The Wolf Of All Streets - CryptoISO, Professional Trader and Educator on His Unique Approach to Trading Crypto, Locating Liquidity, the Entrepreneurial Spirit, Avoiding the Herd, Bitcoin Narratives and More.

Episode Date: May 26, 2020

CryptoISO, Professional Trader, Educator and Adventurist and Scott Melker discuss their shared entrepreneurial spirit, monetizing a hobby, the evolving nature of bitcoin narratives, avoiding the herd mentality, 7 white claws and the entire history of bitcoin, crypto's distortion of time, money and reality, 100x longs becoming the norm, locating liquidity and a gamblers stop loss, the magical 61.8% Fibonacci retracement, what is an ISO and more. --- ROUNDLYX RoundlyX allows you to dollar-cost-average into crypto with our spare change "Roundup" investing tool, manage multiple crypto exchange accounts in one dashboard and access curated digital asset content and services. Visit RoundlyX and use promo code "WOLF" to learn more about accumulating your favorite digital assets when making everyday purchases and earn $4 in free Bitcoin. --- VOYAGER This episode is brought to you by Voyager, your new favorite crypto broker. Trade crypto fast and commission-free the easy way. Earn up to 6% interest on top coins with no lockups and no limits. Download the Voyager app and use code “SCOTT25” to get $25 in free Bitcoin when you create your account --- If you enjoyed this conversation, share it with your colleagues & friends, rate, review, and subscribe.This podcast is presented by BlockWorks Group. For exclusive content and events that provide insights into the crypto and blockchain space, visit them at: https://www.blockworksgroup.io

What's up, everybody? This is your host, Scott Melker, and you're listening to the Wolf of All Streets podcast. Every week, I'm talking to your favorite personalities from the worlds of Bitcoin, finance, trading, art, music, sports, politics, and basically anyone else with an interesting story to tell. So sit down, strap in, and get ready, because we're going deep. Let's go. I'd like to thank my sponsors, Round the X and Voyager, for making today's episode possible. We'll hear much more about them later on in the episode. This podcast is powered by BlockWorks Group, the only events and podcast production company I trust. For access to the premier digital asset conferences and in-depth podcast content, visit them at blockworksgroup.io.

I promise you will not be disappointed. I met today's guest in one of the notorious crypto paid groups in 2017, 2018. We bonded over the fact that the entire thing was an obvious scam and exited stage left together soon after. We then realized that we were both previously DJs in New York City club scene. We both loved extreme sports and had traveled in somewhat the same circles. Since then, he's been one of the few traders that I confer with about the market on a nearly daily basis. He has a really unique perspective towards crypto and markets in general, which helps

offer confluence for my own analysis. More than anything, when I'm feeling bullish, he's the last guy on earth who I want to hear is shorting the market. Most of you know him from Twitter as CryptoISO, but I'm psyched to welcome my friend Tripp to the show. Thanks for being here, man. Hey, Scott. Thanks for having me.

It's pretty cool to come full circle like this. I remember you were one of the first guys to give me one of those FF for follow forwards and that kind of like launched my following on Twitter. So I want to say thank you for that one. You're welcome. Well deserved. I mean, you know, obviously the right people need to be the ones who have the voice in this market because there's a lot of noise to sift through for your average, I think,

person on crypto Twitter. So I'm glad that it's built so quickly for you and that, you know, you've been able to sort of capitalize on that to some degree. So you have a really unique approach to trading the crypto market as As everyone, I should say, probably knows by mean, I remember I was doing Elliott Wave, believe it or not. I mean, it works in a bull market and then you kind of need to learn how to trade a bear market and chop. So I really honed in my trading with simplifying around SR, just support and resistance, understanding market structure, like extremely basic things, right? Higher lows, higher highs, lower highs, lower lows.

And looking at ranges, it just helped me see the market in a different light from a technical standpoint. So charting for me is very basic. Now, I was a former energy analyst. So what I look at in this space on the fundamental side is I look at the mining very closely. And I liken it to a breakeven model similar from what an EMP, an exploration production company in the energy space would do in relation to the price of oil, right? So things that I look at are the difficulty adjustment. I track a lot of sites with different mining stats. And believe me, I'm not a professional in it, but I've developed a thesis around it that helped me understand directionally what could happen in the market. And then with the technical analysis, that's confluence. And so I have more

conviction in my setups and my direction and my bias. And most recently, I've started to look a lot more at something called liquidity theory, which my friend Zoran, Captain Cole, shout out to him. We've kind of been working on this idea for, I don't know, the last six months together. But he had always kind of had this idea in his mind and price gravitates to liquidity. And crypto, if you're trading the derivatives, it's a very high leverage product and there's a lot of gamblers in this space. And I am in the believer that there are large players moving price around. Other people want to believe it or not.

But when I mark out 50x and 100x liquidations on my chart, and I start buying and selling those, and I've created a pretty high conviction profitable trading strategy. Alongside fundamentals and technicals, that's kind of this one-two punch and now this one-two-three punch that I've developed, I'd say in the last six to seven months, really figured it out. So yeah, there's not just one thing. I tend to look at a lot of things. Fundamentals just being because that's my background. Technicals, I've always loved the chart. I think the chart tells the story before the news hits. We saw it yesterday. Satoshi's coins moved around apparently, but I was already short based on market structure and high timeframe

analysis, along with looking at the hash ribbons and understanding that the block reward was cut in half and what this is going to do to miners. So I think that's the best I could describe it. I mean, it's constantly evolving, but there are three things that I always take into consideration when looking at the market and trying to figure out kind of what the next big swing trade is. And would you describe yourself as a swing trader? I mean, are you primarily scalping short positions or is it a combination of both depending on what you see? I run two accounts. So I have a swing on now that I like to hold for a while. But I'm always in scalping. I mean, I help run a telegram with Zoran Crypto Insider. So I'm

constantly putting out charts for people who like to scalp and just putting my ideas out. I like teaching people. That's something that uh, make sure I'm on top of my game, right? You have to be a master of your craft if you're going to teach someone else. So it keeps me in check. And it's also really self-fulfilling and rewarding to have people actually thank you for helping them understand how to trade better or just see things that they didn't see before. That's funny because there's a constant criticism in this market that if you're a trader, you shouldn't be doing anything else because you make enough money trading. So how do you address that? I've always been an entrepreneurial person by nature. I have a photography business.

I have had a slew of positions at startups. I basically was in finance from 08 to 13, right? So I was in equity research most of the time. I did a year in sales. That year in sales, I got really into energy. I became very attached to the product at that time. It was domestic and international EMPs. And the analysts of that space were like,

hey, why don't you come work with us? So that put me back in the research role. And then I eventually covered oil services and equipment. After I left finance, I said, what the broker dealer model is just broken at this point. It's commission-based revenue on volumes. And obviously, 08 put a damper on things. And so the regulations in that sector, a number of other things showed me the writing was on the wall and I didn't want to do it anymore. So I just left the space. I actually decided that I wanted to go into shipping. So I was looking at being a shipping broker because the next step to me after leaving equity research and energy seemed like, okay, maybe this is a sidestep where I can still use some of my knowledge from that. I looked at the shipping space for like six months. I interviewed at a lot of places. I

eventually got offered a job at a broker and I was just like, you know what, this isn't me. And so I turned to more creative stuff. I was living in New York at the time. I started a DJ group called No Sheep. Which is such a hilarious name considering how well that works with the markets. Yeah. Well, I've always been someone that don't follow the herd, right? If I see someone, if I see a bunch of people in a trade, I don't want to be in it. Like the other day, people were calling 10-5, longing high time frame resistance. Like to me, I just was like, I got to take the other side of this. But back to this kind of the path here. So I've always found it interesting to branch off and monetize hobbies or passions.

So photography being one of them, DJ being one of them. And then after getting a lot of feedback in the space and having the confidence in myself to where I really understand Bitcoin and how this trades and a lot of stuff going on behind the scenes, I don't think there's any reason to not monetize your knowledge base. It's another stream of revenue. You want to diversify. You don't just want a single stream of revenue trading. It's a little more self-fulfilling teaching someone. Sure, you could sit here and trade all day,

but it's better for the self, in my opinion. Go ahead. Sorry. So, yeah. I'm always looking for ways to monetize my passions or hobbies. I mean, but can you sit there and trade all day? Cause I find that I look at a chart, I do my analysis. It's pretty quick. I see what I want. And then I move on with my life, you know, like what do you, in a swing? It's awesome. Cause you're just like, you know, I could go fishing now, right.

Tuna season's about to start. Um, but you could sit there and scalp ranges all day long if you wanted to. Uh, I enjoy it. It just, it's helping me master my craft, but I've been working on some other things outside of that. So not trading as much working on some other projects. So talk, talk about the teaching then. So yeah, it all started when I literally rejoined Twitter. I rebranded my name to CryptoISO. I put out some analysis, I think like March 31st of 2019, right? So like the bull market started.

I remember I went back into Texas West and joined you guys. Yeah, you have a real knack for, uh, disappearing when the trading's bad and reappearing right when it starts to get good. Yeah. So, uh, so caught that run and then really caught the top of the market too. Um, and that was largely based on fundamental stuff too. And I, at the time, joined a telegram called Crypto Insiders, which is something I help run now. And my good friend Zorin started that. And I think there was like, out there. And then I connected with Zoran on the side. And we just started talking about the markets. And I always had an idea of starting a research letter and kind of putting our ideas out. And both just really like teaching. And so we started to build a curriculum. And for the last six to seven months, that's what we've been doing. And so it's designed for someone who's like a bedroom trader, who's never looked at a chart or understands supply and demand or anything about the market to bring them up the curve to where they're starting to look at sentiment analysis and the liquidity theory and all that stuff.

So it's a way to give back to the community, a way to monetize a passion and an expertise, I guess you could call it, a way to fill time. I mean, during this pandemic, I mean, everyone's at home and I've never been more hyper-focused to create this content with Zorin. I'm doing all the animations. So my background, photography, videography, all these things that I've done in my life are coming full circle, right? The creative into trading and running businesses. So it just seemed like a really good time. And that's kind of been the focus right now. Sure, you can trade in between then and put the analysis out. But a lot of the time has been spent on that because there's not really much else to do right now.

Yeah, I mean, the liquidity analysis, that's what I generally call you, right? I'm like, this is what I'm looking at on a chart. Tell me. And then you, you know, obviously you have your tools and you say, well, this is where the 50, 50 X longs are going to be offsides. This is where the, or where the liquidity is. This is where the a hundred XR, I mean, and it's been scary, scary, scary, accurate. Yeah. A lot of the time it, uh, it matches up with traditional SR too. Right. So, but that's because that's where people are placing their orders right it makes sense yeah so you can look at a chart and do this it's just it's an added point of confluence and

like gives you a much higher conviction rate in the setup so like just now there was a lot of longs liquidated on the move down to 8900 and then 8800 I bought 8,890 because it was like, all right, how many more can we liquidate? Now the liquidity is topside. So there's probably a bunch at 9,300. So you're just playing levels. You don't actually need a directional bias. If you could just play liquidity, then you're matching it up on your chart. And then you're saying, okay, this makes sense. Maybe it's a Fibonacci. That was a 61.8 Fibonacci off the move from 8,000 to 10,000, basically. So a lot of confluence adds up around that stuff. Yeah. It's amazing how it always seems to line up. I think it was a week or two ago, I was in a short and you were looking for longs and we had our, our bids and I was closing my short, like within $10 of each other. And you actually caught a much bigger long than my sort

of short scalp short, but it was pretty amazing because we were both looking at the exact same level in opposite positions, but still profitable. Yeah. Texting, no, no teller, remember discord, real friends. We were doing it on actual telephones. We have those, which is pretty cool. So I'm like, I want to go back to your sort of background. Like obviously you have this tremendous entrepreneurial spirit. And you have a very similar background to me, which was trying a lot of things, having side businesses. I was obviously DJing, but I had a million other things going on.

Where do you think that that sort of spirit comes from? Because you tried equity research as well. You've been on both sides. You've kind of worked for the man, but you've also done your own thing. I would say that the shift in the world after 08 and just like I was young, I didn't really know what's going on. Right out of college, I started in it. And then I started to think for myself. And internally, it was like, is this what you really want to do? Are you happy doing this? Because my dad is in finance, my brother was in finance. It almost was like, okay, this is what the family does. And where I grew up, it was a very traditional path. And it was a way to make a lot of money. But that kind of disappeared.

The dollar signs really weren't there. And so when I was working in finance, all I would hear about is, oh, the glory days. And I was just like, guys, the glory days are gone. The glory days are when I graduated college in 99. Yeah, like I got dealt a bad deck. And so how can I change this? So my just idea of happiness outweighed any sort of dollar value. Right. And so after I left New York and kind of stopped DJing, I was living with my roommate who was one of my best friends from like sixth grade.

And we decided that we both, we didn't want to stay in New York and we were going to make a change. And so as I was launching my kind of creative career, I was really into GoPro, like one of the original GoPros. And we decided to go to New Zealand. And so we booked a three and a half week trip to New Zealand, budgeted it, and we reached out to a lot of different brands through Instagram, social media, and we created almost a pitch. Like you give us product, and we're going to go photograph this and take videos of it, some of the amazing backdrops of the world, New Zealand, right? And so that made the trip have more of a purpose than you just going on a trip with your best friend.

And so it really struck a chord with me. Like, I love this creative stuff. I love the video stuff. I taught myself Premiere Pro. I taught myself Adobe After Effects, Photoshop, Lightroom, everything that I needed. And got back and we kind of spread that around and it was received well. And I really wanted to go work at GoPro. And so I just picked up and moved to California because my friend who worked for PIMCO was like, I'm going out to Newport Beach. I was like, I'm coming with you. So we just got an apartment and I just like restarted my life there. It's kind of scary. Like never been to Newport

Beach in my life. And I just knew that the wedge was there. Surfing was there. It was sunny. GoPro was in San Francisco. And this is the stepping stone I'm going to use to go work at GoPro. Ultimately, I didn't work at GoPro. Blessing in disguise, the company is a complete disaster. Yeah, I was going to say, I think we all have cameras in our phones now. Yeah. But while I was there and shooting skimboarding and surfing and really figuring out how to use the camera

and get better at editing and all these things, I did side projects like I droned car washes. I did real estate photography. I was a tennis pro because I played tennis in high school. You just kind of fall back on all these things that you enjoy doing that are second nature. And so, I just, I had a pile of cash, obviously, and I just kind of monetized these hobbies. And during that time, my friend from home, who I've known since fifth grade, he was a rep for CMH Heliski. And he always had the idea of creating a platform to make it easier to go heliski. And we had talked about this idea before I left. And he kind of got it off the ground and running and had signed some commission agreements with operators. So operators are heli-skiing lodges. 80% of the market's British Columbia. Some is

in Alaska. Obviously, you have some in South America. And so we started an Instagram account and we just started posting content. And then we started to book people and we went to our home network of kind of the East Coast area, New York City. A lot of our friends who are still in finance started booking people to go heli skiing and we're taking commission off it. And then we structured it. It was a real business, grew an Instagram account from zero to 60,000. I think it's a hundred thousand now. Um, and signed partnerships with a lot of operators sold over a million dollars of heli skiing. And I was the content guy, salesperson

and co-founder. I'm not with the company anymore and I still have equity in it, but it's still running. I just decided to branch off and do something else. But it was that venture that was kind of really the starting point where I was like, okay, now I can do really whatever I want with my life. Because that was a successful business venture. And during that time, I was also working for a startup company that was an accessory company for GoPro. So I was commuting from Newport beach to San Diego every day, which was interesting. And two of my partners who were almost like my mentors when I was there, I didn't really have any family or anyone to kind of talk to, right. As just a guy in california who moved

there um was michael marks and he used to be the ceo of spy so the eyewear company and believe it or not bob harrow i mean i grew up riding bmx bikes and i was just saying i used to ride those i used to ride those of course yeah so i got to work with Bob Haro and Michael Marks every single day. And so that creative mindset and all of that. And I got to work with professional athletes because they were signed on to the deal that we were doing with this accessory company. So we even did like, you know, hey, to some of the skiers, do you want to come work with Heli too? So you just find all these synergies. And California was an incredible experience for me. And that was like a very entrepreneurial time during my life. But ultimately, I ended up moving back to the East Coast because we came back here to raise money for Heli. And my family and friends are here, and California has no sense of urgency. At all. I couldn't take it anymore.

Can't surf your whole life. So eventually found myself back here into crypto. And the way I got into crypto was on a film shoot for a kiteboarding movie. And the whole time the film crew was talking about Bitcoin, I left that shoot. I went home. I got a book, The Age of Cryptocurrency. And that's where it all started, beginning of 2017. It's an incredible story. And we'll give pretty much anyone in this space FOMO probably. Everybody's going to want to go like, you know, sign off, sell all their Bitcoin and go start a heli-skiing business. But so you got into crypto.

Would you say that you got in it because of a belief, sort of the maximalist idea, you know, new money, the deflationary currency, that eventually, you know, fiat would collapse all that? Or was it purely as a trader and an opportunity to make money? I think it was a combo of both. It intrigued me. Uh, when I started reading that book, I was like, this is the matrix. And I didn't really fully grasp the concept. And then I started to get it. And then I also saw the volatility in the space and the interest.

And I talked to a lot about my brother, my brother's probably one of the smartest people I know. He's run some big hedge funds. So he was trading it, you know, it was, I was like, okay, maybe we're onto something here. But yeah, I think it was just the unique character of the space, the people in it, just like the Wild West aspect of it. And started off trading Bitcoin and Ethereum. Then I got into altcoins, which was like...

You were a mana maximalist, if I recall. Mana. I mean, the amount of money my family made in Tron. I put everyone into it. It was just like, this is not real. And then I remember selling all my Bitcoin at like 12K and just was like, I got to get out of this market. And then kind of came back. And then I never traded in altcoin ever again. I just saw BTC as a macro asset that's now on the stage of bigger players.

And it's proven itself with the likes of Rentech coming into the market, Paul Tudor Jones. Novogratz was someone that kind of put it on the map and CME futures and all these things, but it also almost marked the top of the market. Right. And. Almost to the day, actually, if you're talking about CME future. Right. Right. And so guys like Mike and some other former finance people gave some credibility to the space, but I never found it too legitimate because the people who are invested

in this space and the way they talk about it is like, they can't afford Bitcoin to lose, right? And so that was something that I was always wary of. But I think this year, outside of Corona, there was kind of a turning point for it. And I see it as something that's here to stay. And I'm a huge macro guy, right? So I always look at the energy markets. I'm always looking at the equity markets. And I like piecing together the puzzle to see how Bitcoin fits into it. Well, let's talk about the equity markets right now. Obviously, we see these reports of two, three, six million jobs lost on a weekly basis in the United States alone. We see this massive, obviously, contraction in GDP and all these huge macro things, but we also see the stock market pumping like crazy. So what's your take on the disconnect of the market and fundamentals?

Markets pump on disbelief. So that's a large part of it, I think, for S&P. The Fed, right? Stimulus has always been something that's like pumped the market. Now, it doesn't last forever, but it's very hard to guess the top of something like that. And the capitulation moment you had and the Fed stepping in with the stimulus and basically backstopping the credit markets with what they were doing was different than knowing that that did not happen. So I think the relief for people thinking that the credit markets were somewhat saved or not as bad as what we saw in the past put a bit more confidence into the market, along with companies just got completely washed out

and earnings were basically known that they were going to be horrible. So you have stimulus and credit being somewhat safe. People, I think, were like, oh, these guys have a clean slate. We should buy this. Everything's on sale. Now, when the rug comes out, I'm not really sure. But you do believe that it will. Yeah. It's impossible not to. I mean, think about New York City, right? All the restaurants that closed. Who knows when they're going to open? Is it economical for them to open again? They're not going to open. They're paying $30,000 a month rent.

They can't sustain a week. The average restaurant in New York, I believe, can't sustain a week, you know, past cash flow, like the minute that they close. They're running on such tight margins. So businesses and growth is not returning for a long time, which ultimately impacts the consumer. One thing that before all this happened, I was like, okay, the energy market and the consumer

are the biggest problems that are going to get hit. Energy got hit so hard. I did not see that coming as hard as it did. And then the consumer started to feel it. And then you got the mega drop in the market. If you look at kind of what led the rally, it was a lot of energy names, which is like, okay, they have the worst fundamentals hands down, yet people just look for stuff on sale that's super oversold. And then they were just irrationally low. Right. And so it's a trader's market. And I think eventually it's going to become more of a stock picker's market, right? It was very index-based investing on the way up. It was like, you're just riding this trend.

Whereas now companies really have to show how their corporate leadership is important to managing cash flow and making themselves profitable again, right? Like it's, it's survival of the fittest at this point. Now, when that starts to come about, when companies look at these from an earnings or when investors look at this from an earnings standpoint and long-term growth, because growth to me, right, it's just not there right now. And it's not, there's no clarity in when the market is going to turn. And there's no clarity in when the market is going to turn. And there's no clarity in leadership in the country and a lot of other places in the world. And markets move on confidence.

And I don't think there's a sense of confidence in the market right now. So I think it is on shaky ground. But it continues to go up because the Fed is pumping money into it. I mean, that's really the key, right? It's just, I mean, it's free money, infinite QE, and pumping money into it. I mean, that's really the key, right? It's just, I mean, it's free money, infinite QE, and they'll pump it until the last breath. I mean, literally go on TV, pal, and say, we're far from out of ammo and we can do this forever. Right. And it's interesting if you look at Bitcoin and you say, how does this fit into the grand scheme of things? So how does it?

Well, I find it interesting because we had this massive sell-off and that was a de-risking, de-leveraging across the board of all risk assets. And that was very apparent. And Bitcoin put it on the bottom and the S&P put it on the bottom and both started going up. Now, was it a risk on trade? Maybe. Was it a halving trade? Maybe. Was it the famous, this is a hedge on central bank liquidity and acting irresponsibly? Maybe. Was it a halving trade? Maybe. Was it the famous, this is a hedge on central bank liquidity and acting irresponsibly? Maybe. Store value gold? Who knows? So the narrative to me is not entirely clear. But I find Bitcoin more acting like risk on at that point. But if you look recently in the last two weeks, Bitcoin has started selling off and the S&P was going up. So there are these correlations that last for shorter periods of

time. And if you could take advantage of them as a trader, they work, but they don't last forever. And so as it stands right now, I think the S&P could go to like 3000. Now, does it pull back from there? I would like to think so. If it really pulls back, does Bitcoin pull back with it? Or does Bitcoin start going up inverse to it? So the macro picture with me and Bitcoin is a constant puzzle that I'm trying to solve. I mean, do you define it as a safe haven asset or a store of value at all? I mean, the digital gold argument makes the most sense to me. I don't fully subscribe to the idea.

I just trade it on the chart. Yeah, level to level. Yeah. I find that the bull bear stuff on twitter and in this space i never called anyone a bull or a bear an equity researcher on the trading desk it's it's such an immature market and community it's like bulls and bears that was one thing that just a lot of the stuff in this space used to piss me off because i just i wasn't i didn't know anything about memes i it just seemed really juvenile but it's grown on me but the bull bear stuff is like i get labeled as a bear fine now i think i've just decided to take

a more neutral approach whatever that means in my kind of how I talk to the audience on Twitter. It's just, you don't need to be a bull or a bear in Bitcoin. You can trade the chart. I ultimately think it will appreciate in value a lot. So the name of the game is Stack Corn. And I don't think it's going away. It's proven itself. Its shelf life is there. It was $0 at one point. It went to $20,000. It's resilient. And now there is actual institutional money and interest in it. What is the narrative that they're subscribing to that will make it go up a lot in price? I'm not sure yet. Digital gold, hard assets, it remains to be seen, but there is an interest in it and I'm bullish on it long-term. Roundthex.com is one of my favorite

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That's investvoyager.com, promo code SCOTT25 for $25 in free Bitcoin and start trading today. I mean, you mentioned that your brother's a hedge fund guy and was trading it. Can I assume that, well, this was quite a while ago. I mean, was he trading it personally or were hedge funds actually trading it? No, personal. We share an office together and we both trade all day long. So you say that you believe that institutions are here. What gives you the idea that the institutional interest is there and that they're actually invested? For one thing, the CME, open interest. Right. It's at an all-time high.

I read that article about Rentech, Renaissance Technologies. I mean, when you hear that they're in the market trading CME... And by the way, a lot of these guys are trading futures. They're not actually trading spot coins that I would know of, at least. We know that the interest is on the futures, CME. Yeah, I mean, even Paul Tudor Jones, everybody got worked up about the fact that he's, you know, 2% invested in Bitcoin, but that's a bit of a misnomer. He's, you know, he's buying, he's on futures, right? I mean, he doesn't own spot Bitcoin. Right. But those guys look at their, their portfolios in USD, like this space looks at it in BTC. There's people in here who will never sell it. All they care about is getting more Bitcoin.

I care about US dollars. So there are times where I'll cash out into US dollars because they pay for things still. But those guys on CME, they're really not that interested in it. They say, we're going to throw a small percent of our assets in here. And this could be a big winner. Seems like a good flyer. And they look at a chart, just like all of us do. And they have the credibility. And once they make it public, the whole world goes crazy. I mean, if you look at Paul Tudor Jones's analysis, gold and Bitcoin, it's not that shocking. It's funny. And everyone says he bought the top. but if you go back and look at the paper trail, he was probably buying between basically 6,000 and 9,000. He announced it when it was at the top. Of course. That's, that's the thing. I was like, this guy probably bought it 5,000 and he just

is selling into all of you guys buying into it. Yeah. It's the same game. Yeah. It's funny. I was with the head trader of Tudor on New Year's and I was with another guy who was an energy PM and started a fund, an energy fund. And every time you're at a cocktail party or something and you're labeled as the crypto guy, people always want your ear. And then you really start talking about it a lot. And then you go down the rabbit hole and you're like, God, seven white claw later and two hours later, I just told you about the whole history of Bitcoin.

And the Tudor guy was like, yeah, I think it's going to zero. Really? Yeah. Head trip. And to the energy guy, he's like, where do you think I should buy it? was like 5 000 and this is new year's in january he was like sounds about right and to the theory i was like why why do you think it's worth nothing he's like what does it do and that's the thing right like what does it do but what does gold do yeah you can go back to this argument. I don't care what it does. It trades like a freaking animal. And you guys are traders. And if you want volatility and recognize some asymmetric returns,

maybe it might be worth looking at. I think at the time, though, there wasn't the credibility from the institutional standpoint, right? And so now you have two really big players in the market. And that can easily spur a lot of interest from other funds that want to trade on CME. And then eventually... Do you think that they're interested because purely for profit? Or do you think that this macro environment now of, as we've touched on, infinite QE and money printing and all the kind of shenanigans of the Fed and the government, do you think that they actually might see it as a hedge? Like the old Chamath argument, everybody should own 1% just in case we go full zombie apocalypse. They might not be zombie apocalypse guys, but they might look at it like digital gold

and hard assets being something that is going to be a good trade in the future, which is what Paul Terjean said. So I don't think they're as gung-ho as some of like the crazy Bitcoin people. Yeah. I think that's pretty clear. Yeah. Yeah. So. I mean, also I think what people in this community don't realize is these guys have so much money. They couldn't really be that heavily invested even if they tried. I mean, the liquidity is just not there for these guys to commit any significant percentage of their holdings into this market. Yeah. I mean, you got Grayscale buying a ton of Bitcoin and their GBDC product is probably getting a lot of interest as well, which is closer to buying spot Bitcoin than the CME futures. Right. At a premium. Yeah.

They apparently this year have bought 50% of the mind Ethereum and it just came out that they've bought about a third of the mind Bitcoin in the last few months. Yeah. I saw that. I was like, Jesus. I mean, that's kind of, I mean, that's kind of crazy. I don't know. Very, very sober. Yeah. So like, I don't really know how to interpret that from the positive or negative side. I mean, that's a whole lot of Bitcoin in one place. And so that's the problem I have with a lot of this is that you have someone who created this.

So to me, the narratives have shifted over time. And so you have this peer-to-peer cash creation by Satoshi, which I still think is insane that we're just okay with some random guy creating this whole thing. And now the institutions are too. Come a long way. And then it kind of evolved into that digital gold store value when like Novogratz and them came on the scene in 2017 and really started talking on TV. This is digital gold. And here you

are, then there's the valuation. This is what it should be worth because this is what gold is worth. And it would be a percentage of the market share. Okay. Well, you just completely changed why Bitcoin existed. It's supposed to be used as peer-to-peer cash and now it's digital gold. People will say one comes first than the other. Fine. But there's also the, it's a redistribution of wealth from the bankers and the finance guys to the little people. Well, there are some people in Bitcoin who have a ton of it. And that's just the same as some banker or finance guy having a ton of money. I mean, 70% of it never moves and probably 90% of it is owned by 10 people.

Right. But the centralization of it versus the concept of decentralization is funny to me. Because there are some people that have an insane amount of coins. And if the thing goes up to $50,000 one day, well, that's centralized wealth. It is. And that was sort of my argument, actually. And we talked about this at the time because we were trading together when Bitcoin went to 20,000. But these early adopters, these whales that had huge, huge, huge wallets, they don't really care if they sell at 20,000 or 3,000, right? Because they need the volume, they need the liquidity. So any price for them is doing thousands of times multiples of profit. They just need buy orders.

Yeah. They need the liquidity, but they're also like, I got these coins at 800 bucks. Well, I'll just keep them forever. You know, or the, that's what I think the mentality is. A lot of these people are just like, wow, this is ridiculous. It keeps going up. Right. Which goes back to something you talked about, which is caring about USD which is something that I find that traders in this market totally lack that understanding. Maybe it's because they're young or maybe they don't

have families to provide for. I mean, I can't pay my kids school tuition in Bitcoin. I can't pay my mortgage in Bitcoin. So as a trader, are you really a professional trader if you haven't learned to take profit to dollars? No, you're just rolling that. You're playing against the house the whole time. It's going to win sometimes. It's smart to cash out. It's also smart if you make a bunch of Bitcoin and you're trading derivatives, take some of it out of the account and put it away. And, start with a smaller stack and rebuild it. I do that all the time. Yeah. You're the master of that. And it's unbelievable. You'll always be like, I cashed

out this huge stack. I'm starting with a thousand dollar account watch. And then I call you two weeks later and you're like, I've got two Bitcoin, three Bitcoin, four Bitcoin in here. Yeah. It's, it's a challenge. It makes it more fun. Yeah. So it's, it's also like, you see all these really big PNLs flash around, which I never understood in this space.

Like, Oh God, it's like showing your bank account. Well, it's, it's just like a weird thing. Like, great. Like, it's kind of absurd that you're trading that many millions of dollars in Bitcoin on BitMEX and you're posting it on Twitter as like a cartoon. Like if you try to explain this space to the normal people who are outside of crypto, their heads explode. Yeah. Talk to me. Explain it to me. I want you to explain it to me right now.

Like I'm a 10 year old go. No, meaning like I try to explain this to my friends. Yeah. It's impossible. And they're like, I'm like, yeah, this guy made like $5 million trading up this, this range. Right. And they're like 5 million. That's ridiculous. Let's say you made it to 100,000, right? $100,000 to someone outside of crypto who's in the normal world. And you start relating that back to what salaries were and what some people live on. Like, it's crazy. When Bitcoin was 15, 20,000 and people were just talking about like, yeah, three, four BTCs, like they didn't process how much, how many dollars that was. And so it, that to me was amazing. Like ICOs, like people were like, yeah, I'll throw like three BTC at it. Like, okay, well that's, you know,

talk about 50 grand. Yeah. 50 grand. Like that. If you just start thinking about what 50 grand is in relation to the to life outside of crypto and what that means to people it like the crypto i tell people distorts reality and time it moves incredibly fast to make the gains that you can in this space trading this is insane but it distorts reality it's not a realistic approach to the world. I mean, people who didn't have any money to their name besides that three or four BTC would throw it at an effectively unregulated ICO of something they didn't understand at all, that was raising hundreds of millions of dollars for a product that may never come to market and probably only needed 500 grand. I mean... yeah, there's a roadmap and some people on the board looked good. New logo. Let's, let's pump it three X, right? Yeah. I mean, that was, those times are,

they're done. They're never coming back, but I mean, those were fun that you can't, I mean, it's cool to be a part of that, but like, it was so much fun. That was insane. But you had the presence of mind to actually cash out. You touched on it earlier, um, that you actually exited the market. You disappeared for months. I mean, we talked, but you were completely indifferent and disinterested in the space for a very long time. What gave you the presence of mind to actually avoid that FOMO that everyone else had and say, Hey, listen, I've had enough. This is it. I looked at how many Bitcoins I had in dollars and was like, this doesn't last forever. And what would it take for you to make this in real life? The effort. So this is a gift. Yeah, sure. You did some charting and stuff, but like cash out, walk away. And then, you know, it hovered around

three, 4,000 for a long time. I remember my brother brought some that like 3,500 was like, yeah, this is going to 12,000. And I was like, you're an idiot. Cause maybe it goes to 6,500. Again, he was like, nah, there's a lot of liquidity coming back in the system. Seems for us gone. Been looking at the Chinese markets. And I started looking at the chart and I was like, yay, you know what? And I think I bought some like 3,900 or 3,800. Yeah, I think that's when I heard from you again. Yeah.

And then I went into Texas West. I was like, what's up, gents? Osaka was in there. Yeah, it's funny. Out of nowhere. Yeah. What's up, gents? Hasaka was in there. Yeah, it's funny. Out of nowhere. Yeah. So, it's hard to cash out when, you know, the thing moves so much.

But you just have to be true to yourself. You should call it quits here, right? Trading is discipline, patience, self-control. So big part of it. So how do you think that these high leverage hundred X derivative exchanges affect the market in general? Well, there was one only BitMEX for a long time and you could see it in the open interest and the volume that that was where a lot of the action was,

call it that, versus spot, especially on the run-up out of that 3, 4K range to 14K. That's where a lot of the squeezing is occurring. And now you have a lot more players in the space. You have FTX, Bybit, Binance Futures, and they've taken a lot of share away from BitMEX noticeably. But the recent rally was driven largely by a lot of spot coins. So the derivative space is just a liquidation engine. And that's what I trade

because there's people who gamble and they use 50 to a hundred X leverage. And there's bigger players who take advantage of that. And so you just ride on the backs of those bigger players. I don't think the derivatives market is bad. It's just. But should they offer a hundred X leverage to anyone who wants it? You can say yes. I mean, it's a free market. Yes is an acceptable response, but... It became the norm because BitMEX did it. Every other person, every other exchange did it. Sure. I don't really trade Forex, but I know that there's absurd leverage in that too. But that's because the movements are so small that you need leverage to actually be able to make any money.

It's a little different. It's not doing 10, 20% swings in an hourly candle. Yeah, agreed. I think one thing about this space is it's very gamer-like, right? So if you look, a lot of these guys play video games. It's very computer gaming-like, right? So if you look, a lot of these guys play video games. It's very computer gaming-like. It's probably not perfect terminology. No, I agree.

So you have a leaderboard on BitMEX and you have a leaderboard on FTX, which is weird to me because it's real money, but people play this as they trade this like a video game. So those higher risk trading positions with a hundred X is like, Oh, how do I, how do I get the most points as possible and get on a leaderboard? Right. The exchanges have purposely made the currency XBT. So you don't look at USD script by trading have a script like trading it's like playing poker with chips instead

of throwing an actual hundred dollar bill in the middle right so okay i'll 100x 0.1 btc well what is 0.1 btc well it's almost a thousand dollars but people are just like yeah whatever i can make a lot off it or i could lose it i just think that there's no there's no sense of the monetary value and so i think that's partly what the exchanges are targeting. And they also see the gaming aspect of the space. You just touched on it, but the core of your strategy is finding, if you were at a poker table, they always say, if you can't spot the sucker, you're the sucker.

You're basically, I mean, you have the data to see where the liquidations are so you know where those suckers are in this case, but you're really just looking to take money from the people who are gambling. Yeah. It's free money. Yeah, pretty much. And you know what? They don't seem to learn because it's just an ongoing, it's an ongoing process.

They'll always be there. It's the culture. In any market, but it's, market, but in those other markets, maybe you as a trader don't have direct access to them. You can't really pull the same thing on E-Trade as you can on BitMEX, obviously. You also touched on that you're trying to basically, I guess a good way to put it is to think like a whale, right? I mean, you just want to be on sides with those few guys who are really moving the market. Yeah. So one of the tools I use is a website and a platform.

A lot of people have it. I just choose not to share it publicly because I respect the founder and the devs who are working on it. But it's a lot of variables that let me look at sentiment analysis. So I can look at things like cumulative long, short, delta, right? Whenever I open a chart and I look at a market, I just say to myself, this is a conversation between buyers and sellers, who is in control and who is offsides, right?

So if you can identify who's potentially off sides, and whether that's you're looking at the funding rates, whether that's you're looking at a futures basis, whether that's you're looking at cumulative long short delta, or a slew of other things, liquidation levels, net position, heat maps, all these things. That's how I start. And then I chart and then I get my directional bias that way. It's always about where are the larger players trying to move price. Robert Leonardus Interesting. Do you think that you could do it without even looking at a chart just based on a single indicator indicator, like, you know, basically long, long for shorts. Yeah. Long, short Delta is really, it's really powerful. Yeah. And it,

it's, it's no secret sauce. It's just cumulative long, short Delta. So all the net longs, all the net shorts cumulative. Now, if you're adding them up and there's more net longs, well, then the Delta is going to be green. There's more net shorts than the Delta's red. I like buying red Deltas. I like selling green Deltas. So this whole move- Yeah, it's all about counter-trading sentiment. Right. So this whole move, the Delta was so green and longs were way over their skis. And then you started to see it in the funding rates and then even a little bit in the futures contango and so you start putting these variables together to allow you to figure out a good gauge of the sentiment and you know i posted on twitter like it seems like the long seems like the crowded trade

people are like that's because your feed says that and just like'm just like, guys, I'm not telling you what I think because of what I see on Twitter. This is data-driven analysis. This is math. Yeah. And so sure. More people who tell me I'm wrong on a trade on Twitter, the more confident I am in it. It's the best counter indicator I've ever seen in any market. Yeah. So the sentiment though, that that's data driven. Um, and yeah, I mean, there's more,

some indicators now, like you can look at finance that they've started to make available top, uh, trader positions, long, short top accounts, and then global accounts. And you can view the global accounts as retail, and then you can

review the top long short positions as whales or institutions. And the way they use that is they take those accounts, and each account, right, they'll figure out if it's cumulative, the cumulative delta, is it net long or net short, And then of all the accounts, they're going to take a percentage. So you could see at the top that retail was buying the market aggressively and the top traders long short were aggressively selling it. Yeah. You pointed that out to me. Yeah. That to me, I shorted 10,000 the first time that way. And that was another trigger that I had, because I was like, this is a real illustration of market participant psychology, retail buying the top larger players, whales, institutions, whatever you want to call them selling into them. have a clear divergence on my chart and I have a skewed Delta to the long side with actual positive funding rates that were showing up, I was like, this is the most evidence I could need to have

conviction and a short trade at this point. People paying a high price on funding to get liquidated. Good times. Yeah, pretty much. But that really is what it is. So I got to ask, how low of a price at this point for Bitcoin within months, years would surprise you and how high of a price would surprise you? Well, I think Bitcoin's going to 6,000, probably in the next... I mean, it's hard to gauge, right? Because this thing went from 9,000 to 3000 in like no time. So one thing, and this is something I talk about with trader XO a lot and Zorn and a couple of other people,

it was just like the idea of a proper accumulation phase that builds a base, right? That we didn't really have a base on this move. Now, it doesn't matter if you think there was no base, the price rips in your face. But if you look at the base we had, you know, when we went to 10.5, it was like a 50-day accumulation period. Right.

And that wasn't sustainable. Okay, we had like a 14-day accumulation period and we went to 10,000. Well, we had like a 14 day accumulation period, and we went to 10,000. Well, we just saw how this is stairs up elevator down. I think there is another accumulation period coming. And whether that's timed with an equity market correction, or this is your typical post halving sell-off because the hash rate has dropped so much. Price typically follows hash. You get a lull and the kind of a rebuilding period. But if you just take a simple analysis, say the bottom around 3K, whatever you had to the top around 10K, the 61.8 Fibonacci is 6,000. Yeah, 6,200-ish. Yep. Is 6,800. So to me, the price is going to 6,800.

And that's healthy. Yes. And there's a very real chance that if it breaks 6,000, it can go and take out those lows. Right. So the 3,000s would not surprise you. No, I don't think anyone should be surprised by anything Bitcoin does given what we've seen. That's the thing. Like when you start saying it can never happen or this can't happen, you've got to have an open mind in this space because if you don't, it'll just completely own you. And I remember the last time I stopped shorting was like 7,400 on the way up.

I was like, we're about to break into a range that we ran for 58 days or 50 days before we went to 10,500. This thing is going to go up to at least 8,500. And 9,600 was like, I think like a 78.6 Fibonacci I had. So I was just like, you know what? I'll just buy long scalps on the way up. But I didn't catch a lot of that move up. And I don't think a lot of people did. And that's how markets work. It's just, no one wanted to buy it when it was like literally about to go to zero,

but that's when you have to buy it. And so I'm not a good trader in that regard where like I'm a much better shorter of this asset than I am longing this asset. Yeah. I know that because like I said in the intro, nothing makes me feel worse than when you're shorting. I'm like, Oh man, either I'm offsides or I'm just, you know,

my investments are probably about to go down. Yeah. I mean, it's, uh, I look, I look forward to the bull market where we can long it and everyone wins, right? It's just, it's just, you got all these people who have all this Bitcoin and everyone's talking about going to the moon and financial freedom and all these things. It's like, guys, it's not that easy. The market just doesn't. It happened in 2017. It went to 20,000. If you didn't sell there, then you might have to wait a little longer. This could go to 2,000. I have no idea, but I do have the open mind to where it- But you'll be buying in the six thousands. Yeah. I think that's a very fair place to start looking for long positions. Cause like 8,000 is the 200 day moving average.

I don't think that's going to hold. People are saying 7,000. I don't really know why 7,000 would hold. I mean, the price typically goes to like the 61.8. It doesn't stop at the 50. It bounces there, but it usually- Both ways. Up and down. Yeah. Like I'm not comfortable buying 50% retracements. I actually don't do it. Sometimes I short them if the market structure broke. Like I shorted 95.70 because everyone was saying it's going to go to 96 hundredths. And I was like, you know what? Front run it. Yeah, of course.

Yeah. Well, you just had a high volume sell-off out of a consolidation period at a high timeframe resistance level with a rounded top. I was like, you saw the selling today. That was aggressive. I was surprised they pushed it down that much. And it's still like barely holding 9,000 right now. Yeah.

It's, it's, it's, it's going to continue to be, to be the wild West, but man, what a, what a wet dream for traders,

right? Yeah. What do you think price wise? I, I mean, I agree. I think that it could stop higher, but those are the,

that that's where I would start to, uh, sweat. If we started to get in the fives and fours, you know, uh, sweat. If we started to get in the fives and fours, you know, uh, below that golden pocket, I think I would probably start to expect to maybe sweep the lows, you know? Yeah. I know.

If we're breaking below 6,000 or so, I would not be surprised to see 3000. Yeah. I know Chris, um, who's just, his analysis is so refreshing. Good old Texas boy. He's just a fun guy to listen to. I remember him on his stream the other night. I think he said like 2,400 or something or 2,800. Right. But his argument is that if it goes there, I mean, all the weak hands will be shaken out. He thinks that is the potential path to a hundred thousand, right? So I think it's all about perspective. Like even being that bearish and thinking price can go that low is actually a good thing for the market to some degree. I mean, you look at the hyperwave guy, RIP, Tyler Jenks, like the guy go to a thousand, but it went to 3,200 or whatever,

whatever it was still ripped. And he was like, no, still, it still could go to a thousand. And I think it just has to do with the maturity as an asset. And it's Bitcoin to me is a generational thing, right?

So it's like a lot of the younger generations are going to be the ones who embrace this and really make it work. And old people are just going to kind of start dying off. And there's going to be like a shift in this regime and the way people think. And I think the digitalization of all of it takes time. And I do think Bitcoin will play a role in that. But these things all take a lot longer than people expect. I mean, sure, it's been around 10, 11 years, whatever it is.

That's not very long in relation to the life of other assets. It's funny. I think it's actually incredible that it has so much mainstream recognition and that it did reach those crazy highs in that short amount of time. I think it's actually pretty impressive. Yeah. And that's also one of the biggest downfalls of it. It blew the hell out of retail. People don't want to touch it again. They're so scared. Yeah. So like all my friends are still like, you're still trading that stuff. Cause in 2017, they, you know, they had their Bitcoin, they made some money in altcoins

in 2018. And then who knows if they lost it or they just cashed out and they never looked at it again. And so what brings back the interest from a retail perspective? I don't know. It'll be interesting to see, but the institutions might spur the interest just because of their involvement and it might bring retail back just from a credibility standpoint. I think there's a lot of channels opening up with people being able to buy Bitcoin and stuff like that. It's still hard to buy a spot coin. Right. So the learning curve and all that stuff needs to be ironed out a bit more.

But I do think it is, it'll happen. It's just going to take time. People are not patient in this space and you need to be patient. I agree. So where can everybody find you after this and follow you? And then obviously check out your teaching resources that you're building. Yeah. So on my Twitter, which is crypto underscore ISO. So ISO is a photography setting, right? It's almost artificial light within a digital camera. So I just branded myself crypto ISO because I'm a photographer and I put a chart of Bitcoin in my lens finder on my icon. So if people call me ISO, ISO, that's the explanation. And then we have a telegram that we hang out in Crypto Insiders.

And I haven't released the course website yet. It's actually just been released in Crypto Insiders, but I will release it on Twitter when we're ready to fully launch, which should be the end of May. Awesome. Well, I'm going to go set some bids at the 61.8 and wait to meet you there. I don't know that I'll be able to short it all the way down like you, but I'll definitely be trying to buy it.

Yeah, definitely. 7777 could be a nice bounce, but that's my favorite number on this chart. That's definitely a bounceable number for sure. 7,800 is a key consolidation zone I have on my chart. I just don't think it will be the ultimate bottom just in terms of looking at Fibonacci and- I fear you might be right. It'll be fun to watch it unfold. It will. Thank you so much for coming on. I appreciate you taking the time. Yeah,

Scott, man, this was great. So I'll come full circle. Appreciate you having me on. Hey everyone. Thanks for listening. New episodes go live every Tuesday at 7am Eastern standard time.

Links to our Apple and Spotify channels are in the show notes. You can also follow me on Twitter at Scott Melker to continue the conversation. See you next week.