergence, uh but bullish divergence with oversold
11:10 Scott Melker
RSI. So if you’re looking at technical indicators, we have quite a few right now that may be showing that we’re seeing the exact same signals that have been there at every single major cycle bottom for Bitcoin. And now you know sentiments in the dumps. I mean, you can take a look here, we have Fear and greed Index at 11. You know, we’ve seen it at historical lows of late, five, six, seven, it had the longest stretch uh in fear ever, but we are back
11:46 Scott Melker
in extreme fear. Just yet another indicator that the bottom, if not in, could be very close. So, listen, we don’t do much technical analysis here, but I think sometimes it’s worth zooming out and taking a look at the broad trends because they are screaming in favor of a Bitcoin bottoming. Like I said, that doesn’t mean the bottom is in. Bottoming, uh you know, when we hit 60k, I said, 6 to 9 months of sideways.
12:18 Scott Melker
I think actually the most bullish scenario is that we get a price flush down to 55,000, 56,000, we get what we’re looking for on the chart and then we skyrocket. So, I’m not calling for the bottom, but I do think that we are bottoming. But meanwhile, you know, while Bitcoin uh continues to drop, the rails around crypto continue to be built. MasterCard to expand settlement capabilities including stable coin holiday weekend options. I mean,
12:51 Scott Melker
I guess you don’t realize this, but you swipe your card and it approves immediately, but then those transactions are batched and settled settled only during banking hours. It’s like your card works on a Sunday, but the bankers are faxing each other until Monday, until this thing gets done. It’s absolutely absurd. Well, now they’re going to use, I believe, six stable coins, USDC, PYUSD, USDG, USDP, RLUSD, SOFI USD to settle 247365.
13:28 Scott Melker
And we know that this is the direction that everything is heading. Now, this is just a test, but this is an unstoppable train. We’re going to see all transactions settling 247 365, cheap and fast in real time on blockchains. We are also going to see all stock transactions settling 247 365 on blockchain rails. And we are not going to have
14:02 Scott Melker
to wait until Monday to get price action and you’re not going to get a break if you’re a hedge fund guy anymore. You don’t get to go to the Hamptons anymore. You’re going to work 24 7 365 in your Wall Street sweatshop. And we’re all here for it because you guys have had it too easy.
14:24 Scott Melker
Not jealous. But yes, everything is going 247 365 and this is absolutely an unstoppable trend. And I think it’s fair, you know, I I showed you a bunch of charts yesterday about how certain altcoins were still moving uh well, even though Bitcoin was dropping, which is something we haven’t seen in a long time. I think it’s fair to say that the money isn’t leaving crypto right now, it’s actually rotating inside it. I mean, uh you know, I think it’s like uh all the hedge funds went and unfollowed Bitcoin and slid into Hyperliquid’s DMs.
15:00 Scott Melker
Right? Hyperliquid’s beating Ethereum in trading volume on Sundays as big money rotates, says Falcon X. Once again, I’m not mad at all that I own no hype token. Feel great about that now. Yeah, I missed it and uh considered buying it many times if we’re being completely transparent. But these these tokens now are trading at higher volumes sometimes than the large caps, uh tokens like Hype, and we’re actually seeing the volumes on them continue to rise and now institutions are using these platforms.
15:37 Scott Melker
So it’s not like the money has left, we’re actually just seeing a rotation into other things, much like we’re seeing a rotation maybe from everything liquid into AI related IPOs. I think we’re seeing that within crypto as well. The other story here kind of alludes to this is Franklin Templeton and Moonpay partner to expand institutional access to tokenized money market funds. Once again, this is just 24 7 365 everything, right? And now we have things that are actually being priced on protocol revenue, buybacks,
16:11 Scott Melker
real world assets, tokenization. It’s not just Bitcoin anymore. As much as I’m a Bitcoin, Bitcoin is missing out to some degree clearly on the price action of the things that people are more interested in in crypto right now. And one of the things we’re the most interested in is Clarity Act Near Senate floor ahead of recess deadline. So now we are actually in line for a full floor vote. It’s been put on the Senate calendar.
16:47 Scott Melker
Doesn’t mean it will happen but likely to happen. Four week window before July 4th when everything goes into recess and everybody goes on vacation, come back for midterms and it’s over for us. It’s finished, right? So, we got to get this done basically in four weeks. That means that we got to get a bunch of Democrats to vote for this on the Senate floor. It’s got to go to the house and it’s got to be signed by the president. I still think it’s very unlikely but we have a new narrative for why it might happen. That’s this right here.
17:21 Scott Melker
From the Blockchain Association. Today, we’re sending a letter to Senate majority leader, uh, Thune. It’s signed by 160 former National Security, intelligence, and law enforcement professionals in support of the Clarity Act. The narrative here now that is emerging is that crypto and the Clarity Act are literally a matter of national security. I’ve told you on shows past about how the military is running Bitcoin nodes. But basically they’re saying that this gives the police
17:55 Scott Melker
and the cops more power over transactions and what they can do than they had before. So, we need to pass the Clarity Act. A completely new narrative for passing this act and really interesting. And it’s one probably worth taking notice because I want to just pin one last quick story. US sanctions Iranian crypto exchanges in ongoing war against the country. I told you about how we’d taken a billion in their money yesterday. Well, today we’re actually sanctioning and locking down their exchanges as well.
18:29 Scott Melker
Clearly, you can see how internationally, crypto is being used for law enforcement. Listen, I still don’t think the Clarity Act gets passed, but I’m hearing people put it at 50/50, which I think maybe is reasonable and more optimistic than I would give it. But in the meantime, nothing will make people more bullish on Bitcoin again than higher prices. So, once we do bounce and things start to go up and the market starts to bubble, which it eventually will,
19:07 Scott Melker
then all of the bullish narratives that I’ve been presenting every single day will come back to play and start moving price. That’s all I got for you today. I’ll see you tomorrow. Peace.
