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In This Issue:
Catching Up
Bitcoin Thoughts And Analysis
An Estimation Of Mt. Gox’s Impact
Roaring Kitty Lawsuit Dropped
Riot Ups Its Game
Polymarket Is Exploding
$15 Billion Into Ethereum? | Here Is Why You Should Invest In ETH Right Now!
Catching Up
A lot has happened in the crypto space since the middle of last week, so I'm dedicating this section to a rapid-fire news coverage intro to get us all up to speed. These stories are presented in no particular order, but each is significant.
Franklin Templeton Offers Ethereum High Praise
$1.6 trillion asset manager Franklin Templeton, which currently offers a Bitcoin ETF and will soon launch an Ethereum ETF, has released research to help clarify what Ethereum is, likely to benefit both their brokers and customers pre-ETF launch. I’m most excited for BlackRock’s approach to explaining Ethereum, but Franklin Templeton still did a solid job. I have the summary below:
“Ethereum has profoundly reshaped the decentralized economy by expanding on the Bitcoin model and offering a versatile platform for decentralized applications. Its unique combination of a native peer-to-peer payment network, a common developer toolkit, and a virtual machine for executing smart contracts has set a new standard for blockchain technology. Ethereum’s ability to attract a robust developer community and support a diverse array of dApps across sectors like DeFi, NFTs, and gaming underscores its role as the leading blockchain network. Despite challenges such as scalability, Ethereum’s innovative solutions and continued evolution position it at the forefront of Web3, driving significant economic activity and technological advancement in the decentralized digital landscape.”
Germany Is Now Buying Bitcoin?!
In a strange turn of events, the German government went from selling hundreds of millions in Bitcoin from its large stack (over $2.3 billion) to buying back $111.5 million worth (1,915 BTC) on major exchanges Kraken, Bitstamp, and Coinbase, according to Arkham Intelligence. During the selling phase, German Member of Parliament Joana Cotar criticized the government’s decisions, calling them “hasty,” “not sensible,” and “counter-productive.” It’s impossible to determine the level of influence Cotar had on the individuals or group deciding how much Bitcoin to sell, but it’s quite bizarre that Germany reversed its Bitcoin strategy. I’m not calling this decision the bottom, but it's definitely in the category of bottom signals if I’ve ever seen one.
Also worth mentioning in this story is that Justin Sun was casually willing to buy Germany’s Bitcoin OTC to minimize market impact. Love him or hate him, Justin Sun is for the people.
Is Trump Considering Bitcoin As A Strategic Reserve Asset?
Over the weekend, rumors popped up that Donald Trump is considering including Bitcoin as a strategic reserve asset. However, this has not been explicitly stated anywhere. What we do know is that there are a number of pro-crypto individuals influencing Trump in his circle and that a Forbes article sparked the rumor titled, “Trump Sparks Talks Of Bitcoin As Strategic Reserve Asset.”
In that article, the crux of the rumor rests on the idea that Trump's pro-Bitcoin commentary “put a spotlight on discussions about classifying Bitcoin as a strategic reserve asset.” This is far different from Trump coming out and saying, he will make Bitcoin a strategic reserve asset. Close to Trump is Vivek Ramaswamy, who is believed to have introduced Trump to Bitcoin and shares similar ideas to RFK Jr. about backing a small percentage of US Treasury bills with hard currencies like gold, silver, platinum, or Bitcoin.
Also notable is that Republican Senator Cynthia Lummis has said, “Bitcoin is an incredible store of value, and I certainly see the benefits of our country diversifying its investments.” Additionally, Jason Lowrey, another prominent Bitcoin advocate, has been consulted by the campaign for his expertise on Bitcoin. Currently, the conversations seem more focused on mining, but mining could easily lead to holding Bitcoin as a reserve asset.
The idea makes sense; so, it may only be a matter of time before leaders begin to act.
The ETHE Discount Has Closed
After the Ethereum ETF received the green light, Grayscale's Ethereum Trust (ETHE) has quietly narrowed its discount to just -1.15%, rebounding from a multi-year low of -59% in late 2022. As of Sunday afternoon, the trust holds $8.73 billion in AUM, which could see approximately half in outflows if ETHE follows the same trend as GBTC post-ETF launch. Below is an image of the ETHE Discount or Premium Chart, followed by GBTC. ETHE appears to be closely mirroring GBTC.
Celsius Is Suing Its Creditors
The Celsius Network Litigation Administrator has taken legal action by filing a lawsuit in the United States Bankruptcy Court for the Southern District of New York. The lawsuit is aimed at a specific group of Celsius account holders who are accused of receiving "preferential transfers." This group includes individuals and entities worldwide who withdrew over $100,000 and have not yet settled their financial responsibilities related to these transactions. Essentially, Celsius wants back the money that cautious individual withdrew before the exchange collapsed, citing that these withdrawals created hardship for the exchange—unbelievable.
Even more annoying and hypocritical, Celsius aims to base the clawback amount on current prices rather than the value of the assets at the time of withdrawal. Meanwhile, they are attempting to return only a fraction of the funds based on the lowest prices.
That’s all I wanted to highlight for now. The market seems undecided about whether it will go further down or begin climbing back up. Remember, the crowd rarely gets what it wants. If everyone starts predicting Bitcoin will hit psychological or technical levels like 50k, 48k, or even 42k, it probably won’t happen—or if it does, it will happen in a blink.
Don’t overthink the market right now. HODLers should HODL because we are probably close to a bottom, and dollar-cost averagers should take advantage of the low prices. It’s that simple.
I will be back with a full newsletter tomorrow!
Bitcoin Thoughts And Analysis
DAILY CHART
I am currently restricted to charting on my phone, but this is quite simple - we have confirmed and building bullish divergence on the daily chart with oversold RSI - my favorite bottom signal
An Estimation Of Mt. Gox’s Impact
James Butterfill and Luke Nolan from CoinShares released a research report detailing the impact Mt. Gox’s repayments will have on the market. I already did a full write-up on the Mt. Gox story, so I am simply going to reiterate some of their main points, which closely align with my thoughts. CoinShares acknowledged that creditors thwarted claim buyers, opted for the early payout which spreads distribution and resulted in a haircut, and pointed out the tax burden creditors would face with selling.
What I didn't know was this: “We also know that roughly 1/5th of claims are owed to Bitcoinica and Mt. Gox Investment Funds (“MGIF”)... However, MGIF has already publicly reiterated that it does not plan to sell its bitcoin holdings.” CoinShares came to a similar conclusion as I did: “Overall, it would seem that the idea of the overhang has spooked markets more than the actual selling will.”
Further support to their idea.
“If this were to be sold all in one day, the market could cope with these volumes easily, and has already been tested by the substantial liquidations from the Grayscale ETF this year. We estimate this could push down price by 19%, although as mentioned earlier we think it is highly unlikely to happen, and happen over the course of the next few months. We have provided the daily impact this selling pressure would have on price over the course of the next 30 days and found it to have minimal price impact. Taken in combination with the chance for interest rate cuts this year, it will be likely offset by these price supportive events.”
Roaring Kitty Lawsuit Dropped
The lawsuit against Keith Gill, aka Roaring Kitty, alleging he orchestrated a "pump and dump" scheme to inflate GameStop's stock price, has been dropped without prejudice, meaning it can be refiled. The plaintiff, Radev, accused Gill of securities fraud for not disclosing his plan to sell 120,000 call options, while humorously owning only 35 shares and a few options on GME.
There are many mixed opinions on the Roaring Kitty situation, but targeting Keith Gill before hedge funds or politicians seems misguided. Pomerantz Law, representing the plaintiff, has not commented on the dismissal. From what I've seen from other legal experts, the lawsuit's arguments could be easily dismissed or disproven.
Riot Ups Its Game
I have to give credit where credit is due. During the FTX crash, a systemic collapse threatened Bitcoin miners, and Riot was among the speculated candidates that might not have made it into the next cycle. While Riot stock has seen better days, it has at least bounced over 180% off the bottom from late 2022.
As for the actual news: “Riot deployed an astounding 7.3EH/s during the month of June. That’s approximately a 50% increase in deployed hash rate in a single month. This is more hash rate than has every been deployed by a publicly traded miner in a single month. Even more impressive, most of this hash rate was deployed in just the last few days. All 7.3EH/s is now deployed and operational.”
Polymarket Is Exploding
I’ve put together a few charts detailing the impressive growth Polymarket is experiencing right now. I expect this trend to continue, especially if Biden drops out as the election nears. Not only is Polymarket providing a unique service unavailable anywhere else, but it is also effectively proving wrong anyone who claims that crypto has no use case.
$15 Billion Into Ethereum? | Here Is Why You Should Invest In ETH Right Now!
Join Matt Hougan, the CIO of Bitwise, as we are discussing the upcoming launch of the Ethereum ETFs. Should you buy ETH right now? Join the show! Chris Inks will join us in the second part to share some interesting trades in crypto and beyond.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.