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In This Issue:
Trading Is Hard
Bitcoin Thoughts And Analysis
Legacy Markets
Budget Neutral Bitcoin Acquisition Strategies
Banks Are Becoming More Crypto-Friendly
El Salvador Is Aggressively Buying Bitcoin
David Sacks Rejects Allegations
DeFi Is About to Explode – Stani Kulechov Reveals What’s Coming
Trading Is Hard
Trading is hard.
Day trading is especially challenging because losses can be immediate and come with real-world consequences. In contrast, learning an instrument means enduring off-key notes, shooting a basketball often leads to airballs that simply need to be rebounded, and in painting, early mistakes are just layers beneath the final masterpiece.
In most endeavors, there’s room for correction without immediate penalty – not when it comes to trading real money.
One of the biggest pitfalls for new traders is getting caught up in immediate results and short timeframes, driving themselves mad and blurring the bigger picture. While practicing on a one-minute chart can be helpful, it’s crucial not to lose sight of the long-term perspective, even if your goal is to become an experienced trader.
The best way to illustrate this advice is with a real-world example: Imagine an investor who, after years of success, decides it's time to test his skills on a shorter time frame. This is a reasonable move – though I’d never say it’s easy. If a long-term investor has a proven track record and the time to commit to learning the craft, I’d encourage it, with the disclaimer that it will be difficult and the odds are against you.
This is the profile of our successful investor: He is expected to achieve an average return of 10% in excess of Treasury bills, with a 10% error rate per annum. On a bell curve sampling 100 possible paths, we can expect 68.27% of them to fall between 0% and 20% returns, and 95% of all sample paths to fall between –10% and 30% returns.
Our investor’s returns are far from average; he is a success story. As you can see on the bell curve above, the mean return of 10% is at the center, with zero positioned one standard deviation to the left, aligning with what I mentioned earlier. Additionally, this return is in excess of Treasury Bills, which would currently equate to an average return of roughly 13% to 15% per year.
Our investor, eager to bring his skills over to trading, decides to create a spreadsheet to track his winning and losing trades. Obviously, a smart move, right? This spreadsheet is designed to be a live tracker, pinned to his screen, updating instantly and flashing red and green every second, providing real-time feedback.
Given we know the investor’s returns follow a normal distribution with a mean of 10% and a standard deviation of 10%, the odds of having a profitable year (a return greater than 0%) are approximately 84%. Remember, this probability is based solely on the overall return distribution and does not depend on the number of trades made.
For any given month however, the odds of the investor having a profitable month (a return greater than 0%) are approximately 61.36%. This is based on the monthly adjusted mean return and standard deviation, assuming the returns follow a normal distribution. Another way of saying this is that the return of any individual month is expected to be more volatile than years.
Likewise, for any given week, the odds of the investor having a profitable week (a return greater than 0%) are approximately 55.51%. This is based on the weekly adjusted mean return and standard deviation, assuming the returns follow a normal distribution. Building on the previous paragraph, the return of any individual week, should be expected to be even more volatile than any given month.
As we approach any given day, hour, minute, or second, the percentage we are calculating will trend closer and closer to 50%. This is because, at shorter time frames, the fluctuations in returns become smaller compared to the average, and the probability of a positive or negative return becomes nearly equal.
The math demonstrates that shorter time periods show more volatility and less predictable outcomes. Over these brief intervals, it's nearly impossible to differentiate between the most skilled investors and the worst, as the fluctuations in returns are too random and minor to reveal true skill. As time frames shorten, the probability of positive or negative returns approaches 50%, making success seem like a coin toss.
Going back to our investor, the once highly successful individual is now likely at risk of losing his confidence as he logs each trade into an Excel sheet, watching his screen flash red and green throughout the day. Previously spoiled by steady year-over-year gains, he now finds himself weighed down by the constant stream of minute-to-minute losses.
I can’t speak for you individually, but most investors who internalize the daily wins and losses of day trading struggle to see the bigger picture. It wouldn’t be surprising if our investor starts to interpret these short-term failures as evidence that he’s terrible at day trading, unaware that he’s actually outperforming most traders. Frustration takes hold, and before he gathers a large enough sample over time, self-doubt and emotional decision-making drag down his overall performance.
The constant pressure and short-term focus push him toward impulsive decisions, causing him to abandon proven strategies and ultimately sabotage the success he once consistently enjoyed over longer time frames. Obsessing over every detail marks the beginning of a day trader’s downfall. In the crypto market, where trading never stops, the temptation to grind and overanalyze is even harder to resist. Unlike legacy markets, which force breaks on holidays and weekends, crypto offers no such relief.
As long as you're aware of this phenomenon, you’ll be largely protected from its negative effects. Don’t let the flashing red and green shake your confidence but be mindful not to let it psychologically throw you off course. Be a long-term investor before being a day trader!
Before I wrap up this newsletter, I want to highlight up here, one news announcement that I think didn’t catch enough attention yesterday:Our investor’s returns are far from average; he is a success story. As you can see on the bell curve above, the mean return of 10% is at the center, with zero positioned one standard deviation to the left, aligning with what I mentioned earlier. Additionally, this return is in excess of Treasury bills, which would currently equate to an average return of roughly 13% to 15% per year.
Our investor, eager to bring his skills over to trading, decides to create a spreadsheet to track his winning and losing trades. Obviously, a smart move, right? This spreadsheet is designed to be a live tracker, pinned to his screen, updating instantly and flashing red and green every second, providing real-time feedback.
Given that we know the investor’s returns follow a normal distribution with a mean of 10% and a standard deviation of 10%, the odds of having a profitable year (a return greater than 0%) are approximately 84%. Remember, this probability is based solely on the overall return distribution and does not depend on the number of trades made.
For any given month, however, the odds of the investor having a profitable month (a return greater than 0%) are approximately 61.36%. This is based on the monthly adjusted mean return and standard deviation, assuming the returns follow a normal distribution. Another way of saying this is that the return of any individual month is expected to be more volatile than years.
Likewise, for any given week, the odds of the investor having a profitable week (a return greater than 0%) are approximately 55.51%. This is based on the weekly adjusted mean return and standard deviation, assuming the returns follow a normal distribution. Building on the previous paragraph, the return of any individual week should be expected to be even more volatile than any given month.
As we approach any given day, hour, minute, or second, the percentage we are calculating will trend closer and closer to 50%. This is because, at shorter time frames, the fluctuations in returns become smaller compared to the average, and the probability of a positive or negative return becomes nearly equal.
The math demonstrates that shorter time periods show more volatility and less predictable outcomes. Over these brief intervals, it's nearly impossible to differentiate between the most skilled investors and the worst, as the fluctuations in returns are too random and minor to reveal true skill. As time frames shorten, the probability of positive or negative returns approaches 50%, making success seem like a coin toss.
Going back to our investor, the once highly successful individual is now likely at risk of losing his confidence as he logs each trade into an Excel sheet, watching his screen flash red and green throughout the day. Previously spoiled by steady year-over-year gains, he now finds himself weighed down by the constant stream of minute-to-minute losses.
I can’t speak for you individually, but most investors who internalize the daily wins and losses of day trading struggle to see the bigger picture. It wouldn’t be surprising if our investor starts to interpret these short-term failures as evidence that he’s terrible at day trading, unaware that he’s actually outperforming most traders. Frustration takes hold, and before he gathers a large enough sample over time, self-doubt and emotional decision-making drag down his overall performance.
The constant pressure and short-term focus push him toward impulsive decisions, causing him to abandon proven strategies and ultimately sabotage the success he once consistently enjoyed over longer time frames. Obsessing over every detail marks the beginning of a day trader’s downfall. In the crypto market, where trading never stops, the temptation to grind and overanalyze is even harder to resist. Unlike legacy markets, which force breaks on holidays and weekends, crypto offers no such relief.
As long as you're aware of this phenomenon, you’ll be largely protected from its negative effects. Don’t let the flashing red and green shake your confidence – but be mindful not to let it psychologically throw you off course. Be a long-term investor before being a day trader.
Before I wrap up this newsletter, I want to highlight one news announcement that I think didn’t catch enough attention last week:
Tokenized COIN will launch on Base, an Ethereum Layer 2, or Ethereum’s mainnet. It wouldn’t make sense for Coinbase to do this on Solana, given that they operate their own L2 on Ethereum. When it happens, this will be major news, as it will be one of the first tokenization efforts at a large, publicly accessible scale – likely the very goal Coinbase is aiming for.
For Coinbase to pull this off, I highly, highly, highly doubt tokenization will stop at COIN. Tokenizing all sorts of popular equities will naturally follow, unlocking a massive capital rotation into DeFi. Imagine checking your equity portfolio on-chain, staking your shares for a small yield, lending and borrowing against them – then trading them for other equities.
This has the potential to be a much-needed narrative to relieve alt pain. There’s so much to tokenize that Ethereum, Solana, Ondo, and other chains can all find massive success without worrying about competition – there’s more than enough to go around.
Bitcoin Thoughts And Analysis
Bitcoin’s daily chart shows a key technical shift with the loss of the 200-day moving average (red line), which is now acting as resistance. The 200 MA had been a crucial support level throughout the recent correction, but Bitcoin failed to hold above it, reinforcing bearish pressure.
Price dropped as low as $80,027 before bouncing strongly, indicating buyers are stepping in at lower levels. However, the 200 MA will remain a major barrier that bulls need to reclaim to shift momentum back in their favor.
A potential bullish divergence is emerging on the RSI – price made a lower low, but RSI held a higher low and is now rising from oversold territory. This would be confirmed with a clear upward elbow on the RSI and a higher close today, which could signal that the downtrend is losing strength.
Volume on the recent bounce has been relatively strong, suggesting that buyers are defending lower levels. For bulls to regain control, Bitcoin needs to close back above the 200 MA and reclaim the $85,000 support level. Failure to do so could lead to a retest of the recent lows around $80,000 - or down to the low 70s as many are predicting.
Legacy Markets
Global stocks dropped as fears over U.S. economic growth mounted following President Donald Trump’s protectionist policies and cuts to the federal workforce. Futures for the S&P 500 fell 1.2%, while Nasdaq 100 futures slid 1.4%, with Tesla and Nvidia among the biggest premarket losers. Tesla dropped 3% after reporting a steep decline in China shipments, and other tech megacaps followed suit. Treasuries rallied, pushing 10-year yields down by six basis points, signaling rising concerns that the U.S. economy could stall. Bloomberg’s dollar index remained near four-month lows, while gold held steady after last week’s 2% rise.
Trump’s recent comments that the U.S. economy is entering a “period of transition” have added to market uncertainty, with Treasury Secretary Scott Bessent warning of potential economic disruption and ruling out any policy intervention to support stocks. Analysts at Morgan Stanley and JPMorgan are now warning of downward pressure on corporate earnings due to tariffs and spending cuts. Morgan Stanley’s Michael Wilson predicts the S&P 500 could decline by 5% in the first half of the year before recovering later.
The downturn extended to global markets, with Europe’s Stoxx 600 falling 0.7% and MSCI’s world index down 0.3%. Cryptocurrency-related stocks also fell as Bitcoin extended its losses for a fifth straight session. Coinbase dropped after S&P Dow Jones excluded it from the S&P 500, while DoorDash rose after being added to the index. With uncertainty surrounding tariffs, government spending cuts, and corporate earnings, markets face continued volatility as investors seek clarity on the economic outlook.
Key events this week:
Australia consumer confidence, Tuesday
Japan GDP, household spending, money stock, Tuesday
US job openings, Tuesday
Canada rate decision, Wednesday
Japan PPI, Wednesday
US CPI, Wednesday
Eurozone industrial production, Thursday
US PPI, initial jobless claims, Thursday
France CPI, Friday
Germany CPI, Friday
UK industrial production, Friday
US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 1.2% as of 8:03 a.m. New York time
Nasdaq 100 futures fell 1.4%
Futures on the Dow Jones Industrial Average fell 1%
The Stoxx Europe 600 fell 0.6%
The MSCI World Index fell 0.1%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro rose 0.2% to $1.0853
The British pound was little changed at $1.2927
The Japanese yen rose 0.6% to 147.11 per dollar
Cryptocurrencies
Bitcoin rose 0.5% to $83,499.35
Ether rose 3.9% to $2,127.61
Bonds
The yield on 10-year Treasuries declined six basis points to 4.24%
Germany’s 10-year yield declined four basis points to 2.80%
Britain’s 10-year yield declined two basis points to 4.62%
Commodities
West Texas Intermediate crude rose 0.5% to $67.38 a barrel
Spot gold fell 0.2% to $2,904.63 an ounce
Budget Neutral Bitcoin Acquisition Strategies
Trump’s executive order, titled “Establishment of the Strategic Bitcoin Reserve and United States Digital Asset Stockpile,” proposes acquiring Bitcoin through government-held BTC, provided the strategies remain budget-neutral. Crypto Twitter wasted no time proposing all sorts of “budget neutral” methods to acquire Bitcoin and I compiled a large list below. Exploring and sharing these ideas will encourage officials to consider innovative, outside-the-box solutions.
Trump should accept BTC in the SBR for the “Gold Card.”
Fund BTC buys with profits from seized crypto sales.
Trade U.S. Treasuries for BTC with major institutions.
Sell off government waste via DOGE to fund BTC purchases.
Launch Bitcoin-backed government bonds.
Reward miners for selling BTC to the government.
Settle tax debts with BTC payments.
Partner with private firms for strategic BTC acquisitions.
Use a 2% Bitcoin rewards card for federal spending to stack BTC at no taxpayer cost.
Allocate surplus from the Treasury’s ESF to buy BTC.
Revalue gold to market price and sell a portion to fund BTC purchases.
Offer tax breaks for BTC donations to the reserve.
Use tariff revenue, like ASIC import fees, to acquire BTC.
Mine BTC using wasted energy or subsidize such mining operations.
Implement a crypto trading tax to fund the BTC reserve.
Banks Are Becoming More Crypto-Friendly
The OCC confirmed that federally regulated banks can engage in cryptocurrency activities, including custody, stablecoin services, and running nodes, without prior approval. Below are the key topics from the interpretive letter along with an official statement.
“The OCC published Interpretive Letter 1183 to confirm that crypto-asset custody, certain stablecoin activities, and participation in independent node verification networks such as distributed ledger are permissible for national banks and federal savings associations. The letter also rescinds the requirement for OCC-supervised institutions to receive supervisory nonobjection and demonstrate that they have adequate controls in place before they can engage in these cryptocurrency activities.”
El Salvador Is Aggressively Buying Bitcoin
Despite financial pressures from the IMF, El Salvador acquired 13 BTC since March 1, increasing its treasury to over 6,105 BTC, valued at $527 million. The country typically buys 1 BTC daily but purchased 5 BTC on March 3. This comes after a $1.4 billion IMF loan agreement in December 2024, which required El Salvador to rescind BTC’s legal tender status and reduce public sector involvement with Bitcoin. Nayib Bukele knows he will take the last laugh in this saga when Bitcoin trades at $200,000 and $300,000 plus and no longer needs aid from the IMF and can sustain itself from its Bitcoin position. From the chart below, you can see El Salvador bought 5 Bitcoin instead of the usual one per day. Bukele is fully committed to Bitcoin and not intimidated by the IMF.
David Sacks Rejects Allegations
David Sacks will likely forgo nearly a billion dollars in potential gains after honorably divesting around $200 million in crypto assets. Yet, he still faces criticism and false accusations of pumping his own bags. It’s a shame, as he has played a key role in advising Trump on refining the executive order to focus on Bitcoin. Not only did Sacks sell his crypto holdings, but he also divested from Bitwise, Multicoin Capital, and Blockchain Capital.
“We cleared that before day one, paid taxes on it, and basically said there wouldn’t be a conflict. The scrutiny then shifted; people claimed that even if he didn’t own crypto, he was still invested in crypto funds. When it comes to crypto, there are going to be fluctuations in the market. You never want someone to be able to point at one of those fluctuations and say somehow that the cryptos are benefited from that and create a conspiracy theory, which is exactly what basically happened.”
Once Bitcoin rises, these false accusations will be quickly forgotten, and Sacks will be praised—despite the fact that he’s already doing an outstanding job now.
DeFi Is About to Explode – Stani Kulechov Reveals What’s Coming
DeFi isn't dead—it's just working better than ever. In this episode of The Wolf Of All Streets, we sit down with Stani Kulechov, CEO of Aave, to break down why DeFi is still booming under the surface, how institutions are quietly moving in, and why boring and reliable beats hype and failure every time. If you're wondering when DeFi will reach its full potential and whether meme coins are just a distraction, this conversation is a must-watch.
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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.