How To Trade the Bitcoin Halving: Whales Vs Traders | The Wolf of All Streets & Michaël van de Poppe

Aliens come down from Mars and are horny for bitcoin and hack all of our wallets and steal our bitcoin in advance of the halving. To be honest, I think that's one of the stupider things I've ever heard.

It's not bearish if the market goes down to 5k or even 4, 8 or 4, 5. It's just that it's going to be an accumulation period.

5K is about the most bearish scenario that I could think of. I don't see a reason that we would return to the 3000 bows.

Hi everyone, my name is Giovanni. Welcome to our weekly crypto market show. Today with us, crypto trader Michael Van de Popp. And for the first time on our channel, Scott Melker, better known on Twitter as the Wolf of Allstreets. How are you doing, guys?

Doing great, doing great. Thank you for having me.

Yes, stable. Thanks.

Bitcoin has been struggling to establish a strong Support on the $7,000 benchmark. Traders now point at the Fibonacci retracement indicator as a sign that Bitcoin is likely to retest the low $5,000 soon before seeing another rally. Do you agree with this analysis at this point?

I think the market is just in between levels in which we have been ranging around the 6.6-7.4K zone for like three weeks now. Two, three weeks. Basically indecisive on the markets, which way we want to go. If we lose 6.6 to 6.8k as the zone, I'm assuming we are going to test the lower 5Ks. But given that we've got an halving coming up pretty soon, I think we should see some more FOMO going into that event and then we are just going to test 7678 and then go down. So I'm midterm a little bit bearish on bitcoin. Short term we could see some FOMO. Given that we've just bounced from 6.6k. It's just indecisive.

Scott, do you agree with this analysis? Do you have your own.

You know, I'm not one to really make bold price predictions far in advance. It's just not my style. I trade the charts sort of level to level. You know, if you are a Fibonacci trader, there's a couple assumptions I assume that you have to make here. One is that, you know, we're. I'm assuming they're talking about the move from roughly 3,800 back up to 7,400. So that level at around five grand would be 5K would be, you know, the 61.8% or golden, golden pocket retracement. So that would make sense. But you have to assume then that 7,400 was the highest. And I agree with Michael. There's no reason right now we haven't lost any key support. I don't see 7k as a key level. As you sort of mentioned it. I think that it's now ranging after a significant move up and consolidating. So right now nothing would surprise me. But 5k is not even remotely on my radar. I think that we would have to see quite a few things happen before I would expect 5k to be a significant level.

So what's the most bearish scenario that you can think about right now? If it's not 5k?

5K is about the most bearish scenario that I could think of. I don't see a reason that we would return to the 3,000 lows. I think that there were specific exchange events that had nothing to do with the fundamentals of bitcoin itself that caused Price to go there. I believe that on the drop, the first half of that drop was, you know, institutional selling and whale moves, whatever you want to call it, you know, risk off people selling their bitcoin because it was a liquid asset to cover losses in other places. But then, you know, there's pretty good evidence that the second leg of that down was a result of Bitmex's liquid liquidation engine completely spazzing and breaking down. So I don't really account for that movement down to three grand. I don't think it was meant to happen. It could have gone to zero if they hadn't shut it off. So, you know, if you step away from the charts, I think that that was sort of the back leg of the big drop was somewhat absurd. And we've corrected. So looking at a chart using those levels is a bit suspect.

Michael, do you have anything to add?

Well, it's not bearish if the market goes down to $5k or even 4, 8 or 4, 5. It's just that it's going to be an accumulation period. So a real bearish scenario would be if we start to make new lows.

Correct.

I don't see that happening in the short term. I just see bitcoin going into an accumulation phase and just seeing some FOMO going towards the whole thing. So calling it like a real bearish scenario would be that we're going towards 2k, but I'm just not seeing that Happening in the short term.

I agree, I agree. I think, you know, even 5k is just a healthy retracement.

Like you said, it's just back testing levels we have just had.

And what about a bullish scenario like what's the most optimistic scenario you can think about? Scott?

I think like you said, I think on the monthly chart certainly the 7777 coincidentally strange number, but that level, much like 6666 actually has been very key. So I think that I have somewhat of an expectation that we'll at least test that level if we get above that. And I think we can start talking about the low 8 thousands where the impulsive move down on March 12 began. And like I said, I don't want to get too far ahead. Right now I see no good reason to start talking about all time highs or 14 15ks. Again it's possible but I think that would be getting ahead of ourselves.

So.

So right now I would say mid to high seven thousands and then if that happens to break the low to mid 8000s.

I like your down to earth predictions. So moving on to the next question. Last week we saw a recovery in the stock market with the S&P 500 gaining 12%. Some investors are already thinking it's a good time to buy. Others think that the market hasn't fully factored in the damage caused by the COVID 19 and and at the bottom are still to come. What is your personal take on this issue? Scott?

I'm very bearish on the stock market. I have been, I've been shorting it aggressively since the very top. Every time it bounces I've sold into it and I haven't been proven wrong yet. If you want to talk about it, technically it's a insanely large impulsive move, especially for the stock market to have dropped as far and as fast as it did. And so for it to bounce back up here, a 50% retracement, that's something you expect and you see on every chart historically after every impulsive move. So to me this looks more like a dead cat bounce or just a reaction to the aggressiveness of the move down. And in no way does it look like a reversal. Now of course I could be proven wrong and infinite QE is certainly helpful when you know that the market is being manipulated on the level that it is. But if you take a look at the chart, this entire move back up has been on decreasing volume and every single daily candle has less buying than the daily candle before. That is A classic sign of bearish consolidation, not of a reversal. So you always. The price bounces. If the price and the volume are not in agreement, then you expect continuation. If you want to look at the macro factors here, beyond the Fed and the obvious manipulation by the government, GDP is projected to drop this quarter more than it did in the entire Great Depression. I mean, that's astounding fact. We're talking about 30, 40% decrease in GDP in a quarter. We've already seen 22 million jobs lost in the United States in less than a month, which is almost double the Great Depression's unemployment. There's no demand. Everybody's sitting at home, Nobody's buying anything. There's no supply, nothing shipping. They're killing pigs and burying crops because they have nobody to sell them to. This is an unprecedented situation. The economy is completely screwed. And if the market continues to rise, it will only be because the Fed is buying in some manner. That's what I think.

Michael, do you also think that was a dead cat bounce?

Yeah. Well, I mean, if we go back in time and with the crypto markets, we have seen a whole cycle in the past three years and I just get the feeling that I've. I've published a bearish tweet on Amazon yesterday and I got just roasted by it because people are so in that stock right now and they expect the stock to just go up and up and up, which makes me feel like it's the same market as Bitcoin December 2017, in which people stop to believe that things will go down because of the economy and just start. Continue moving upwards. So what I call this is the Big Short 2.0. And there's. If you go towards the coronavirus, I think there are two big groups. One group is expecting the coronavirus just vanish away within a few weeks and the economy will just start off back again through a switch. And there's a group expecting the economy and the coronavirus to be staying around for a few years in which the economy would just be just crushed. I'm in the last group as I just don't see any slowing down in the coronavirus at all. I see countries accelerating back again. The UK just announced that they are going to lock down stuff for three weeks more, so the economy will just be destroyed and it's just a matter of time until people start to realize that companies won't really reach their targets. And then things start to flip over. So I think it's a dead cat bounce and we're just in for way more Trouble on the, on the, on the markets.

So you don't only expect this gains to be short living, but also you expect new lows.

This whole move up is not sustainable, it's just not. The jobless games came out today 5.2 million, which is 22 million right now and about 16% unemployment rate in the state right now. Markets go up, that's just not sustainable. Through which I believe that the longer the coronavirus stays around, the harder the impact will be on the economy and the economy will just lag behind. So within a few months we'll just be crashing back down is what I believe.

Bitcoin has been showing a strong correlation with the stock markets in the past few weeks. When do you think we'll see Bitcoin behaving again as a non correlated asset? Michael?

Well, it's funny we had this discussion earlier today between the two of us during crisis times I tend to believe and what you see is that assets and correlation between assets go to one or at least increase to that level. So what we witnessed On Black Thursday 12th March is all assets just decreased because people were selling their risk assets for their losses on the equity markets to cover that through institutionals, but also people just selling because of fear for the coronavirus. And I don't see since then we said we saw a bounce back up from the equity market. So we are seeing it on the crypto market. So you're seeing it on the commodity markets. Which makes me believe that the correlation is still there and will remain to be there unless people start to lose their faith in the fiat currency and start to seek for other assets outside of that. So they fly away. And then you want to see gold moving up, want to see silver moving up and that's the opportunity for Bitcoin to step in. If people seek for other assets than the USD, then Bitcoin has their chance, his chance to perform.

Scott, what do you think? I mean at the moment I think that you both agree that the dollar is considered the best safe haven because still right now people want the dollar, want to flee into the dollar because it's a safe haven at the moment. So when do you think that this mistrust towards fiat currency will manifest itself?

Well, first the dollar has been the only safe haven asset for a long time, regardless of how many they print. Everybody in the world needs it, everybody in the world wants it, and everybody in the world hoards it. So if we're talking about the dollar, the sort of bitcoin maximalist theory that it's going to hyperinflate soon. And that Bitcoin is going to be the most valuable asset is unproven and is dubious at best. If we're talking about correlation, I have sort of a different take than Michael on this, although I do agree in some part. So I'm we should talk about what correlation even means. It just doesn't mean the charts kind of look the same. It goes back to Markowitz and modern portfolio theory. Correlation is a mathematical equation and as he said, it goes from negative one to one. For 11 years, Bitcoin has been the only truly uncorrelated asset. It's a 0.150 and close to 0 means not correlated. If you're at minus 1, it means they're inversely correlated. If something goes up 10%, you expect the other asset to drop 10%. And if they're 1, you know, one goes up 10 points at 10%, the other goes up 10%. As he touched on, when there's a crisis, it goes out the window and everything pushes towards a 1. But actually Bitcoin really hasn't pushed beyond a 0.5, which is still a loosely correlated asset. And we can also, you know, talk about correlation in general from a risk perspective. But you know, Bitcoin is a non correlated asset because we can talk about the four main kinds of assets that there are, right? Stocks, bonds, currencies and commodities. And that's it. And they're all correlated in some way. Their value is derived from interest rates, gdp, corporate earnings, whatever it is. Bitcoin doesn't derive its value from any of those things. Bitcoin derives its value from things like millennial adoption, government regulation, network value, things like that. But they're completely uncorrelated as far as how their value is essential. If we're talking about price, yes, both dropped, but I think you can dig a little deeper into that as well to see that there's not really that much correlation. On March 12, Bitcoin dumped. We know that. I've already given you my theory on why it went as far as it did. But the SPX, the market didn't actually bottom until the 23rd. So nine days later. And while that was happening, bitcoin went up 60 or 70%. So you can't ignore the fact that they were completely uncoupled during that time. And this has not been that long of a time. So there's a general trend of the prices being similar. And yes, I do believe obviously that Bitcoin is a risk off asset and when there's a real dump on everything, it's going to dump with them. But so do gold and silver, the other, quote unquote, uncorrelated assets. So for me, I think that they're already, in some regard, decoupling. And one more important point that I have to give to everyone who thinks that they're completely correlated. If you look at the charts, bitcoin's actually been leading the market. So, like, yeah, the market opens, you know, on a Monday and it's up, but bitcoin's been up the whole weekend. If you believe that bitcoin is leading the US Stock market or as a leading indicator, I mean, that is just absurd. I've got a, you know, a nice villa to sell you on Pluto with lakefront property and a sunroof because it's just not even possible.

So as far as I understand, the point where you disagree is, is that fiat currency, like the dollar, will eventually become hyperinflated and bitcoin will kind of be seen as a solution for that. Because I think that Michael has more of a positive view about it, while you, Scott, seems to be quite skeptical.

I'm not skeptical of it long term, but I'm saying it shouldn't even be on your radar right now. I mean, yes, I think, and I've said this countless times, I think everyone should own some bitcoin, even if it's just just 1 to 5% of what you have, in case we go full Mad Max or I am legend and the world completely melts down and we're in this apocalyptic scenario and the dollar hyperinflates and that's where we will be. But I certainly don't cheer for it, and I don't think that that is in our immediate future. I just don't think that that's what's coming yet. I do think that it could certainly happen, but I don't think that's going to be in the next weeks, months, even years. I do think that that could happen down the road. We've seen it all over the place. We saw it in the 30s, 20s and 30s in Germany. We certainly are seeing it now in Venezuela. But the difference is that the dollar is actually the world's reserve currency. It's not the same as a random currency in a random country melting down.

Michael, do you have anything to add?

It's delusional to think that, that the dollar will just vanish away or that it's just going to hyperinflation. That's just. That's just a Big joke. But what you should be considering and watching is what's going to happen with the inflation. At some point, printing an infinite amount of money won't be sustainable. So if the inflation starts to crawl up in the next few years, then it's going to be into a problem area. And whether it's going to be the dollar is remaining to be the world reserve currency, or whether it's going to be the Chinese huan or it's going to be this STR from the imf, we don't know. We don't know what it takes for the old crisis to just, just go through in which it measures like, are we going to see helicopter money? Or no, it's just a big guess. And until now, in the coming few years, I still believe that the dollar will be the reserve currency. But hedging yourself through commodities and through Bitcoin is not a bad idea. As if at some point the dollar has to be devalued, that will be through another asset.

I agree 100%.

Pretty clear. So let's talk about one of the most important events coming up soon, the bitcoin halving. So according to popular blockchain educator Ivan on Tech, whales will be trading against retail traders during the bitcoin halving.

When you sell into a whole liquidity event where a lot of retail is trying to get in, well, then the price doesn't crash as much. So it's another important thing to realize that probably whales will be trading against retail during the halving.

The logic is that retail traders will buy into the event hoping for the price to pump immediately after the halving. At the same time, whales will be taking advantage of the surge in liquidity to sell large amounts without causing slippage. So without causing the price to crash too abruptly. Do you agree with these forecasts?

I think that's possible. I think it's almost equally possible that, you know, aliens come down from Mars and are horny for bitcoin and hack all of our wallets and steal our bitcoin in advance of the having. To be honest, I think that's one of the stupider things I've ever heard. Now that I'm thinking about it, it's a complete tin hat theory. It reminds me of the Wall street bonuses and Chinese New Year and everyone's going to sell bitcoin to pay their taxes and every ridiculous narrative that we've heard. There's literally no evidence that that would happen. It's just a random idea. I don't even understand why that would happen. First of all, that's giving retail way too much credit. Retail is not a very big space. They don't have money. They're a bunch of broke kids in their mom's basements. These are not people that are going to move the market. They're not going to be buying. First of all, people are scared of bitcoin. The greed and fear index is still extreme fear. I don't really think that people view the halving as some bullish event. It's been talked about for years. Price has dumped here in advance. We're in a complete global economic crisis. I just don't think there's anyone out there who's like, I gotta get bitcoin in front of the halving. If they are, they're certainly not buying enough for a whale to sell without slippage. I really think that that's absurd and I wouldn't give that any credence at all.

Mm, interesting. So you're basically saying that there won't be enough buying movements from the retail sector before the halving, like so you don't think that there are so many people that are actually going to FOMO in, in correspondence to the halving?

Not. I mean, listen, whales move this market. Retail maybe jumps on board and rides the very back of the train, but their money is, you know, makes no difference. When when Price dumped on March 12, it wasn't because everybody simult decided they needed to get out of bitcoin. It was because a few speculators who needed cash went to the most liquid place that they could, which was Bitcoin. You couldn't even sell a bond on March 12. There were no bids on the bond books. I mean, think about that. Literally the Fed had to come in and buy all the bonds that people were trying to sell. So if you were a huge operator and you had exposure to bitcoin, you had to sell your bitcoin because you literally couldn't even sell other assets. They were illiquid. So I mean, we know for a fact that 70% of Bitcoin has not moved, say 5% is lost. So we're talking about 25% of all the bitcoin is the world is what's actually moving price. And it's a few people who own that and decided to sell. Retail has very, very, very little impact on this market, I believe. So, yes. I don't think there's enough retail volume or FOMO in the universe for, you know, that to be enough for whales to sell in large amounts without slippage. Also, I just Think the halving is like yesterday's news, man. I mean it's a bullish event fundamentally. But I, you know, I don't see anyone that's got like a huge hard on for it at this point.

Okay, let's see, let's see what Michael thinks about this issue. What do you think about Ivan on tech's speculation?

Yeah, it's, it's just one of those stories. I mean I don't really listen to any of these theories. They just don't make sense. It's speculation based on nothing. Basically I just want to watch the charts and that's providing me the data that I have need to have to trade. Usually news is priced in already as we are always behind and there's always inside info. People are saying that the crypto markets are manipulated, but we are just witnessing the biggest manipulation of our lifetime on the stock market. So I just traded charts and what I feel like with the whole thing could be that we still see some slight rally coming into the next few weeks, just so close to the event, which makes it a buy. The rumor sell. The news event, which has been with the previous halving on bitcoin, which you see on the bitcoin cash halving, litecoin halvings, they all have that, after which the price just crashed down because people start to realize that the actual event on the moment itself doesn't make any sense. It's a big non event. But long term and structurally after that, fundamentally it is a bullish scenario. So yeah, short term I just think it's a big non event and doesn't really matter. But long term it could kick off a bull market.

What's the best way for you guys to trade the halving? If there is any specific way to trade it?

Scott, I agree 100% with Michael that I'm a chart trader. The beauty of bitcoin and crypto is that you don't have to think of any of this stuff. Stuff you don't need a narrative. People want a narrative, but you don't need a narrative. It's all in the charts. You can look there. So I can tell you a day before or a week before what I'm seeing in the chart and what I'm going to do. But it's not going to be because of the having narrative. Personally I won't trade it any different than I trade any other day. And that's what makes bitcoin the most fun and amazing asset to trade. Because you can actually do it technically, you know, looking at a stock chart. Come on. You know, every 50 ma and 200 ma and retracement level that anybody had drawn on a stock chart completely died, you know, in, in a matter of a week or two. And it's just really hard to, you know, when, when you have to think about things like I said before, interest rates or corporate earnings or all these things, you know, quarter quarterly earnings and, and all the things that give stocks an actual valuation. None of that exists in Bitcoin. So we get to just look at a chart and try to identify on that chart where the whales are going to try to inflict the most pain and act accordingly. So if they decide to do something, I think we'll see it on the chart and we can behave accordingly.

Thank you, Michael and Scott, for the cool discussion that was very interesting and thanks for being with us.

My pleasure. Thank you so much for having me.

Thank you.

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