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In This Issue:
The Secret To Being A Better Investor
Bitcoin Thoughts And Analysis
Legacy Markets
Market Wizards - Book Review
Americans Are Ready For Change
Lido Prepares For Massive Volatility
The Secret To Being A Better Investor
The world of cryptocurrency is fast-paced and ever-changing. Unlike with traditional markets, there are no investment police to protect investors. As a result, those who venture into the world of crypto must exercise caution and be extremely diligent when exploring the unfamiliar digital landscape.
To draw an analogy, consider the city of New York, where Bitcoin and Ethereum, the two most popular cryptocurrencies, can be compared to the posh and relatively safe neighborhoods of the Upper West Side and Soho. The streets are always lit up, residents smile, and crime is well below average.
Investing in other cryptocurrencies requires a bit more diligence, much like navigating the bustling city while avoiding the notorious bad neighborhoods.
Both in New York and in the world of crypto, it should be evident when one starts to enter the bad parts of town. The telltale signs include streets littered with trash, lights always off, and the unpleasant sight of someone publicly peeing in the corner. Just like being an outsider in these neighborhoods can be dangerous, exploring cryptocurrencies outside of Bitcoin and Ethereum can also be risky. As such, it's best to leave the dangerous parts of town to the experts and save one's money.
Moving on, my single favorite practical advice for investors looking to venture beyond Bitcoin and Ethereum is to be nosy.
Being Nosy
Given that there is no investment police to call in the world of crypto, it's wise to adopt the persona of a Karen on neighborhood watch, constantly vigilant and proactive. Here's how investors can do it:
When researching a crypto project, investors should first check whether the founders or contributors have doxxed themselves, meaning they've shared personal information about themselves online. This involves scouring their social media profiles on platforms like Facebook, LinkedIn, and Reddit. It's also worth googling their name in quotes to see what additional information pops up.
Once investors have identified the project's names, they should take a closer look at their GitHub accounts if available. A red flag to look out for is if they are juggling too many projects, which may indicate they're using a "hired gun" for development. This could lead to vulnerabilities and sub-par work, so it's important to scrutinize every detail and investigate every nook and cranny.
If investors are unable to find the names of the founders or contributors of a crypto project, it's essential to get in touch with someone on the inside. Joining Discord or Telegram and asking lots of questions is a great place to start. Investors shouldn't hesitate to be persistent in their inquiries because, at the end of the day, they are investing their own money. If no one is willing to answer their questions or direct them to where the information can be found, it's a red flag, and it's best to take their money elsewhere.
While asking questions, investors should look for other people doing the same and see if they can find any complaints. They should pay attention to how quickly the community addresses and resolves issues. An honest community will do everything it can to keep investors around. If they don't care about investors or cannot provide satisfactory answers, that's an indication that the investment may not be worth pursuing. It's best to search for FUD (Fear, Uncertainty, and Doubt) and consider it before becoming biased.
As investors, we have to do everything in our power to make difficult judgments with limited information. If it's possible to gather more information, then investors should do so as best they can. Investing is one of the few chances in life to make sound financial decisions, and it's encouraged to strategically seek out any potential red flags, raise a fuss, and gather information. The process may be tedious, but it's well worth the effort. Investors should let their imagination run wild with the possibilities of what sound investment decisions could lead to.
Bitcoin Thoughts And Analysis
There is absolutely nothing new to see here since yesterday, so I will not bore you with an update!
Legacy Markets
European stocks remained unchanged while euro-area bond yields surged on Tuesday as the region’s central bank prepared to battle price pressures from hot inflation reports. The Stoxx 600 saw little change after a 1.7% gain in February, while US contracts were rangebound following a solid day of gains on Monday for the S&P 500 and tech-heavy Nasdaq 100. Inflation in France and Spain continues to accelerate, increasing pressure on the European Central Bank to deliver more interest-rate hikes.
The fear of sticky inflation and hawkish central banks drove declines last week for both US and European stocks. Investors are becoming more pessimistic as they build short bets in both US and European equity futures, with wagers on a decline in the Euro Stoxx 50 tripling. Oil was set for a fourth straight monthly decline, while gold headed for its worst month since the middle of 2021. The Federal Reserve Governor Philip Jefferson confirmed that the central bank will firmly stand by its 2% inflation goal, while traders are now pricing US rates to peak at 5.4% this year.
Key events this week:
US wholesale inventories, Conf. Board consumer confidence, Tuesday
China manufacturing PMI, non-manufacturing PMI, Caixin manufacturing PMI, Wednesday
Eurozone S&P Global Eurozone Manufacturing PMI, Wednesday
US construction spending, ISM Manufacturing, light vehicle sales, Wednesday
Eurozone CPI, unemployment, Thursday
US initial jobless claims, Thursday
Eurozone S&P Global Eurozone Services PMI, PPI, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.1% as of 10:47 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average rose 0.1%
The MSCI Asia Pacific Index fell 0.3%
The MSCI Emerging Markets Index fell 0.5%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0612
The Japanese yen fell 0.4% to 136.67 per dollar
The offshore yuan was little changed at 6.9579 per dollar
The British pound rose 0.2% to $1.2093
Cryptocurrencies
Bitcoin fell 0.2% to $23,349.13
Ether fell 0.1% to $1,625.58
Bonds
The yield on 10-year Treasuries advanced two basis points to 3.93%
Germany’s 10-year yield advanced five basis points to 2.63%
Britain’s 10-year yield advanced two basis points to 3.83%
Commodities
Brent crude rose 1% to $83.28 a barrel
Spot gold fell 0.4% to $1,809.09 an ounce
Market Wizards - Book Review
If you are a trader but have not read “Market Wizards,” then you are not really a trader. I write a quick review and summary on my blog, but hopefully you will buy and read the entire book!
Americans Are Ready For Change
Coinbase recently commissioned a survey conducted by Morning Consult, and the results are impressive. The survey interviewed over 2,000 American adults for their opinions on the current financial system, and the "overwhelming majority expressed frustration."
Below are the most crucial findings of the study:
80% of Americans think the global financial system unfairly favors powerful interests.
67% of Americans agree that the financial system needs major changes or a complete overhaul.
20% of adult Americans – which is over 50 million people – own crypto. Despite the tumultuous events of 2022, crypto ownership has remained largely unchanged since early 2022, which was the historic high watermark for crypto ownership in America. Ownership is higher with people of color and younger Americans.
Crypto ownership is generally consistent for Republicans (18%), Democrats (22%), and Independents (22%), speaking to how crypto is a rare bipartisan issue.
76% of those who own crypto agree that cryptocurrency and blockchain are the future. These numbers are even higher amongst people of color and younger Americans. Regardless of crypto ownership, the majority of Gen Z adults (54%) and Millennials (55%) agree that cryptocurrency and blockchain are the future.
For a more in-depth analysis of the results, you can read Morning Consult’s “Perception Study” HERE.
Before moving on from this segment, it's worth mentioning Coinbase's plans to launch a public education campaign this week. According to Coinbase, "we're planning for the campaign to include the regular release of data and reports, as well as national advertising." These advertisements are intended to highlight the benefits of crypto and underscore the need for updating the current financial system. The campaign aims to communicate the message that the utility of crypto has real-world benefits, as supported by the data above.
Lido Prepares For Massive Volatility
Ethereum's Shanghai upgrade is set to take place sometime this March, and we can expect an exact launch date any day now. In the meantime, staking providers are working tirelessly to ensure their products can handle the volatility.
Over the weekend, Lido Finance, the most popular Ethereum staking provider, experienced a record-breaking 150,000 ETH inflow, marking the largest daily stake inflow to date. According to an analyst from Dragonfly Capital, the $240m stake came from Justin Sun, the founder of Tron.
Concerned that the massive deposit could impact rates, Lido activated a safety feature to slow down the amount of ETH that can be staked at once. This mechanism, called the Staking Rate Limit, limits the amount of ETH that can be staked to 6,200 per hour - still a substantial amount.
If we crunch the numbers, the 150,000 ETH stake represents just under 1% of all staked ETH and pushed Lido past the $9b total stake milestone. From the beginning of January to now, Lido has seen its total staked ETH increase from $6b to $9b, with the numbers continuing to rise rapidly.
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.