The Wolf Den #1063 - Tools To Improve Your Investing
Here are a few...
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In This Issue:
Tools To Improve Your Investing
Bitcoin Thoughts And Analysis
Legacy Markets
You Can Read The Michael Saylor/Bernstein Transcript HERE
Kamala Harris Is Totally Missing The Point
Tether Is Exploring A New Business Model
Galaxy Research Released This Scorecard
Bitcoin's Massive Pump: Will Uptober Push Prices Even Higher? | Macro Monday
Tools To Improve Your Investing
Yesterday was an interesting day—despite no significant news, the crypto market surged. Could this be a sign that we're nearing the point where the market is ready to trend upwards without the need for positive news? One can hope.
Today, I want to swiftly go through a collection of random thoughts and images that will enhance our understanding of where we are in the cycle. There's a lot to cover, and I'll be moving quickly, so let's dive in.
I’ve never shared this tool before, but I think it’s interesting. On Blockchaincenter.net, there's a feature called “Dollar Cost Averaging Returns Since…,” which does exactly what its name suggests. While the cryptocurrencies being assessed may be outdated, the concept remains incredibly valuable for illustrating just how powerful and profitable dollar-cost averaging can be. It’s really that simple.
The real reason I shared that image, though, was to set the stage for the next one. I know it's a bit blurry and many of the coins are outdated, but you can still grasp the overall message.
“Everybody should know what ‘Dollar Cost Averaging’ (DCA) is. But what if you would have taken your hard-stacked Satoshis and “Satoshi Cost Averaged” into other coins. Here are the returns to your Satoshi Stack.”
If this chart is ever updated or remade with more relevant coins, I would expect it to unfold much like this one, with popular coins from previous cycles. Trading your Bitcoin for altcoins rarely proves to be a winning strategy. The goal for any trader should be either A) stacking cash (though this is a less desirable approach to trading), or B) taking profits and stacking Bitcoin. Once your Bitcoin is secured, it should stay in the piggy bank because of its superior risk/reward potential.
This next image doesn’t offer a lot of analytics or data points, but it’s something you should keep in mind when forming judgments in this space.
I find the mid-curve meme useful to some extent, but how often do we hear statements like "99.9% of crypto projects will fail" or "99.9% of crypto traders will lose money"? This sentiment is echoed frequently in the crypto community. Yet, isn't it interesting how often we gloss over the subtle implications of this claim? The irony is that while many confidently cite this high failure rate, they might inadvertently be part of the very statistic they mention. This applies to both ends of the bell curve.
The 99.9% fallacy tends to hit hardest with those who aren’t raw beginners or seasoned experts—it’s most prevalent among the intermediates. These are the individuals still working to refine their understanding of the space. They’ve grasped some of the crypto intricacies but often overlook their own limitations. As a result, they’re convinced that their choices are the exception, the rare 0.1% destined for success. They believe they're going to make it. Newsflash: most likely, you aren't!
Being ahead of the curve doesn’t guarantee immunity from potential pitfalls. Just because I'm discussing the 99.9% fallacy doesn't mean I'm exempt from it. The same flawed logic applies to anyone who assumes they're in the 0.1%, while everyone else is in the 99.9%. This is precisely why Bitcoin makes up the majority of my portfolio. If I’m going to be wrong, it would mean the entire crypto space collapses. That would be a terrible outcome, but at least I would have failed in the safest possible way.
Bitcoin is like an insurance policy—not just against the depreciation of fiat, but against the inevitable failure of altcoins destined to trend toward zero. Don’t let anyone convince you that Bitcoin is a mid-curve investment. It will shield you from the 99.9% of everything else.
Up next, I want to revisit one of my favorite price model charts, which I haven't checked in a while because Bitcoin hasn't made any major moves recently.
The original ‘Rainbow Chart’ has been replaced with an updated model, so I’ll put my focus there.
For starters, here’s an explanation of how the new Rainbow 2023 model works.
We fitted two curves: one that best fits all of Bitcoin’s highs (in red) and one that accounts for the lows (in blue). The rest is interpolated to create this beautiful rainbow chart, which will hopefully have a brighter future than the old one.
Currently, with Bitcoin priced around $66,000, it’s just emerging from the 'still cheap' zone, sitting above 'accumulate' but still below 'HODL.' It won’t hit the 'HODL' zone until it reaches about $80,000, and around $105,000, it will enter the 'Is this a bubble?' territory. Beyond that, the 'FOMO intensifies' zone starts at $135,000, 'Sell, seriously sell' kicks in at $175,000, and 'Maximum bubble territory' begins at $229,000. Keep in mind, these values are based on today’s timeline, and as time progresses, these thresholds are likely to increase, improving the chances that we’ll reach them—assuming this chart holds true.
And of course, I couldn’t skip Ethereum!
Ethereum is currently in the 'still cheap' zone but is close to entering 'Steady...' at $2,770. Beyond that, the 'HODL' zone begins at $4,018, followed by 'Is this The Flippening?' at $5,849, 'But have we earned it?' at $8,536, and 'Maximum Bubble Territory' at $12,235. Given ETH’s recent underperformance, I believe there’s a strong likelihood it will outperform in the latter half of the cycle, particularly in Q1 when altcoins historically gain momentum. Additionally, just like Bitcoin, as time progresses, these targets will adjust upward, providing even higher potential price milestones.
One story that did emerge yesterday, which I want to clarify, is the rumor that Larry Fink supposedly said, "Bitcoin will become the size of the housing market." He didn’t actually make this statement. The rumor originated from the article linked below, but there’s no real evidence supporting it, and it’s important to avoid misinformation.
He did say the following, “I’m not sure if either president would make a difference. I truly don’t believe it’s a function of regulation. It’s a function of liquidity [and] transparency. We believe Bitcoin is an asset class in itself.”
Larry Fink is clearly thinking with a long-term perspective, which is why he stated that it doesn’t matter who wins the election. I also believe that, in the long run, Bitcoin is on its way to a million, regardless of the outcome of this or the next election. However, I do disagree with the notion that the election doesn’t matter in the short term. If Trump were to fire Gary Gensler on day one and replace him with someone pro-crypto and supportive of innovation, this could have a significant impact in the short term. Altcoins would thrive, lawsuits against crypto projects could be dropped, and ETFs would evolve—imagine Solana ETFs and staking on ETH ETFs.
On another note, it looks like Uptober might finally be kicking off.
I took this screenshot when BTC was trading at $65,800. Maybe, just maybe, we’re finally starting to see some momentum. And to think, we’re only up 3.8% for the month—peanuts compared to the average and median monthly gains. Plus, we’ve got a situational edge: the odds of a favorable election outcome paired with an 8-month sideways/downtrend. All the right pieces are falling into place. Tick, tock.
Typically, price movements are driven by news, so it’s interesting that we didn’t see much happening yesterday. However, once the market finally breaks out of this trend, you can expect the media, announcements, and news to kick into high gear—it’s only a matter of time.
Bitcoin Thoughts And Analysis
We have a clearly defined local resistance at $65,550, exactly where the move in mid September was stifled. Price is squarely above the 200 and 50 MAs now, so most resistance is broken. Still, I want to see price above $65,500 and really $70,000 to think much of this recent move.
Legacy Markets
US equity futures held steady as robust earnings from Bank of America reassured investors, following strong reports from JPMorgan Chase and Wells Fargo last week. S&P 500 and Nasdaq 100 futures were little changed, with Bank of America shares rising in premarket trading after exceeding expectations for trading revenue and increasing net interest income. Investors are now awaiting earnings from Citigroup, Goldman Sachs, and Netflix later in the week, remaining optimistic despite lowered profit forecasts.
Oil prices dropped below $75 a barrel following reports that Israel will delay attacking Iranian oil facilities, causing energy stocks to fall. In Europe, the Stoxx 600 index slipped 0.2%, weighed down by declines in energy and beauty stocks. Meanwhile, the yen strengthened near the key psychological level of 150 against the dollar, with the risk of intervention in focus.
Analysts expect the earnings season to be strong, partly due to lowered expectations, with a year-over-year growth consensus around 4%. Early results suggest that Corporate America is benefitting from lower rates at the start of the Federal Reserve's easing cycle.
Key events this week:
Goldman Sachs, Bank of America, Citigroup earnings, Tuesday
Fed’s Mary Daly, Adriana Kugler speak, Tuesday
Morgan Stanley earnings, Wednesday
ECB rate decision, Thursday
US retail sales, jobless claims, industrial production, Thursday
Fed’s Austan Goolsbee speaks, Thursday
China GDP, Friday
Fed’s Christopher Waller, Neel Kashkari speak, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.2% as of 10:14 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index fell 0.2%
The MSCI Emerging Markets Index fell 0.8%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0908
The Japanese yen rose 0.5% to 149.06 per dollar
The offshore yuan fell 0.4% to 7.1263 per dollar
The British pound was little changed at $1.3070
Cryptocurrencies
Bitcoin fell 0.4% to $65,619.2
Ether fell 0.4% to $2,610.05
Bonds
The yield on 10-year Treasuries declined three basis points to 4.07%
Germany’s 10-year yield declined four basis points to 2.23%
Britain’s 10-year yield declined four basis points to 4.19%
Commodities
Brent crude fell 4.5% to $73.97 a barrel
Spot gold rose 0.1% to $2,651.85 an ounce
You Can Read The Michael Saylor/Bernstein Transcript HERE
If you have the time, definitely give this a read! It’s a masterclass in answering the question, “Why Bitcoin?” while also revealing the full MSTR playbook. As the predictions for Bitcoin and MSTR come to fruition, this interview will be studied for decades, with its insightful quotes and perspectives. When it comes to Bitcoin education, it doesn’t get much better than this.
Kamala Harris Is Totally Missing The Point
Kamala Harris has been increasingly talking about crypto, but she’s not really saying anything meaningful—just proving she doesn’t understand the issue while seemingly fishing for votes. Last month, in her 80-page economic layout, she said, “It will also encourage innovative technologies like AI and digital assets while protecting our consumers and investors.” Now, this month, she’s bringing the issue up in the context of black men.
It baffles me that Kamala Harris actually thinks crypto has anything to do with race or gender. It's a complete misunderstanding of the technology and the movement behind it. By design, cryptocurrency is permissionless, decentralized, open-source, and non-discriminatory. You could argue there's an information gap, where some groups are exposed to the technology sooner or in more informative ways, but even that seems like a stretch in the U.S.
Here’s what she said in her latest statement:
“Drawing on insights from her experience throughout her career and her Economic Opportunity Tour, today Vice President Harris is laying out an Opportunity Agenda for Black Men to provide them with the tools to achieve financial freedom, lower costs to better provide for themselves and their families, and protect their rights. This pathbreaking agenda includes: Supporting a regulatory framework for cryptocurrency and other digital assets so Black men who invest in and own these assets are protected.”
“Enabling Black men who hold digital assets to benefit from financial innovation. More than 20% of Black Americans own or have owned cryptocurrency assets. Vice President Harris appreciates the ways in which new technologies can broaden access to banking and financial services. She will make sure owners of and investors in digital assets benefit from a regulatory framework so that Black men and others who participate in this market are protected.”
It’s hard to tell, based on her most recent commentary, whether she’s pro-crypto or against it. It seems more like an attempt to pander to specific groups without offering a clear stance or any real understanding of cryptocurrency’s broader implications.
Tether Is Exploring A New Business Model
Tether is reportedly exploring opportunities in US dollar lending and commodity trading. What we know so far is that the company has been in talks with firms in the commodity sector, which often face difficulties securing credit, particularly smaller players. The advantage of borrowing from Tether is that it can provide funding without the stringent regulations that traditional lenders face, potentially speeding up payments and trades. While these discussions are still in the early stages, Tether CEO Paolo Ardoino has confirmed their interest in expanding into commodity trading, viewing it as a significant future opportunity. However, the firm hasn’t disclosed any specific investment plans yet.
Tether is generating an incredible amount of cash, so much so that it’s struggling to keep up—a great problem to have. It’s still hard to believe that in 2023, Tether made $700 million more in profit than BlackRock.
Galaxy Research Released This Scorecard
Galaxy Research released a scorecard evaluating Biden, Harris, and Trump on various crypto issues, presenting their scores side-by-side. Since a screenshot would be too difficult to read here, I've paraphrased the most important points.
The scoring categories include SEC, Treasury - BSA, Treasury - Sanctions, IRS/Tax Issues, Bitcoin Mining, Self-Custody, Banking Regulators, FIT21, and Stablecoin Legislation.
Crypto Policy & Legislative Comparison of Biden, Harris, and Trump
Trump/Vance's Scores:
5/9: Extremely supportive
2/9: Somewhat supportive
1/9: Neutral
1/9: Somewhat hostile
Harris/Walz's Scores:
1/9: Extremely hostile
3/9: Somewhat hostile
2/9: Leans in direction of hostile
2/9: Leans in direction of positive
1/9: Somewhat supportive
Biden/Harris
5/9: Extremely hostile
1/9: Somewhat hostile
1/9: Neutral
1/9: Leans in direction of hostile
1/9: Leans in direction of positive
For the full write-up on where exactly these politicians stand, check out the report linked above. While Harris and Walz represent a significant step in the right direction compared to Biden and Harris, Trump and Vance still outshine them by a substantial margin—it's not even close.
Bitcoin's Massive Pump: Will Uptober Push Prices Even Higher? | Macro Monday
Join Dave Weisberger, Mike McGlone, and James Lavish as we break down what's happening in macro and crypto!
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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.