The Wolf Den #656 - Know Thy Enemy
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In This Issue:
Know Thy Enemy
Bitcoin Thoughts And Analysis
Legacy Markets
Kitco Interview
India Provides A Bottom Signal
Stablecoins Are Absorbing Global Finance
Bitcoin's Difficulty Adjustment
This Web3 Club Sells $100,000 NFT Memberships | Lucas Foertsch, House Of Muse
Know Thy Enemy
Sometime during the period between 475 and 221 B.C.E., Sun Tzu wrote "The Art of War." This ancient Chinese military treatise is considered by many historians to be one of the greatest works on warfare ever written. Sun Tzu, a high-ranking military general, knew how to win a battle, and his work has transcended time, philosophy, and disciplines.
In "The Art of War," Sun Tzu states, "Know thy enemy and know yourself; in a hundred battles, you will never be defeated. When you are ignorant of the enemy but know yourself, your chances of winning or losing are equal. If ignorant both of your enemy and of yourself, you are sure to be defeated in every battle."
Today, Sun Tzu's work is studied and appreciated by sports coaches, business leaders, and even crypto investors around the world. The last part of that statement might have caused a chuckle, but in all seriousness, nobody knows the figurative war more than crypto believers, who are fighting ideological enemies on all fronts.
Recently, one such enemy was captured by the Bitcoin army. Peter Zeihan, was busted on the Joe Rogan podcast for the crimes of slander, lies, defamation, and dissent against Bitcoin. In line with Sun Tzu, let's "know thy enemy."
There’s no intrinsic value to this asset and now it's starting to be priced appropriately. Bitcoin is at $16,000, it has another $17,000 to go down. There’s no intrinsic value to this product.
It became an ideology and whenever you invest based on an ideology, you make decisions divorced from math. The people who really like crypto are convinced that it’s the currency of the future, a decentralized ledger is the way to go, anything controlled by a government entity is by definition a negative, and if it's done by the private sector freely, it would be better. That’s not how currency works. Currency is a method of exchange and a store of value. For that, there has to be a degree of trust. You have to have it managed in terms of volume.
One of the crazy things about Bitcoin is that there will never be more than X number of units of Bitcoin. By default, that means it can’t be used for trade. The whole idea of economic activity is that there is expansion, which means you need more currency to lubricate and manage that expansion. If a currency is locked into this specific number, you get monetary inflation, which is one of the fastest ways to destroy an economic model.
There is a lot that could be said to pick apart Peter's comments, but I am not going to fall into that trap. If we truly understand Peter, we know that he represents the old guard, peddling Keynesian economics, trying to fight on horseback against advanced modern weaponry. Let's watch him shoot himself in the foot with an arrow.
For Bitcoin to come out on top, as painful as it may be, we have to stop and listen to what detractors like Peter Zeihan have to say - we must know them to defeat them. But to engage in a battle with them is a lost cause. Naysayers like Peter rarely believe what they are saying. If they did, they would open up a short position on Bitcoin or any other high-beta crypto asset, and "comfortably" ride their lies into profit. However, no detractors actually do this because they are not actually doubting Bitcoin, they are just afraid of it.
That is the truth of our enemy. They don't doubt Bitcoin, they fear it.
If fear is their dominant feeling towards Bitcoin, then all we have to do is continue to disrupt the old way with positive chaos at every chance we get. A rising price is certainly one way to frighten our enemy, but to get them to retreat, we have to overwhelm them on all fronts. It isn't until Peter sees Bitcoin everywhere that we win. Once his bank accepts it, his financial advisor recommends it, and his friends and family own it, he will concede. He will have no choice.
That is the art of this war.
Our enemy is already on their heels, let's keep it that way.
Bitcoin Thoughts And Analysis
WEEKLY CHART
Wow.
That's about as impressive of a weekly candle as anyone could draw up.
Bitcoin has entirely recovered from the FTX dump, reaching almost exactly the same local high as before the news broke. That said, it would be nice to see Bitcoin break resistance and trade above that level, around $21,000.
Some retracement here would be no surprise, but it's impossible to ignore just how bullish this move has been.
DAILY CHART
This tweet sums up my thoughts on the daily chart. Absolutely bullish.
Legacy Markets
A gauge of global equities has faltered after its best start to a year in a generation as investors assessed whether the rally has gone too far in light of the outlook for inflation, growth and earnings. The MSCI ACWI Index slipped for the first time in seven days after posting the biggest advance for the first two weeks in data going back to 1988. Futures on the S&P 500 and Nasdaq 100 indexes fell at least 0.2% each. The dollar snapped a three-day losing streak. US spot markets were closed for a holiday and bond yields across Europe climbed. The World Bank has warned of "one of the sharpest slowdowns we have seen in the past five decades" due to aggressive policy tightening by the Federal Reserve and other central banks which could push the global economy into a recession.
Key events this week:
Earnings this week are scheduled to include: Charles Schwab, Discover Financial, Goldman Sachs, HDFC Bank, Interactive Brokers, Investor AB, Morgan Stanley, Netflix, Procter & Gamble, Prologis, State Street
World Economic Forum’s kicks off in Davos, Monday
US markets closed for Martin Luther King Jr. Day, Monday
China retail sales, industrial production, GDP, Tuesday
US Empire State manufacturing survey, Tuesday
Fed’s John Williams to speak, Tuesday
Eurozone CPI, Wednesday
US retail sales, PPI, industrial production, business inventories, MBA mortgage applications, cross-border investment, Wednesday
Bank of Japan rate decision, Wednesday
Federal Reserve releases Beige Book, Wednesday
Fed speakers include Raphael Bostic, Lorie Logan and Patrick Harker, Wednesday
US housing starts, initial jobless claims, Philadelphia Fed index, Thursday
ECB account of its December policy meeting and President Christine Lagarde on a panel in Davos, Thursday
Fed speakers include Susan Collins and John Williams, Thursday
Japan CPI, Friday
China loan prime rates, Friday
US existing home sales, Friday
IMF’s Kristalina Georgieva and ECB’s Lagarde speak in Davos, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.3% as of 1:01 p.m. London time
Nasdaq 100 futures fell 0.3%
S&P 500 futures dropped 0.2%
Futures on the Dow Jones Industrial Average fell 0.1%
The MSCI Asia Pacific Index fell 0.2%
The MSCI Emerging Markets Index was little changed
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.1% to $1.0818
The Japanese yen fell 0.4% to 128.40 per dollar
The offshore yuan fell 0.4% to 6.7417 per dollar
The British pound fell 0.3% to $1.2191
Cryptocurrencies
Bitcoin fell 0.5% to $20,810.78
Ether fell 0.7% to $1,541.1
Bonds
The yield on 10-year Treasuries was little changed at 3.50%
Germany’s 10-year yield advanced two basis points to 2.19%
Britain’s 10-year yield advanced four basis points to 3.41%
Commodities
Brent crude fell 0.5% to $84.83 a barrel
Spot gold fell 0.3% to $1,914.90 an ounce
Kitco Interview
I really enjoyed this conversation with David Lin from Kitco.
He asked extremely compelling and tough questions that made me consider my point of view in a way I had not before.
India Provides A Bottom Signal
This news is a two-for-one special: a bottom signal and demonstration of corruption in one. Over the weekend, Shaktikanta Das, India's central bank governor, called for a ban on cryptocurrencies and support for CBDCs - go figure. Below is what was said about cryptocurrencies:
"Every asset, every financial product has to have some underlying (value) but in the case of crypto, there is no underlying… not even a tulip…and the increase in the market price of cryptos, is based on make-believe. Please, believe me, these are not empty alarm signals. Crypto is 100% speculation or to put it very bluntly, it is gambling."
This isn't the first time the Reserve Bank of India has called for a crypto ban, the bank did so in July of last year, citing a "destabilizing" effect of this asset class on monetary stability. As a G20 nation, India will likely be a significant contributor to global crypto regulation moving forward and they have even started their own pilot program for their digital currency in cooperation with nine banks.
Stablecoins Are Absorbing Global Finance
This tweet leaves me speechless. In 2022, Tether processed more transactions than Mastercard and Visa and is likely on track to process more than both combined in 2023. Did you know that Visa is a $472 billion company and Mastercard is $361 billion? In comparison, Tether has just a $66 billion market capitalization and outdid them. Not only that, Visa was founded in 1958 and holds 39% of the global credit card market and Mastercard was founded in 1966 and holds 24%. The number of credit cards + debit cards these companies are responsible for is well over 1 billion. Stablecoins are taking over the world in real-time, right before our eyes.
Bitcoin's Difficulty Adjustment
The perfect storm caused Bitcoin's massive 10.26% difficulty jump. Bitcoin's hash rate was inches away from an all-time high, miners came back online due to the passing storm, Bitcoin's price exploded, and new machines were deployed. Also, since the previous difficulty dropped 3.6% in the last update, a large rebound was expected to continue the upward trend. Here are some compelling statistics for the month of December: Hive installed 1,423 machines, Riot deployed 16,128 machines, and Marathon will install 12,000 soon. In short, Bitcoin is very much alive, but public miners are still in a precarious situation.
This Web3 Club Sells $100,000 NFT Memberships | Lucas Foertsch, House Of Muse
Lucas Foertsch is building a new web3 co-networking membership space across the globe with the idea to unite artists, entrepreneurs, and web3 enthusiasts under one roof. Will he succeed? I surely hope so, as NYC’s pop-up web3 House Of Muse where we filmed this podcast is a really amazing place!
In this episode with Lucas Foertsch, we discussed:
House Of Muse
Web3 Club
Social Muse
Covid business
Future of House of Muse
NFT access
Bridging physical and digital art
Models & NFTs
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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