The Wolf Den #683 - Lessons Learned - A Look Back In Time
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In This Issue:
Lessons Learned - A Look Back In Time
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
The NBA Is Selling Securities?
Coinbase Released Its Earnings
Binance.US Likely To Buy Voyager
SEC And NYDFS Likely To Make The Voyager Purchase As Difficult As Possible
Lessons Learned - A Look Back In Time
The entirety of my knowledge is within these letters. Every day, I am grateful for the opportunity to work through my ideas and share them with each one of you. While new ideas emerge, old ones become buried deep within the Wolf Den Archive - a stack of 683 editions tall and counting. It's important to look back to prevent losing touch with the past, even amid the lightning speed of the crypto market. Today, I want to reflect on some of the older and even ancient ideas that I'm most proud of.
Each of the five sections below contains the newsletter name, lesson, and brief summary. You can access these letters through your inbox or Substack. Although not all letters copied over perfectly, they are saved, and nothing is lost. These lessons must be committed to memory or written down. They'll be most helpful in the market's chaos.
The Wolf Den #172 - Everyone Is A Genius In A Bull Market
Lesson - Anyone can be right and profitable in an upward-trending market.
Repeated small gains across rising assets are likely to give the false impression to new traders that they are consecutively profitable and skilled at trading. More than likely they are in the right place at the right time and are actually underperforming the market. For this reason, holding through a bull run is more profitable for a strong majority of people.
The Wolf Den #375 - Patience Pays Off
Lesson - Live to see another day and focus on doubling up.
I would rather take a slow and steady 2x on my investment portfolio than roll the dice and risk my hard-earned money. If you do feel that urge to gamble, it probably isn't worth your time because trades should only be taken with a very small percentage of your trading portfolio. The solution isn't adding more to make the investment 5% or 10% of your net worth. Usually, the answer is to walk away and find something else that looks better.
The Wolf Den #402 - Stacking Is The Name Of The Game
Lesson - Push very hard when the opportunity presents itself.
This is how I approach trading. I like to strike while the iron is hot. It doesn't work for everyone and requires being early and acting with conviction when others are fearful. It also means selling when others are finally jumping on the bandwagon and being willing to sit on your hands for long stretches.
The Wolf Den #486 - The Trader's Trap
Lesson - Do you want to be profitable or right?
Trading isn't like electing an official, measuring sugar for a soufflé, or following the law. Being right as a trader doesn't matter much at all. A good trader can be wrong 7 or 8 times out of 10 and still make a living by managing their position properly - small losses cut early, big wins that require patience. This is the result of caring about being profitable, rather than being right.
The Wolf Den #550 - The Contrarian Trap
Lesson - Being a contrarian is not enough, you must also be right.
Being a successful contrarian means questioning every herd you enter. It's a balancing act of constant reality checks to ensure contrarian thinking hasn't led you to a "contrarian trap."
These lessons offer valuable insights that traders and investors can use to navigate the volatile and rapidly changing world of cryptocurrencies. By remembering these lessons and drawing on their wisdom, traders can stay focused on what really matters - profitability, patience, and discipline - and avoid getting sidetracked by hype, fear, or herd mentality. Whether you are a seasoned trader or just starting out, these ideas can help you stay on track and make smart decisions that lead to success in the crypto market.
Bitcoin Thoughts And Analysis
Not much to say. Little has changed. Until Bitcoin is convincingly above $25,212, there’s not much to talk about.
Altcoin Charts
I took a look at quite a few altcoin chart requests in the back half of yesterday’s live stream.
My feeling was that things are looking generally shaky…
Legacy Markets
The stock market is in an interesting spot. The descending line that “everyone” was watching for weeks was just retested as support, after the breakout that we saw recently. This is also in confluence with the blue 50 MA on the daily chart.
This would be a logical place for a meaningful bounce after the past few days of pain.
Market Wrap
US equity-index futures rose as investors became more confident about the Federal Reserve's peak interest rate, with contracts on the S&P 500 and Nasdaq 100 climbing at least 0.4% each. Europe's equity benchmark also stopped a two-day loss after gains in global technology shares, with Nvidia Corp.'s bullish outlook sparking the advance. After months of divergence over the perceived path of monetary tightening, the Fed and markets are increasingly aligned in their expectations, reducing the scope for hawkish shocks.
The dollar and Treasuries traded lower, and Treasury yields rose across the curve, with the 10-year rate adding 3 basis points to 3.95%. Markets fully price in a 25 basis-point hike in March, but assign a 24% probability for a 50-point hike. US jobless claims data due Thursday may help shed light on the strength of the labor market, while Eurozone inflation data will help investors outline the health of the European economy.
Key events this week:
Eurozone CPI, Thursday
US GDP, initial jobless claims, Thursday
Atlanta Fed President Raphael Bostic speaks, Thursday
BOJ governor-nominee Kazuo Ueda appears before Japan’s lower house, Friday
US PCE deflator, personal spending, new home sales, University of Michigan consumer sentiment, Friday
Russia’s invasion of Ukraine hits the one-year mark, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.4% as of 5:49 a.m. New York time
Nasdaq 100 futures rose 0.7%
Futures on the Dow Jones Industrial Average rose 0.2%
The Stoxx Europe 600 was little changed
The MSCI World index was little changed
Currencies
The Bloomberg Dollar Spot Index was 0.1% lower
The euro was little changed at $1.0599
The British pound fell 0.1% to $1.2033
The Japanese yen was little changed at 134.92 per dollar
Cryptocurrencies
Bitcoin rose 2% to $24,270.63
Ether rose 2.8% to $1,664.54
Bonds
The yield on 10-year Treasuries advanced three basis points to 3.95%
Germany’s 10-year yield advanced three basis points to 2.55%
Britain’s 10-year yield advanced four basis points to 3.64%
Commodities
West Texas Intermediate crude rose 0.8% to $74.54 a barrel
Gold futures fell 0.4% to $1,833.60 an ounce
The NBA Is Selling Securities?
NBA Top Shot, an NFT platform where users can buy and sell unique digital collectibles of their favorite NBA players, has been at the center of a lawsuit filed by Jeeun Friel against Dapper Labs, the company behind NBA Top Shot. Friel alleged that Dapper Labs violated securities laws with the sale of digital collectibles. Dapper Labs argued that digital collectibles should not be subjected to securities laws, as they are no different from physical collectibles like trading cards.
After several months of back and forth between the two parties, Dapper Labs filed a motion to dismiss the lawsuit in an effort to put an end to the legal battle. However, a federal judge denied the motion, indicating that there is enough supporting evidence to hold a case. It's worth noting that this doesn't necessarily mean that NBA Top Shot "Moments" are securities, but it does suggest that the judge believes there is sufficient reason to proceed with the lawsuit.
This decision has left many in the NFT community concerned about the implications for the future of NFTs, particularly with regards to regulation. As NFTs continue to grow in popularity and become a more mainstream asset class, there are concerns about how they will be classified and regulated by governments and financial authorities. This case could set a precedent for how NFTs are treated under securities laws, and it may have far-reaching implications for the broader NFT market.
Here are a few quotes form the judge:
“In the most general terms, the Court is asked to assess whether Moments are more like cardboard basketball cards, i.e., commodities, or more like crypto tokens. As the ICO Cases reveal, tokens offered as part of ICOs often bear the hallmarks of a security.”
“Nevertheless, mindful of the purposive nature of Howey, the Court finds that Plaintiffs’ allegations render each consideration under Howey facially plausible and survive Defendants’ Motion to Dismiss the alleged violation of Sections 5 and 12 of the Securities Act.”
What hot garbage. These NFTs are no different than baseball cards. Are those securities now too?
Coinbase Released Its Earnings
Coinbase’s earnings offer a glimpse into the health and hype of the crypto market.
It is important to note that there are some key differences to consider when comparing Q4 of 2021 to Q4 of 2022. In Q4 of 2021, Bitcoin began and ended around $47,000 and peaked at $69,000. In contrast, in Q4 of 2022, Bitcoin started at $19,000, ended at $16,000, and dipped to $15,000.
Despite the volatility in the market, Coinbase has made notable strides towards expanding its offerings and cutting costs. The exchange is now supporting Circle’s Euro Stablecoin EUROC, which is expected to boost European adoption. Coinbase is also set to launch ETH staking withdrawals, which is likely to increase the total amount of ETH staked on the platform. However, this is all subject to regulatory scrutiny, particularly in light of Coinbase's recent announcement to cut about 30% of its workforce, as this could significantly impact the company's future bottom line.
The stats:
Loss of $2.46 per share, vs. a loss of $2.55 per share (expected)
Earnings of $629 million, vs. $590 million as expected by analysts
8.3 million monthly transacting users (MTUs) vs 8.5 in the period prior
Q4 of 2021, during peak adoption there was a net gain of $840m
Q4 of 2022 was a net loss of $557m
Annual net income -$2.6b in 2022 vs. +$3b in 2021
Subscription and services revenue +33% increase year-over-year.
USDC alone generated $146 million of interest income for Coinbase
You can read the Q4 earnings report HERE.
Binance.US Likely To Buy Voyager
An overwhelming majority of creditors, approximately 97%, have voiced their approval for Binance.US to acquire Voyager. The eagerly anticipated acquisition is set to be confirmed on March 2nd, the culmination of a voting process that concluded yesterday evening. Once finalized, Voyager will cease to exist in its current form, and its creditors will be directed towards Binance.US to initiate the recovery process. From Binance's perspective, the acquisition will yield a plethora of benefits, including procuring valuable assets, garnering significant publicity, and attracting a new user base.
SEC And NYDFS Likely To Make The Voyager Purchase As Difficult As Possible
Binance.US’s proposed $1.02 billion deal to purchase the assets of cryptocurrency lender Voyager has been opposed by the US Securities and Exchange Commission (SEC) and the New York State’s Department of Financial Services, which claims the purchase could be discriminatory and unlawful. The regulators have raised concerns that the plan could violate the prohibition on the unregistered offer or sale of securities, with particular emphasis on Voyager's VGX token. The SEC also noted media reports that Binance is expected to pay fines for past money laundering and corruption infractions, stating that it could render the deal unfeasible.
The Voyager deal had already faced opposition from the SEC, which had stated in a limited objection in January that there was not enough detail to show that Binance.US could afford the deal. The Federal Trade Commission is also reportedly probing Voyager, which filed for bankruptcy in July, for deceptive marketing. Voyager creditors had until February 23 to approve the deal, which would be confirmed on March 2 if it were to go ahead.
Do you want my opinion?
F*ck the SEC. F*ck the NYDFS. F*ck the Attorney General of NY. They are using Voyager creditors as pawns. Not only are they failing to protect anyone, they are actively working against the interests of people who are financially hurting already.
Holding up this process will cause financial harm to creditors, while forcing Voyager to spend more money on lawyers and defense. That money belongs to creditors.
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.
Over the years, when trading, two major factors of always seemed to keep me in-check: 1) price action and 2) volume. Monitoring those, and pushing most everything else to the back burner, has somewhat kept me simplified... And, well, sane. 🙃
Nice one 🔥