The Wolf Den #592 - Keeping Up With The SEC
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In This Issue:
Keeping Up With The SEC
Bitcoin Thoughts And Analysis
Legacy Markets
The United Nations Wants The Money Printer Turned On
Mashinsky Withdrew $10M
Normalize Staking
My Recommended Platforms And Tools
Keeping Up With The SEC
The era of celebrities promoting crypto is grinding to a halt. The social media world woke up in shock to learn that their queen, Kim Kardashian, was being charged by the SEC for promoting EthereumMax, without disclosing the fact that she was compensated to do so.
Of course, because it was Kim K, the SEC made a huge deal out of the charges, with a Twitter post and additional “educational video." To be fair, EthereumMax was arguably the most egregious crypto "scam" ever promoted by big name celebrities.
In June 2021, Kim Kardashian posted the following message on her Instagram stories:
Are You Guys Into Crypto?
This Is Not Financial Advice But Sharing What my Friends Just Told Me About The Ethereum Max Token! A Few Minutes Ago Ethereum Max Burned 400 Trillion Tokens - Literally 50% Of Their Admin Wallet Giving Back To The Entire E-Max Community.
#EMAX #DISRUPTHISTORY #ETHEREUMMAX #AD
Everyone went crazy. But Kim was not alone. Paul Pierce and Floyd Mayweather were both promoting the token as well. Floyd Mayweather actually showed up to the Bitcoin 2021 Conference in an EthereumMax shirt and was asked to take it off backstage.
For anyone that understands the basics of crypto, the celebrity push for EthereumMax was an obvious marketing ploy, but for those that didn't know anything, well… it likely looked like a great investment opportunity.
Celebrities are paid every day to promote products, financial and otherwise.
And the laws surrounding celebrity promotion in crypto are vague at best.
Kim did include “#Ad” in her post, making it clear that she was paid to promote the token. Her team likely believed that this was sufficient disclosure, and most would agree. Kim Kardashian and her team take her reputation seriously, so breaking the law for a paid promotion made little sense.
She failed to specifically disclose that she was paid a quarter of a million dollars to promote the token, which most people did not realize was the law until... yesterday.
Here is what the SEC had to say.
“The federal securities laws are clear that any celebrity or other individual who promotes a crypto asset security must disclose the nature, source, and amount of compensation they received in exchange for the promotion. Investors are entitled to know whether the publicity of a security is unbiased, and Ms. Kardashian failed to disclose this information.”
I certainly believe that Kim's team used poor judgment choosing to promote E-Max. But I also disagree that the law surrounding promotion of crypto assets is clear, as stated by the SEC. Like everything in crypto in the United States, the laws are confusing and regulators seem to clarify them with enforcement after the fact.
The charging of Kim Kardashian is a slippery slope. Should Matt Damon be sued for appearing in a crypto commercial during the Super Bowl? It was also clear that he was compensated, but he did not say how much in the commercial. Of course he promoted an exchange and not a specific "security," but you get the point.
CoinTelegraph highlighted the same idea.
Regardless, if there was any doubt as to the SEC's stance, it has been cleared up moving forward.
The SEC is not playing around when it comes to crypto.
Bitcoin Thoughts And Analysis
WEEKLY CHART
This is the weekly BTC/USDT linear chart, which shows that Bitcoin is approaching a key descending trend line that would signal the end of the bear market. You will likely see this chart all over twitter and YouTube.
But... I ALWAYS use logarithmic charts.
This is what the log chart looks like. Less exciting, right?
Here is how investopedia describes the difference.
Logarithmic price scale—also referred to as log—represents price spacing on the vertical or y-axis dependent on the percentage of change in the underlying asset's price. This is usually the default chart style.
Linear price scale—also referred to as arithmetic—represents price on the y-axis using equidistant spacing between the designated prices. Linear charts display absolute values.
The reason most people use Log charts is that they account for the percentage change in price. A Bitcoin move from $1,000 to $2,000 is a 100% gain on a $1,000 increase. That is NOT the same as a $1,000 increase from $20,000 to $21,000, which is merely 5%. Logarithmic charts account for this.
My conclusion? There's little to see on the weekly for now. In fact, I was traveling for two weeks and the price has not changed.
DAILY CHART
The daily gives us a bit more insight as to how little is going on. Price continues to trade around the 2017 bull market all time high at $19,666. The 50 MA (blue) is once again in play as resistance, so it's hard to get excited with price still below. Even a break above has been a poor signal of late.
The descending black line is a confirmed resistance, with 3+ touches. A break of that line would signal a likely move to $25K. That's what I will be watching for at the moment.
Legacy Markets
A rally in global markets extended into a second day, lifting US index futures and European stocks, as investors wagered central banks will have to slow the pace of monetary tightening.
Key events this week:
Eurozone PPI, Tuesday
US factory orders, durable goods, Tuesday
Fed’s John Williams, Lorie Logan, Loretta Mester, Mary Daly speak at events, Tuesday
Eurozone services PMIs, Wednesday
OPEC+ meeting begins, Wednesday
Fed’s Raphael Bostic speaks, Wednesday
The Reserve Bank of New Zealand meets, Wednesday
Eurozone retail sales, Thursday
US initial jobless claims, Thursday
Fed’s Charles Evans, Lisa Cook, Loretta Mester speak at events, Thursday
US unemployment, wholesale inventories, nonfarm payrolls, Friday
BOE Deputy Governor Dave Ramsden speaks at event, Friday
Fed’s John Williams speaks at event, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 2.1% as of 9:39 a.m. London time
Futures on the S&P 500 rose 1.5%
Futures on the Nasdaq 100 rose 1.8%
Futures on the Dow Jones Industrial Average rose 1.3%
The MSCI Asia Pacific Index rose 2.2%
The MSCI Emerging Markets Index rose 1.6%
Currencies
The Bloomberg Dollar Spot Index fell 0.3%
The euro rose 0.5% to $0.9872
The Japanese yen fell 0.1% to 144.75 per dollar
The offshore yuan rose 0.6% to 7.0649 per dollar
The British pound rose 0.5% to $1.1374
Cryptocurrencies
Bitcoin rose 1.8% to $19,940.47
Ether rose 1.9% to $1,349.14
Bonds
The yield on 10-year Treasuries declined six basis points to 3.58%
Germany’s 10-year yield declined 10 basis points to 1.82%
Britain’s 10-year yield declined 10 basis points to 3.87%
Commodities
Brent crude rose 0.6% to $89.39 a barrel
Spot gold rose 0.4% to $1,707.31 an ounce
The United Nations Wants The Money Printer Turned On
The United Nations has effectively advised central banks to stop raising interest rates because of the risk of a global recession. This is interesting timing, considering the growing rumors of an investment bank on the brink of collapse, intense bond volatility, and currencies in free fall.
Will the Fed stick to their guns?
Likely, as the UN does not affect monetary policy. That said, the market seems to be pricing in a potential pivot.
Sadly, continuing to tighten the monetary supply hurts developing countries the most. Here’s a quote from the UN’s secretary general: “this is a matter of policy choices and political will. But the current course of action is hurting the most vulnerable, especially in developing countries, and risks tipping the world into a global recession.” Also included in the report was this alarming statistic: “overall, 46 developing countries are severely exposed to multiple economic shocks and another 48 are seriously exposed, increasing the threat of a global debt crisis.”
Mashinsky Withdrew $10M
Alex Mashinsky withdrew $10M from Celsius just weeks before withdrawals were frozen. The news was originally reported by the WSJ and included unnamed sources, so there's at least a shred of doubt to the veracity of the story. Either way, the optics are poor amid an already disastrous situation.
Normalize Staking
Deutsche Telekom, the parent company of T-Mobile, has partnered up with StakeWise to host Ethereum validator nodes. It's only a matter of time until more major companies host an Ethereum node or mine Bitcoin as a side endeavor. By doing so, they can strengthen the network, contribute to a new financial system in which they will inevitably participate, and earn some extra revenue.
This is big news.
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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.
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