The Wolf Den #1107 - Dear Santa, Where's My Rally?
Pretty please?
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In This Issue:
Dear Santa, Where's My Rally?
Bitcoin Thoughts And Analysis
Altcoin Market Thoughts
Legacy Markets
Michael Saylor Released A Comprehensive Crypto Framework
ETF Upgrades Coming Soon?
Trump Nominates Another Pro-Bitcoiner
The 18-Day ETH Inflow Streak Is Over
Raoul Pal Predicts The Biggest Bitcoin & Crypto Boom Yet!
Dear Santa, Where's My Rally?
I have never written a letter to Santa. Who knows what I would have asked for in my younger years—probably a Schwinn Predator, a Sony Walkman, band tees, or Air Jordans.
Kids today, on the other hand, are asking for Fortnite V-Bucks, Roblox gift cards, and the latest iPhone. Thankfully, my children aren’t hooked on gaming, and the outside world still captivates their imagination. They know how to have fun without a screen, which feels increasingly rare.
It’s a bit ironic that my career revolves around the digital realm, yet I take pride in the fact that my kids remain largely disconnected from it. Of course, they’re more exposed to the online world than I ever was at their age, but the contrast is stark—the world is evolving at an incredible pace.
One clear sign of this transformation is Bitcoin’s performance: up 116% year-to-date, 1,207.84% over the past five years, and an astonishing 29,743% over the past decade. The reasons behind this growth could fill volumes of theoretical analysis, but at its core, it’s simple: the world is going digital.
The longer I reflect on it, the clearer it becomes—how could the most valuable asset in the world not be something accessible to anyone with an internet connection, governed by the people? It’s the natural evolution of finance, not just in terms of decentralization, scarcity, and empowering individuals, but in its sheer accessibility.
In what reality should a stock exchange that operates from 9 AM to 5 PM Eastern Standard Time in the world’s largest financial market be considered sufficient? It’s absurd that trading advantages are still tied to someone’s physical location. Why should investors on the other side of the globe adjust to our operating hours while those in the U.S. react to market news in real time?
The argument for standardized market hours doesn’t hold up. T-Mobile doesn’t restrict us from texting outside of business hours. Amazon doesn’t close its virtual doors when employees clock out. Netflix doesn’t stop streaming at night, and Spotify doesn’t pause music for convenience. So why do financial markets cling to outdated structures?
Consider the inefficiencies of buying a home: red tape, endless paperwork, and weeks of waiting. From title searches to escrow, every step is mired in inefficiency, driving up costs and delaying the process. Blockchain has the potential to revolutionize this system, offering immutable property records, automated contracts, and secure, real-time transactions.
The last decade was about proving the possibility of a digital financial world; the next will be about making it a reality. Imagine owning a share of a luxury hotel or investing in renewable energy without needing millions upfront or accreditation. Picture splitting the cost of a rare artwork through digital tokens or instantly selling a fraction of your home’s equity to cover an emergency—no refinancing required.
This is the future we’re building—a world our kids are already prepared for. While our generation is still adjusting, they’ll embrace the digital economy as effortlessly as we embraced the physical world of our childhood. We have the privilege of investing in, building, and shaping this future, while they’ll step into it as second nature.
I realize this isn’t much of a letter to Santa, but I hope it serves as a broader perspective on where we’re headed. These moments of reflection are especially valuable when markets are down. I wouldn’t change a thing about this industry or the progress we’ve made. Once-in-a-generation innovation always breaks through, iterates, and rises to the surface. Financial progress will be no exception, and we each play a small part in that journey.
This week is going to be a good one—just focus less on prices and more on family. After all, your loved ones and friends are the only truly scarce physical assets. Everything else is going digital.
Bitcoin Thoughts And Analysis
Key Observations:
Recent Price Action:
Last week’s candle was a large bearish engulfing candle, marking a significant rejection and pullback from the $108,000 zone.
Bitcoin has broken below the $99,860 support, which had previously acted as a key level during the rally. This level is now likely to serve as resistance.
Current price sits near $95,905, attempting to stabilize after the sharp sell-off.
RSI Analysis:
The RSI on the weekly timeframe is trending downward after reaching overbought levels (~80).
The RSI is currently sitting near 67, which is still bullish but indicates weakening momentum.
This decline in RSI aligns with the pullback in price, signaling a potential cooling-off period for Bitcoin's uptrend.
Volume:
Last week’s bearish candle was accompanied by high volume, confirming strong selling pressure.
This suggests that the pullback is not just a minor correction but a significant event that traders are actively responding to.
Support and Resistance Levels:
Support:
$89,000–$90,000: Key area and a psychological level where buyers might step in.
$73,835: Major breakout level from earlier in 2024, which remains a critical support zone in the event of further downside.
Resistance:
$99,860: Previously strong support, now flipped to resistance.
$108,000: Recent high and upper boundary for potential future attempts to reclaim bullish momentum.
Trend Structure:
The weekly structure remains bullish overall, with higher highs and higher lows intact.
However, the break below $99,860 signals a potential shift to short-term bearish momentum.
Key Considerations:
Last Week’s Candle:
The large bearish engulfing candle signals significant selling pressure at higher levels.
This type of candle often precedes further downside or at least a period of consolidation, especially when confirmed by strong volume.
Bearish Momentum:
The break below $99,860 combined with RSI dropping from overbought territory suggests a cooling-off phase in the uptrend.
Further downside to $89,000–$90,000 is likely before buyers step in to defend.
Long-Term Bullish Case:
Despite the short-term pullback, the macro trend remains bullish, with price still well above the 50-week SMA and prior breakout levels.
A retest of $89,000–$90,000 or even $73,835 would still align with a healthy correction in a long-term uptrend.
Bitcoin's weekly chart shows a significant pullback after a sharp rally, with RSI and volume confirming short-term bearish momentum. Immediate support lies at $89,000–$90,000, while $99,860 acts as key resistance. The broader trend remains bullish, but this correction could deepen before resuming the uptrend.
Quickly take a look at the 50 MA, the ascending blue line. That is clearly the key daily resistance for the moment. A decent morning is brewing, bouncing off that 50 MA, but we need to see it sustained throughout the day.
Altcoin Market Thoughts
Bitcoin Dominance and Altcoin Lag
Bitcoin has led the market rally, consistent with the typical 4-year cycle pattern where Bitcoin outperforms first, establishing dominance.
Altcoins historically follow Bitcoin, but currently, the broader altcoin market is lagging behind Bitcoin's performance.
“Alt Seasons” usually kick off in January.
Total market capitalization of altcoins (excluding BTC and ETH) is consolidating below major resistance levels, indicating a cautious sentiment among traders.
Technical Overview
Bullish Signals:
Altcoins are forming higher lows, suggesting early signs of recovery.
Major breakouts could occur if Bitcoin consolidates or moves sideways, allowing capital rotation into altcoins.
Bearish Risks:
Many altcoins are still below their 200-day moving averages, which remains a critical resistance level for bullish continuation.
Broad bearish divergences in relative strength indicators (RSI) for several altcoins suggest caution in entering aggressively.
Outlook
Short-Term:
Altcoins are likely to remain range-bound or show selective strength while Bitcoin leads the market.
Medium to Long-Term:
Once Bitcoin consolidates or peaks, altcoin season is expected, with capital rotation into high-beta altcoins.
Altcoins with strong fundamentals, narratives, and liquidity will likely lead the market.
Summary
The altcoin market is currently in a wait-and-see phase, following Bitcoin's lead but showing signs of selective outperformance in specific sectors. While broad participation is limited, there is significant potential for altcoins once Bitcoin consolidates. Focus on fundamentally strong projects and prepare for possible breakouts during the next phase of the market cycle.
Legacy Markets
Global markets showed mixed movements as investors assessed interest rate prospects and geopolitical factors. U.S. equity futures remained steady, with Nasdaq 100 contracts gaining 0.2% and S&P 500 futures little changed, following Wall Street's strong performance on Friday. Core PCE inflation data rose at its slowest pace since May, renewing hopes for deeper Federal Reserve rate cuts in 2025. Meanwhile, President Joe Biden's approval of funding legislation averted a U.S. government shutdown, securing operations until mid-March and leaving future spending decisions to President-elect Donald Trump.
In Europe, stocks edged higher, with the Stoxx 600 index climbing as Novo Nordisk rebounded from a record slump. However, European bonds weakened after ECB President Christine Lagarde emphasized persistent price pressures in the services sector. The euro-area economy is projected to grow modestly in 2025, with forecasts less optimistic than the ECB's outlook.
Asian markets broke a six-day losing streak, with South Korea and Taiwan leading gains, though the region’s currencies remain under pressure. Oil prices edged higher after a weekly drop, as traders reacted to Trump’s threats to reassert U.S. control over the Panama Canal. Investors globally remain cautious amid robust U.S. economic data, geopolitical uncertainties, and shifting monetary policies.
Key events this week:
Bank of Canada issues summary of deliberations, Monday
Mexico trade, Monday
RBA publishes minutes of Dec. rate meeting, Tuesday
Christmas Day, Wednesday
Bank of Japan Governor Kazuo Ueda addresses Keidanren council, Wednesday
US initial jobless claims, Thursday
Colombia’s central bank publishes minutes of rate meeting, Thursday
Japan Tokyo CPI, unemployment, industrial production, retail sales, Friday
BOJ publishes summary of opinions for December meeting, Friday
South Korean court to hold preliminary hearing on impeachment of President Yoon Suk Yeol over his martial law declaration, Friday
Brazil unemployment, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 6:08 a.m. New York time
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average fell 0.2%
The Stoxx Europe 600 rose 0.2%
The MSCI World Index rose 0.1%
Currencies
The Bloomberg Dollar Spot Index rose 0.3%
The euro fell 0.4% to $1.0393
The British pound fell 0.2% to $1.2546
The Japanese yen fell 0.3% to 156.81 per dollar
Cryptocurrencies
Bitcoin rose 1% to $96,076.18
Ether rose 1.8% to $3,340.61
Bonds
The yield on 10-year Treasuries advanced one basis point to 4.53%
Germany’s 10-year yield advanced two basis points to 2.30%
Britain’s 10-year yield advanced three basis points to 4.54%
Commodities
West Texas Intermediate crude fell 0.3% to $69.28 a barrel
Spot gold fell 0.2% to $2,617.40 an ounce
Michael Saylor Released A Comprehensive Crypto Framework
Before diving into the story, it’s worth emphasizing that Saylor’s contributions to this space have consistently remained open source—a commitment that doesn’t get nearly enough credit.
When you finish this newsletter, I recommend revisiting this segment and clicking the image above to read through the digital asset framework Saylor drafted, aimed at demonstrating how “The United States Can Lead the Global Digital Economy.”
This 5-part framework, titled “Digital Assets Framework, Principles, and Opportunity for the United States,” outlines the taxonomy of assets in the space, establishes rights and responsibilities for stakeholders, sets compliance goals, and highlights the vision and opportunities for the U.S. in this industry. It would benefit many lawmakers, both in the U.S. and abroad, to read this document.
This segment stood out because Saylor, the biggest Bitcoin bull, is making the case for tokenization and acknowledging assets beyond Bitcoin. While he didn’t name specific assets, this marks a notable shift in tone compared to the language we’ve grown accustomed to during Saylor’s Bitcoin journey.
Some of the figures in this segment are mind-blowing. In the second bullet point, Saylor projects the space to grow 100x, with digital assets increasing from $1 trillion to $590 trillion. Even if the space captures only half or a quarter of what he’s predicting, this still represents remarkable growth.
As a bonus to this segment on Saylor, I’ve included the post below, which features a savage and funny reply from Saylor—he truly is relentless on his Bitcoin mission.
ETF Upgrades Coming Soon?
I have the transcript of a brief clip where Hester Peirce essentially confirms that in-kind redemptions and ETH staking are likely to receive approval from the SEC. While there’s no specific timeline, her comment that these changes will be “posed to us early on” suggests that issuers might submit these proposals for review within one to two months of the new SEC chair assuming office. Although it’s challenging to predict how quickly the new administration will address crypto-related matters, it seems reasonable to anticipate improvements to existing products and progress on new ETF offerings by summer.
Interviewer: “How likely is something like that? Whether it’s in-kind redemptions with Bitcoin ETFs or ETH ETFs when it comes to staking. How likely are those changes?”
Hester Pierce: “Again, it’s something people raise with me pretty frequently. I imagine that question is going to be posed to us early on. I am open to reconsidering both in-kind and staking to think about how you can allow people to design products so that they are most useful to the investors in those products. If it changes to a majority of commissioners who want things to go through vs. a majority who don’t, then it’s easier.”
Trump Nominates Another Pro-Bitcoiner
I did some digging on Trump’s newest nomination, Stephen Miran, the chairman of the Council of Economic Advisers, and found this interview he did recently on a show called “The Bitcoin Layer.” This sounds pretty pro-crypto:
“One area that I think is going to be important to a lot of your listeners is financial regulation, which is excessively burdensome and prevents banks from lending into the economy as much as they would. I think, sometimes, it can really inhibit innovation in areas like the crypto economy. I am a huge believer in innovation, empowering the betterment of mankind, and increasing prosperity in ways that nobody can anticipate. You can always be a little surprised how things turn out. People don't predict how an invention like the internet, crypto, ATMs, or radar is going to change the world. And yet, things can develop in ways you don't expect. I think financial deregulation is going to be a powerful part of that, and crypto has a big role, potentially, to play in innovation and ushering in another Trump administration and economic boom.”
The 18-Day ETH Inflow Streak Is Over
It took a significant drop for the ETH inflow streak to finally break. On Thursday, December 19th, outflows totaled $60.47 million, followed by $75.12 million on Friday, December 20th. During the 18-day streak, I calculated that the ETH ETF brought in a remarkable $2.44 billion, with a single-day peak of $428.44 million on December 5th.
In the same period, Bitcoin experienced a 15-day streak of inflows, also totaling approximately $2.44 billion—but in three fewer days. The fact that Ethereum matched Bitcoin’s inflows, maintained its streak for three days longer, and accomplished this while representing only 21% of Bitcoin’s market share is nothing short of extraordinary.
Given that this marks the first sustained period of success for the ETH ETF, 2025 is shaping up to be a pivotal year for the product, especially with the anticipated news of in-kind redemptions and staking on the horizon.
Raoul Pal Predicts The Biggest Bitcoin & Crypto Boom Yet!
Get ready for an unforgettable conversation with Raoul Pal on The Wolf Of All Streets! We dive into the “banana zone,” the future of crypto regulation, tokenization, meme coins, and the unprecedented macro opportunities ahead. Join us as we decode market trends, the rise of technologists, and the next big moves in Bitcoin and beyond—don’t miss this alpha-packed episode!
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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.