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In This Issue:
Let’s Catch Up
What’s Going On At Binence? Binance USD Transfers Come To A Screeching Halt
The State of The World - Bank of America Prepares For Debt Default
On The Ethereum Front - LIDO Finance Gets An Upgrade
NGRAVE Made This For You - Take This Free Security Test
Sunday Will Not Be The Crypto Bowl
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Every Unregulated Token Will Go To Zero | Kevin O’Leary
Let’s Catch Up
The crypto market has been on a tear in 2023. Since Bitcoin’s push past the psychological $20,000 mark, prices for the majors have been fairly quiet. Altcoins have churned and sloshed, with a bull run for AI coins and some other popping randomly. Other than that, Ethereum has sat quietly around the $1,600 mark and the market seems to be once again consolidating for another big move.
In light of this, I have decided to incorporate noteworthy news and events directly into the introduction today, as they are likely to have a significant impact on the market's long-term trajectory. I will provide the normal analysis and charts after this extended intro.
Prior to delving into the market analysis, it is worth mentioning the recent remarks made by Powell at the Economic Club of Washington D.C. His comments stirred a commotion in traditional markets and he stated, "The process of disinflation has commenced, but it still has a considerable way to go. These are the early stages of disinflation, and the reality is that we will react to the data as it becomes available."
Here’s the news.
What’s Going On At Binence? Binance USD Transfers Come To A Screeching Halt
I chose to address this story first as it has garnered much attention and remains shrouded in mystery. The ramifications of this development on the market and the timeline for Binance's full return to operation are yet to be seen.
As of today, Binance users have temporarily lost the ability to make deposits and withdrawals using U.S. dollars. It is important to note that this suspension only applies to a small portion of Binance's USD activity and does not affect the Binance.US platform. The sudden announcement of the suspension, without any explanation, has led to speculation that it may be related to Signature Bank discontinuing support for cryptocurrency transactions.
The timing of this news is intriguing and could have had devastating effects had it been released during Binance's recent reserve concerns. However, the market has remained stable, and CZ has attempted to quell concerns by stating that all other methods of buying and selling cryptocurrency remain unaffected. He also acknowledged the inconvenience for the 0.01% of monthly active users who rely on USD bank transfers and apologized for the poor user experience.
This could be a small win for Coinbase, and other US based exchanges.
The State of The World - Bank of America Prepares For U.S. Debt Default
The significance of remarks such as these cannot be overemphasized. Regrettably, I am aware that this will be one of those stories that receive fleeting attention and be forgotten in a matter of hours.
Lawmakers are currently deadlocked regarding the US debt ceiling. Democrats are pushing to raise the borrowing rates, while Republicans are resisting and advocating for spending cuts. The problem is that one party wants to kick the can further down the road and the other wants to light the can on fire.
It turns out, the can is beyond repair.
Bank of America’s CEO had some choice words on the situation in an interview yesterday. “We have to be prepared for that (US debt default), not only in this country but in other countries around the world. You hope it doesn’t happen, but hope is not a strategy — so you prepare for it. The company is preparing as it would in a natural disaster.”
The founder of Bridgewater Associates, Ray Dalio, characterized the debt ceiling situation as "a group of alcoholics who write laws to enforce drinking limits, and when the limit is reached, they engage in a farcical negotiation that temporarily eliminates the limit, allowing them to have the next drinking binge until they reach the next limit, at which point they go through the next farcical negotiation and continue to binge."
The likelihood of an "intentional default" is increasing. On January 19th, the US government reached its debt ceiling of $31.4 trillion, and with Republicans controlling the House and Democrats controlling the Senate, resolving the issue will not happen quickly. Both parties can argue, then blame the other until the situation worsens. Meanwhile, the unemployment rate is at a 53-year low, so not everything is terrible, but piercing the debt ceiling and defaulting will certainly have serious market ramifications, worth observing closely.
On The Ethereum Front - LIDO Finance Gets An Upgrade
Ethereum never fails to provide a compelling narrative. While Bitcoin may be quiet at times, Ethereum steps up and takes the lead. There is a real possibility that Ethereum could one day overtake Bitcoin and establish its own independent trajectory. Despite the opposition from Bitcoin enthusiasts, both Bitcoin and Ethereum are vital to the cryptocurrency world.
The recent developments in the Ethereum ecosystem are truly remarkable. The community has once again come together to support a major protocol upgrade, and LIDO Finance, the most popular Ethereum staking platform, is playing a leading role. The Lido V2 upgrade, which is aimed at preparing for the Shanghai Hardfork, represents a significant step towards decentralization. It includes two key components: diversifying the validator pool through a new routing system and enabling stETH holders to initiate withdrawal processes.
While the upgrades must undergo voting procedures due to the Lido governance model, there is no reason to believe that they won't pass. Additionally, the Ethereum community has assessed Lido's performance and identified areas for improvement, which the Lido V2 upgrade specifically addresses. The stage is set for Ethereum to move forward, and it is only a matter of time before institutions embrace staking. All upgrades are expected to be launched in conjunction with the Shanghai hard fork.
NGRAVE Made This For You - Take This Free Security Test
NGRAVE has launched its annual Crypto Security Self-Audit Campaign and is offering a free assessment to evaluate the safety of your crypto storage methods. The quick quiz provides personalized results and takes only a few minutes to complete. There are no hidden motives or drawbacks, and the insights you gain will only serve to benefit you.
It's important to answer truthfully, as there's always room for improvement when it comes to securing your crypto portfolio. Despite its growing importance, the mindset of "nothing can happen to me" still persists among investors. Don't take chances with your crypto investments, take your security seriously and take this quiz.
Remember, protecting your crypto should be a top priority, so treat it as if your life depends on it.
Sunday Will Not Be The Crypto Bowl
This Sunday's Super Bowl will not feature crypto commercials, unlike last year's event that had some impressive advertisements from companies like FTX, Coinbase, and Crypto.com, each spending a hefty $6.5 million. The absence of crypto ads this year is due to various reasons… so alcohol and packaged food ads that are deemed safe by mainstream standards are set to take center stage. There has been speculation about whether the NFL has banned crypto commercials or the deals simply fell apart. However, there are expected to be a few NFT commercials. Given the budget cuts many platforms are facing, the lack of centralized crypto commercials is understandable.
Bitcoin Thoughts And Analysis
Bitcoin price has effectively been 23K for the past two weeks, and continues to trade at the same price as when I left for my trip last week. We can zoom in and attempt to analyze small moves, but really we are waiting for the next meaningful move to either side to determine where to be positioned in the short term.
As you can see, the Bollinger Bands have rapidly tightened and are once again extremely close together. We normally get further consolidation when this happened, but either way, tight bands lead to big breakouts.
What is encouraging to me is the fact that RSI has been able to largely reset without price dropping significantly. Sideways price action and consolidation can give indicators the opportunity to cool off for another leg, and that is what we are seeing here. It is a sign of actual bullishness.
I see no reason to reverse course for now - the trend is your friend until the end. The market remains in “buy the dip” mode, so let’s hope we get a real dip to buy.
Altcoin Charts
This is the MATIC weekly chart, giving us a wide view of what is going on. If you have been following along, we have already seen a 30% move from the .95 cent area and the flip of the 50 MA. Price clearly broke the down trend and is now testing key resistance at $1.307.
This is not the place to buy, technically. Now you are looking for dips or for a break of resistance and a flip to support. If that happens, sky is the limit. I currently have an alarm set for a break of $1.3.
This is my largest Altcoin holding.
Legacy Markets
European Stocks Climb on Earnings; Futures Slip: Markets Wrap
Stocks gained momentum on Tuesday as a result of positive earnings reports from Europe and a late rally on Wall Street. The Stoxx Europe 600 index saw an increase with Equinor ASA and ABN Amro NV among those reporting better-than-expected earnings. The US futures were lower despite the rally, led by the tech-focused Nasdaq 100. Meanwhile, a benchmark of Asian shares rose, with gains in Australia and South Korea, while Chinese stocks underperformed. Treasury yields and the dollar gauge also saw a decrease.
Federal Reserve Chair Jerome Powell spoke positively about the economy, stating that disinflation has started and that further rate hikes may be necessary if the job market remains strong. These remarks echoed his comments from the FOMC meeting last week and relieved traders who were expecting the Fed chief to be more aggressive. Jone Foley, head of FX strategy for Rabobank, increased her expectations for US interest rates to reach 5.5% and commented that stock market investors ignored the hawkish tone in Powell's comments.
Adani Enterprises saw a second day of gains, following a decline caused by Hindenburg Research's negative report two weeks prior. Distressed debt and hedge fund investors have started purchasing Adani company bonds. Moody's reported that the Indian banks' exposure to the Adani Group is not substantial enough to affect their credit quality.
In other markets, oil extended its gains from a 4.1% surge on Tuesday, which was the biggest one-day move since November, boosted by an increase in demand from China. The European earnings outlook is improving with upgrades outnumbering downgrades for the first time in nearly three months. The stock market seems to be taking a dovish stance, with investors focusing on the slowing manufacturing, goods prices, and supply chain repairs in the US. Despite the decline in headline inflation, it may be difficult to bring it down to 2%.
Key events:
US wholesale inventories, Wednesday
New York Fed President John Williams is interviewed at Wall Street Journal live event, Wednesday
US initial jobless claims, Thursday
ECB President Christine Lagarde participates in EU leaders summit, Thursday
Bank of England Governor Andrew Bailey appears before Treasury Committee, Thursday
US University of Michigan consumer sentiment, Friday
Fed’s Christopher Waller and Patrick Harker speak, Friday
Stocks
The Stoxx Europe 600 rose 0.7% as of 9:09 a.m. London time
S&P 500 futures fell 0.2%
Nasdaq 100 futures fell 0.1%
Futures on the Dow Jones Industrial Average fell 0.2%
The MSCI Asia Pacific Index rose 0.6%
The MSCI Emerging Markets Index rose 0.5%
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.3% to $1.0754
The Japanese yen rose 0.3% to 130.72 per dollar
The offshore yuan was little changed at 6.7905 per dollar
The British pound rose 0.4% to $1.2095
Cryptocurrencies
Bitcoin was little changed at $23,192.42
Ether rose 0.2% to $1,671.59
Bonds
The yield on 10-year Treasuries declined three basis points to 3.65%
Germany’s 10-year yield advanced two basis points to 2.37%
Britain’s 10-year yield declined one basis point to 3.31%
Commodities
Brent crude rose 1.1% to $84.57 a barrel
Spot gold rose 0.6% to $1,884.77 an ounce
Every Unregulated Token Will Go To Zero | Kevin O’Leary
Kevin O’Leary believes there is too much “poo-poo” in the crypto ecosystem and predicts we will soon see a lot of new bankruptcies. He openly doubts the solvency of Binance and says the majority of tokens will be flushed out. In this episode, we talked about the FTX collapse and its consequences, regulation, AI excitement, and Kevin’s watch collection and its relation to SWIFT and stablecoins.
In this episode with Mr. Wonderful, we discussed:
What has changed since FTX
Is BNB token next to go bankrupt?
Long way to go to flush out the garbage
Heavy-handed senators
No institutional interest in crypto
10,000 tokens are worthless
The poo-poo token
BNB - subsequent big collapse?
Kevin’s watch collection, Swift, and stablecoins
The regulation of stablecoins and crypto
AI excitement
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.