Scott Melker: Bitcoin will hit $100K in a month if Amazon buys

Foreign.

For those who don't know, Scott, he is a crypto trader, investor at Texas West Capital, he's an advisor to a number of blockchain based projects and he's the author of a popular Wolff Den newsletter and host of the industry leading the Wolf of All Streets podcast. Welcome Scott. We are happy to have you on today's show. A lot of good questions for you as well.

Let's do it. Yeah.

So let's jump right into things. What niche inside of crypto are you most bullish on right now?

I'm supposed to say bitcoin, right. So I don't anger the maximalists. What niches? There's only bitcoin. No, I think it's pretty, I think it's pretty, pretty obvious at the moment, honestly, that the NFT space is booming, the defi spaces are booming, that we're seeing really these sort of niches, as you mentioned, branch off from the hole and find their own life. It's funny, people talk about alt season or what the market's gonna do, but there's been no time really in the past 12 to 18 months that something in crypto hasn't been booming. Right. So if you consider NFTs as part of the altar coin market. I don't obviously, but you know that that's been going absolutely crazy while everything else has been boring this summer. So I would say DEFI and nft. You know, I'm more of a fine art collector in the NFT space. I'm not flipping pudgy penguins and handicapped apes or whatever, I don't know what they're called but, you know, or fluffy unicorns. But I'm loving watching people do it and make an incredible amount of money doing so. And I think that that's really just because beginning.

Yeah, definitely. Now, where do you see the markets heading here overall, just from like a macro perspective, the next 30 to 60.

Days I'm supposed to say up only, right. I generally don't make 30 to 60 day predictions because they make me inevitably look stupid. And so I'm not, I'm really not a fan of placing time limits on targets because the odds of you being correct and your crystal ball being accurate are minimal, I would say, I think that if we're just looking at the market as a whole, obviously bitcoin leads. And so we left consolidation in my mind, you know, accumulation when it broke above the 41, 42, 43 area. And so I'm not surprised to see that move exhaust, you know, whether we get a retest of that area I've been looking for. It doesn't mean we get it. And then I think, you know, it's up from there. I think that bearish news cycle that came with the leverage liquidations and price drop is somewhat over. And you know, with price rising, we'll probably see another sovereign nation make bitcoin legal tender or another Tesla type buy. That will spark things and send us heading up. And I think that if bitcoin rises, you know, a rising tide will lift all boats.

Yeah. So are there certain like levels that you're looking at right now in particular in regards to bitcoin?

Yeah, I mean I think everything from 40 to 43, you can pick any level in there, depending on your strategy is kind of the key support. Now. I mean my view is right around 41, 42 we made a higher high and broke the bearish market structure and that, like I said, we sort of left that range that we were in for three months. So I would be a bit surprised to see us trading back in it. I wouldn't be surprised to see a wick or two down there and some opportunities to grab some liquidity. But. And then above that, I think 47 is key right now. Very clear again, 47 to 48, a line is a zone on a chart, right. I mean you don't need to be that precise. And above that we're going to get the 50 sort of psychological and above there, you know, pretty clear sailing I think, to the, to the previous highs. What do you think it would take to push the price up to that or like a hundred thousand dollar Bitcoin 100. I mean it's only a 2x, right. It's funny because 100 seems so crazy when you've been here for a while and you think about in perspective what previous prices were. But when you consider the fact that Bitcoin went from 3,800 to 65,000 in a year last year doing a mere 2.2x from 46 or 47 to hit 100,000 is nothing. Personally, I think that could happen just organically without a catalyst. But if we're talking about what sets it off again, I think it'll be some news event that gets people confident again, brings retail pouring back in. But interestingly, I mean on chain retail is kind of back. I know a lot of them obviously got rinsed on the drop, but we are seeing a lot of small accounts sort of starting to accumulate again as well. Obviously as the larger accounts that we are accumulating down in the 30s. But listen, I just don't think there's that there aren't that many sellers here. I think people who wanted to sell, somewhat sold. I could be wrong, of course. I mean we could go to 10,000 or zero as people like to say. No, I don't think that will happen, but I'm aware that anything could happen. This could be some sort of a bear market fake out. I just don't really see it right now. I think the huge drop was largely a result of liquidations and went much deeper than you would have expected. I mean, $10 billion were liquidated from 60 to 50amillion individual retail accounts and it took less than a billion in shorts being liquidated to get from 30 to 43. Right, a few hundred million. So it's not even the same ball game from what happened on the way down and what's happening on the way up. So I just think that the demand is increasing and supply isn't at the most very basic level. And that could take us. But we get one more, Amazon buys Bitcoin, we're going to 100,000 in a month. Scott, I'm curious, what allocation do you recommend for Bitcoin and Ethereum versus Altcoins right now in someone's portfolio, like a portfolio allocation, it's different for every single person. And I have to make clear I am not a financial advisor, although I play one on TV here. I think that's changed over time and it really depends, I think, on how comfortable you are with the market, how much knowledge you have and how long you've been here, right. If you're brand new, that answer is different than if you've been here for two or three years. So I think if you're brand new, you start buying some Bitcoin, you start touching these assets, you get a feel for it, you send a bit to a friend, you make them send it back because you don't want to actually give it to them. And then once you're familiar with Bitcoin, you start to buy a bit of Ethereum, you start to take that and then from there you start to go down. The longer tail of risk when you're more comfortable. I believe that generally I like the standard portfolio balance view, which is 70% long term, holds, 15% cash for buying dips, in which case for me is USDC earning interest on any of the number of platforms where you can do that 10% a year and then 15% for trading, you know, and so you can leverage, you can, you can ratchet that up Big time. If it's like a full on alt season and you're confident, go ahead, you know, go above that 15% for trading. And so if you're considering your long term holds, I have a pretty like refined strategy on how I do it. It used to be almost all bitcoin. Then I went to sort of like a 75, 25 Bitcoin Ethereum. Then Ethereum made itself a much larger percentage. Right. Because it's been just crushing obviously. And then the smaller part of that portfolio is the leftovers. The last 10, 20% of successful alt trades of the past. Right. So if something does a 10x, a 20x, a 30x, I throw the last 10, 20% that I haven't taken in profit into my long term holds as a moon bag. Maybe I'll wake up in 10 years on a yacht because of some coin that I forgot I owned. And that's basically how I approach it. But I think your average person should be heavily weighted to Bitcoin and Ethereum in whatever proportion they view. And I think institutions that are starting to get interested in Ethereum are generally looking at it as a 75, 25 Bitcoin Ethereum split. From what I've heard talking to people on the podcast, do you think China's crackdown on mining is really good long term? I think you got involved in mining now, haven't you? Is that good long term for bitcoin? Yeah, that's actually when I got into mining. Literally the second I heard that news, I hit up with Gibbs at Compass Mining and I said, how do I do this? And he said, I'm not helping you go to my website. Didn't help me at all. So I can get like a 10% discount? No, no, just go to my website. So I did. And no. Yeah, I view that as. It's funny that it was such a bearish narrative obviously for the price drop from 65 to 30, because if you zoom out, it was the most bearish narrative was that mining and bitcoin was centralized in China. Right. We've been hearing that for as long as I've been here. The worst thing about bitcoin was the centralization in China. So China makes the mistake of basically relinquishing that control and somehow that becomes the bearish narrative, showing you how absurd the narratives are surrounding bitcoin and how they just follow the price either way and they don't lead it. But yes, I think that obviously with the energy debate still being somewhat hot, although it's cooled off anything that Removes that from China and moves it to more energy conscious miners in countries that are cracking down a bit more on it is better. I think. Argo Mining just announced that they're, don't remember what they called it, environmentally positive. Now between carbon credits and renewables, they're actually benefiting the environment rather than hurting it. You know, we know Riot Mara, all those are moving in that direction. So I think anything that removes control from China is a good thing, mining and otherwise, very good.

So is the US going to be the ultimate beneficiary of this, this kind of shift from China or is it.

Going to be everywhere not named China? Is the beneficiary beneficiary of it? I mean, I think that there's a lot of interest, interest in the United States. So I think that, you know, we have these huge sort of pools and publicly traded companies, so I think the eyes are on them. I view investing in mining stocks as sort of like a leveraged bitcoin play. Right. They have more downside when bitcoin drops and more upside when it goes up. But if you're trying to gain exposure to bitcoin, buy Riot, buy Mara, buy one of these stocks and you can do that in your ira. You don't have to touch bitcoin and you get more upside if you think it's going up, in my opinion. Right, so you basically get the benefit of the bitcoin price edge. Go ahead. Sorry. Why not Coinbase shares? Oh, I love Coinbase, although I'm sunken down at the bottom of the ocean in a submarine with a hole on it in my position right now. But I've been averaging down on coinbase from like 330 down to the low 2/00 and I've even bought more 260 maybe on Tuesday. I think same thing. But I think the miners are more volatile. But I think that Coinbase will be one of the, you know, 10 largest companies in the world. I do and maybe I'm wrong and frankly I don't like Coinbase. Right. I don't use it. When I did, it would be frozen every time I wanted to use it. You know, the fact that they were still last I had been on there were using SMS authentication, things like that. I just not a platform that I am comfortable with but I what I am comfortable with is making money. I really like it and I think that if you buy Coinbase and you wait 10 years, you're going to be rewarded and that's sort of the time horizon that I tend to invest on.

At least so when it comes to on and off ramps, though, what are some of your favorites that you like to use in regards to getting your crypto?

Well, listen, so I used to go full yellow and use all the exchanges that were not necessarily just, say, gray areas for United States citizens. Our options are extremely limited. I don't live in New York anymore, so I have at least some options, but I primarily use Voyager. I think they're a broker, so they obviously source liquidity from multiple exchanges, so filling is really easy. They do have a spread, but no fees. So it basically ends up being comparable, probably or slightly less than Coinbase. But what I love about them, and I use it off ramp and on ramp, is the fact that while I'm sitting there waiting to trade or buy, I'm earning 10% on my USDC because I hold VGX, which you guys just reviewed earlier. Hilarious. I mean, I bought, I don't know, $2,000 worth of VGX to get the 1% bonus without even thinking. And all of a sudden I looked down and that $2,000 was like 75 grand two months later. So it shows how nuts this market is. But, yeah, and I trade a lot, actually on Binance Us. I don't know how many people actually use it, but it's really easy to get money in and out of. And there are some pairs there. And then obviously, like most of the rest of what I do is on Dexes. I don't touch legacy Binance anymore. I don't. As much fun as that would be, and it used to be, that was actually a huge, huge change in my entire sort of interaction with the ecosystem was when I truly gave up on using Binance and having access to all those coins and pairs.

Yeah.

What are your thoughts on Ethereum fees and Dex usage? Listen, Ethereum's for the ethereum is the 1% right now. Right. I mean, you gotta be. You have to be kind of rich to use Ethereum. And that was even more true, I think, in March, April, May, when it was really, really going nuts. You know, when you'd go in there and be like, I want to send a thousand bucks, cost 400 bucks. Great. You know, so listen, I'm hopeful that that will be solved slowly. But like, I. I believe ETH 2.0, like the Lightning Network is one of those things that will perpetually be 18 months away until I'm dead. So I don't, you know, I have confidence it'll eventually happen. I just can't tell you when that will happen and what Those improvements will be. But I think that there's so many options now, right. And so easy. Like, I mean, I. I don't trade, you know, that aggressively at this point. But, like, I really like matcha. I really like pangolin for an avalanche. You know, I've obviously used pancake swap. There are ways around those fees now. Polygon, you know, there are ways around those fees now that you don't really have to do it, but I still do a lot of the time. Because if you're trading, you know, if you're trying to move a position that has some size, you know it's going to fill bill, and sometimes it's just worth sucking it up and paying the transaction fees. And they're really. I mean, you guys remember it was literally like 4 or 500 bucks for a transaction for a while there. Now it's something like 60, 70, $80 for me. That's fine, thank you. That's fine.

Yeah, it's doable now, I guess. What are you most concerned about right now in. In the markets? Just kind of like looking at things. Is it regulation? What does that kind of look like?

I'm concerned that I haven't bought enough while the prices have been lower because I failed to sell more of my material items to get more crypto. I'm really not concerned. I'm really not concerned about anything. I think bitcoin is an unstoppable force. I think they're going to make it really difficult on us. But I think that once again, if you zoom out, I don't worry about those bumps in the road. I really do view them as opportunities for adding more to my stack and taking advantage of those dips. But listen, I don't have a fear of regulation. Part of me wants to say regulation would be good to the degree regulation is bad for the average person who is trying to hedge against the government. You want nobody to touch it. It's the libertarian ideal of bitcoin. But we all love when the number goes up. And that requires institutions to buy in huge amounts and they want regulation, right? So it's sort of like we love to say, short the bankers long bitcoin. It's really, really cute. And then the same people who say that, myself included, get really excited when a bank comes in and buys a few billion dollars worth of bitcoin, Right? And so it's a conflict. It's in our interest to see that happen and things like an ETF and more clear regulation, as long as it's not stupid regulation. I think Will help really be a catalyst for the next move. So I'm not really right now. I think that we had this FUD cycle, right? We had the China thing, the India thing, which, by the way, we have every time price drops more than 10%. We had the energy thing. Okay, maybe if I had. One thing that I think is concerning is the ransomware thing. I don't care. They act like criminals have never done anything outside of bitcoin, but I think that that's like a glaring. I think that's the next thing they're going to use to try to slow us down. I don't think it will hurt, but I think all the other narratives have been disproven, and that's sort of still rolling.

Well, even with the narrative surrounding that ransomware, you know, the. The authorities were able to actually track the transactions because of how transparent the bitcoin network is. So it's like. It's very counterintuitive.

You know, we know it's stupid, right?

But, y.

You know, crypto makes it easier to hack people. And so, like, that's not a point against crypto, but, like, come on, we all love crypto, but let's be honest, like, it does make certain things easier for criminals, right? And so that's fine. That's the price you pay for privacy. And, you know, being in a nascent industry, it's funny, I had Mark Yusko on my podcast not so long ago, and he made the point that, like, he was always mocked for being the investor that was on the side of the bad guys because he's a bit older. And he was like, I invested in the Internet in the 90s, and everyone was like, you're with the porn dudes, right? And then I invested, because it was all porn. And then you invested in bitcoin in the early 2010s. Well, you're with the criminals and the Silk Road and the drug addicts and the. You know, and so that's the nature of every new technology is. At first, it's basically adopted by the underground, and then it sort of spreads out from there into the mainstream. So, yeah, I mean, I think that it's problematic, but like you said, it's easier to track. If the Colonial pipeline, if they had handed somebody a few suitcases worth of cash, I mean, it would have probably been like, a movie where they opened it and then, like, blue shot out on their faces or something. But, you know, it would have been a lot harder to track that cash, obviously, than to figure out where it went. Using a distributed public ledger. Like Bitcoin.

Exactly. Well, I do want to get in some like, some quick, like technical analysis questions for especially like our newbies that are kind of tuning in today. Today. So like when you're looking at charts, what are some of the favorite indicators that you like to use when you're doing your technical analysis?

It's funny, I can tell you as a beginner because we've all been there, you're probably using too much, right? I mean, I can tell you that when I started and through like the first years and years of doing technical analysis, my charts looked like you're on acid watching a Pink Floyd laser like show. There are lines everywhere, like 17 indicators on top and bottom. Like my actual chart was like this much of the screen. So much happening. And I think once you advance in your technical analysis a bit, at least not for everyone, but I think you find that less is more, right? And you start to realize that technical analysis is a risk management tool and not a crystal ball. So for me, like, I want to be watching the things I think a lot of people are looking at. Like, I'm not an MA trader, but when I see the whole community starting to talk about a certain ma, I'll throw it on my chart because I know that, you know, there's going to be bots or algorithms or people trying to trade there. So I can front run that or avoid being in that same crowded trade. But in general, I think if you're new, I would say focus on very simple things. Price, action, volume, right? I mean, if you see spikes in volume that are consistent, something's going to happen and price hasn't moved, Something's going to happen with price, right? So I would say volume precedes price is a huge key. So that's something that I really like to look at and I just look at it on a naked chart. I'm not using like an indicator or a tool or anything. There's like five huge volume bars and prices only move 3%, right? It's going to go up, it's going to pop. And so I. Of all the thousands of indicators, being an Ichimoku maximalist and an OBV minimalist, I don't know, you know, I've always still loved rsi, but I only use RSI because I like to use divergences with rsi. When I see overbought or oversold and I see a divergence with price, to me that's a great potential bottom or top signal. So I'm not even using RSI I guess in its classical sense of when it crosses 50 price action is bullish, things like that. And otherwise I just draw a couple lines. Like I said, my lines are no more important than your lines. And if you draw your lines off wicks instead of bodies. How dare you. How dare you like this community. You get so, people get so triggered by like, like dude, leave my chart alone. Who gives a like go live your life man. And you know the only reason you draw some lines and it gives you an excuse to place a stop loss. The only real, only point of a chart in my mind is to justify even if it's because like I use tea leaves and that's how I found my line. At least now I know what my position size will be, exactly how much I will lose on my trade and how much I'm going to win if it goes well. And then I have to actually not be a spaz and change that plan once price is actually moving, right? I mean I would say find a simple strategy that works for you and then focus more on risk management, positioning, position sizing and your stop loss. And then never change it for the first years once you said it, don't like, don't go, oh I placed my stop in the wrong place. It's going to hit and rocket the other way. We know what you're going to do. You're going to move it down and you're going to lose more money. It's what happens. The moment that you take a trade is your most clairvoyant, clear minded moment. When you're not emotional about it. The plan that you had is the one you should stick to. So that was a very long winded way of saying analysis simple and follow your risk management and don't alter your plan once you're in a trade. Keep it simple, stupid. Keep it simple stupid kiss. Awesome sim. Yeah.

Well Scott, we greatly appreciate you joining us on today's show for market report. Definitely awesome insights and we hope to have you on again on future shows.

Man, I'm down anytime. Thank you guys so much. Thanks guys.

Right on.