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In This Issue:
What Type Of Investor Are You?
Bitcoin Thoughts And Analysis
Legacy Markets
Checkout These Heat Maps
$100k By Year-End Is Possible
Donald Trump To Speak At Bitcoin Conference
Goldman Sachs Is Ready For Tokenization
The CFTC Disagrees With The SEC
Ethereum ETFs Are Coming – Here's What Bloomberg Experts Predict!
What Type Of Investor Are You?
Broadly speaking, investors in any market can be categorized into two types:
Fear-driven investors: These individuals constantly anticipate the next 5% correction, fearing it could trigger a more aggressive downturn.
Fear-averse investors: These individuals are comfortable with a 5% correction and remain unperturbed even in the face of steeper downturns.
To break this down further, each type can be divided into subsections:
Fear-driven investors:
Active Dollar-Cost Averagers: Willing to dollar-cost average during corrections.
Reluctant Averagers: Claim to be willing to dollar-cost average, but are never fully satisfied with the market conditions to do so.
Fear-averse investors:
Opportunistic Buyers: Purchase investments whenever they have spare cash, regardless of market conditions.
Long-term Holders: Invest with a long-term perspective and remain unperturbed by short-term market fluctuations.
Generally, within this oversimplified framework, opportunistic buyers and long-term holders are best suited for bull markets, while active dollar-cost averagers are more suited for bear markets. As for reluctant averagers, don’t be that guy.
Given that we're in a risk-on bull market, let's break down fear-averse investors further.
Fear-averse Opportunistic Buyers:
Strategic Opportunistic Buyers: Allocate funds into investments whenever they perceive a favorable opportunity, regardless of market conditions.
Tactical Opportunistic Buyers: Take advantage of short-term dips or corrections to deploy cash into investments, aiming to capitalize on temporary downturns for potential gains.
Fear-averse Long-term Holders:
Strategic Long-term Holders: Maintain a steadfast approach, holding investments for extended periods to align with long-term financial goals and investment strategies.
Tactical Long-term Holders: Balance a long-term perspective with occasional portfolio adjustments based on market conditions or evolving investment opportunities.
Are you still with me? Good. Try to pinpoint your style within this framework.
To clarify, all these investor categories can potentially achieve high success. Even the most reluctant investor could capitalize on significant drawdowns if they can muster the confidence to act decisively when opportunities arise—easier said than done.
That said, I would argue that the ideal archetype for crypto is the fear-averse strategic opportunistic buyer. This investor doesn’t succumb to fear or obsess over market conditions but instead actively seeks out opportunities for investment.
If I had to choose names that fit this description, Paul Tudor Jones and Stanley Druckenmiller would be prime examples. Both exemplify disciplined decision-making, a keen awareness of market sentiment, and the ability to capitalize on opportunities presented by economic and market volatility. They are known for their readiness to take substantial risks when warranted, displaying a level of calculated boldness that far exceeds what most investors are willing to consider.
Returning to the different archetypes, understanding your investment style offers several advantages. Firstly, knowing whether your approach thrives in a bull or bear market enables you to adjust risk levels effectively and anticipate potential profits. Moreover, understanding your strengths can boost confidence when the market aligns with your strategy.
For investors prone to fear, embracing dollar-cost averaging is crucial to avoid market underperformance. Conversely, fear-averse investors should be wary of heightened greed and consider strategically selling assets from time to time.
While the ideal archetype may be appealing, most investors are better off as long-term holders, sticking to a plan that aligns with their skills and interests. Excelling at a chosen strategy is more important than the strategy itself.
One more time: Excelling at a chosen strategy is more important than the strategy itself.
The S&P 500, QQQ, Nasdaq Composite, and Dow Jones Industrial Average are all at all-time highs. Sooner or later, Bitcoin is poised to experience a similar surge, with spillover from these indexes driving the sector much higher. Stocks are signaling what’s to come; we just need to be patient and wait our turn. Bitcoin has much more room for growth, with an incomparable upside.
Learn your investment style and plan accordingly.
Bitcoin Thoughts And Analysis
DAILY CHART
Yesterday’s daily candle was decidedly ugly, closing with a long wick up and a clear rejection at the 200 MA. That said, an ugly candle requires confirmation, which means another… ugly candle. Right now we are looking good for day.
Generally the analysis has not change… need to clear resistance and get back in the range. The bullish divergence is still valid.
Legacy Markets
US equity-index futures were steady as traders awaited inflation data, anticipating potential Federal Reserve interest rate cuts. Contracts on the S&P 500 and Nasdaq 100 remained unchanged after both indices reached all-time highs, driven by gains in Nvidia and Apple. Fed Chair Jerome Powell indicated rate cuts could occur even if inflation isn't below 2%. The core CPI is expected to rise by 0.2% in June. Swaps predict two Fed cuts in 2024, possibly starting in September.
Costco rose over 3% in premarket trading after raising its membership fee, while PepsiCo slipped due to weaker-than-expected revenue. Investors await Delta Air Lines' earnings for insights on consumer health, with major banks reporting later in the week.
Goldman Sachs strategists noted concerns over high spending on AI by US tech megacaps, suggesting valuations may need to be justified by revenue and earnings growth. European stocks gained, led by utilities and consumer products, while Taiwan Semiconductor reached record levels in Asia. The British pound strengthened against the dollar following better-than-expected UK economic growth in May.
Oil prices increased as US crude inventories fell, and gold continued its upward trend.
Key events this week:
US CPI, initial jobless claims, Thursday
Fed’s Raphael Bostic and Alberto Musalem speak, Thursday
China trade, Friday
University of Michigan consumer sentiment, US PPI, Friday
Citigroup, JPMorgan and Wells Fargo’s earnings, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.1% as of 6:30 a.m. New York time
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average fell 0.2%
The Stoxx Europe 600 rose 0.4%
The MSCI World Index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro rose 0.2% to $1.0850
The British pound rose 0.2% to $1.2877
The Japanese yen was little changed at 161.55 per dollar
Cryptocurrencies
Bitcoin rose 1.6% to $58,299.67
Ether rose 1.4% to $3,140.08
Bonds
The yield on 10-year Treasuries was little changed at 4.28%
Germany’s 10-year yield advanced two basis points to 2.55%
Britain’s 10-year yield advanced three basis points to 4.16%
Commodities
West Texas Intermediate crude rose 0.3% to $82.34 a barrel
Spot gold rose 0.5% to $2,382.77 an ounce
Check Out These Heat Maps
This first map is Bitcoin. It’s pretty interesting that 64.8% of nodes are unidentifiable. In most cases, a privacy tool is masking their locations.
The next map is Ethereum. A cluster of green dots transitions into a yellow, then red, blob. Feel free to click on either map for more details; the links are attached.
$100k By Year-End Is Possible
Matt Hougan’s Weekly CIO Memo beautifully outlines the bigger market picture and makes a solid case for why Bitcoin will end this year in the 6-figure territory.
Here’s a breakdown of short-term headwinds facing the market:
Mt. Gox Distributions
Silk Road Sales
German Government Sales
“Consider: $8 billion from Mt. Gox, $12 billion from Silk Road, $2 billion from Germany … that’s a lot of Bitcoin. Making matters worse, these sales and distributions began in earnest over the July 4 holiday week, which is typically a low-liquidity time for crypto. This amplified the impact and led to large liquidations in the futures market, further pressuring prices.”
Here’s a breakdown of the long-term tailwinds facing the market:
Extraordinary Inflows Into Spot Bitcoin ETPs
The Bitcoin Halving
Spot Ethereum ETFs
A Sea Change in Washington’s Attitude Towards Crypto
Fed Rate Cuts
“Add strong growth in stablecoins, big developments in Layer 2s, institutions like BlackRock moving deeper into the space, and more, and it’s one heck of a setup. The right mix of developments in the second half of the year could easily drive Bitcoin to $100,000 and push Ethereum to new all-time highs.”
Matt Hougan delivers high-quality, concise market overviews. If you enjoyed this, sign up for his weekly memo.
Donald Trump To Speak At Bitcoin Conference
Rumors that Trump would be present in Nashville have been confirmed, a story that Mario Nawfal and I broke for The Street. Regardless of your feelings for either candidate, it is clear that Bitcoin is on the docket and that this is bullish for the space.
Nashville is going to be wild.
Goldman Sachs Is Ready For Tokenization
Goldman Sachs plans to launch three tokenization projects by the end of the year, specifically targeting major institutional clients. While specific details about these projects have not been disclosed, the bank aims to convert real-world assets into digital tokens, create a marketplace for tokenized assets, enhance transaction speeds, and diversify collateral types.
What sets Goldman Sachs apart from competitors like BlackRock and Franklin Templeton is its focus on institutional rather than retail clients and its use of private blockchains instead of public ones. Although many would prefer Goldman to build on the Ethereum network, any engagement with blockchain technology is a positive step and may potentially integrate with public initiatives in the future.
Goldman’s first tokenization project is set to launch in the U.S.
The CFTC Disagrees With The SEC
Chairman of the CFTC, Rostin Behnam, recently testified before the Senate Agriculture Committee to discuss the status of cryptocurrencies. Behnam asserted that 70-80% of tokens in the crypto market are not securities, a stance that significantly diverges from SEC Chairman Gary Gensler's claim that the “vast majority” of cryptocurrencies are securities.
Behnam highlighted that an Illinois court ruled Bitcoin and Ethereum are commodities under the jurisdiction of the CFTC, a position the CFTC fully supports. He emphasized the need for new legislative authority for the CFTC to address the risks posed by this unregulated market to U.S. investors.
The stark disagreement between the SEC and CFTC on the classification of cryptocurrencies underscores the urgent need for regulatory clarity in this rapidly evolving sector.
Ethereum ETFs Are Coming – Here's What Bloomberg Experts Predict!
Join Eric Balchunas and James Seyffart, Bloomberg ETF analysts, as we discuss the upcoming launch of the Ethereum ETFs!
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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.