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In This Issue:
Crypto Will Rule The World
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Coinbase Will Delist BUSD
Solana Went Down, And Nobody Knows Why
The SEC Wants To Look Under Robin’s Hood
Grayscale’s War With The SEC Could Bring Billions Into Crypto | Michael Sonnenshein, Grayscale's CEO
Crypto Will Rule The World
If you had told me just 3 years ago that Bitcoin, CBDCs, and DeFi would be at the center of geopolitical events around the world, I would have checked you into a mental health facility. And who in their right mind could have predicted that in 2023, China would ease up on crypto restrictions while the U.S. cracks down?
Yet here we are.
Cryptocurrencies have become a key player in world events across several countries, with attitudes towards them fluctuating between positive and negative. If you search for any country followed by "crypto" on Google, you're likely to find dozens of articles covering a range of news.
2023 is set to be a pivotal year for the adoption of digital asset technology. China is expected to release its CBDC, and Russia may legalize crypto for trade. India plans to discuss crypto legislation with G20 countries, while Singapore, Vietnam, and the Philippines have each taken their own unique approach to crypto adoption. And let's not forget the United States, a country whose financial output, input, and throughput far surpasses any other in the world, with a GDP of almost $21 trillion in 2022. China comes in second with $14.7 trillion, followed by India with $2.66 trillion. The other countries mentioned don’t even have GDP in the trillions. Given this context, it's clear that crypto adoption matters significantly in both the US and China.
However, several other mid-range economies, such as Japan, Germany, the United Kingdom, France, and Italy, are beginning to increase their pace of adoption. A quick Google search will reveal how far these countries have come in recent years.
While there are certainly negative aspects to the adoption of cryptocurrencies, such as regulation, rules, and restrictions, it's important to remember that adoption will always be a struggle and progress towards economic freedom will almost always flow in one direction.
The most important takeaway from the intersection of crypto and geopolitics is the pivotal role played by the US and China, whose combined GDPs of $35.7 trillion and populations of 1.7 billion far exceed any other country in the world. While it's exciting to see favorable crypto adoption in smaller nations, the US and China are of paramount importance for the future trajectory of crypto.
Both the US and China understand this, and I believe 2023 will be the start of a new narrative. Eventually, there will be a point where crypto does not depend on countries' approval, but rather it will dictate their actions. This will come from mainstream adoption by the citizens, particularly in the US. Crypto won't need the US and China; rather, the US and China will need crypto. While this reality is still far off, we're certainly on the right track when we consider how far we've come.
To put it plainly, when this happens, we'll all be rich
Bitcoin Thoughts And Analysis
I can’t believe that it is already March!
The February candle close offered more confusion than clarity. We have almost a perfect doji, with equal wicks up and down and the candle opening and closing at the same price. The candle is technically green, but this is meaningless with a near non-existent body.
Dojis can be signals of a reversal coming, but more often they signal indecision. It is very rare to see such a perfect doji, especially on the monthly time frame. That means that next month’s candle will confirm the direction, unless we get another similar doji.
So… be patient.
It is also important to note, once again, that the monthly candle was rejected exactly at key resistance - $25,212.
My assumption after this close is that we are likely to see a choppy month.
Altcoin Charts
I shared this idea a couple of weeks ago. If you have been tracking, then you have likely noticed that price has been bouncing around between the buy zones now for quite a while. There are no guarantees that this will play out, as it is largely dependent on macro and what happens with Bitcoin in the coming weeks. That said, this is a good technical setup with the potential for a 2x.
Price has dropped from the highs, but that has happened alongside decreasing volume. This is a sign of consolidation, rather than a reversal to a bearish trend.
I do NOT own GRT and I am NOT trading it. This is simply analysis for those looking to trade.
Legacy Markets
European stocks wobbled as investors came to terms with the likelihood that policy makers will maintain hawkish stances in the coming months. However, German government bonds fell as traders prepared for fresh inflation data. The Stoxx Europe 600 Index opened with a small gain but ended up trading little changed. Meanwhile, futures for the S&P 500 and Nasdaq 100 held onto modest gains following positive economic data from China. Bond traders are no longer expecting a Fed rate cut this year, and market expectations indicate that the European Central Bank will raise rates through February 2024, with a fully priced 4% ECB terminal rate.
Key events this week:
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 was little changed as of 9:55 a.m. London time
S&P 500 futures rose 0.2%
Nasdaq 100 futures rose 0.3%
Futures on the Dow Jones Industrial Average rose 0.1%
The MSCI Asia Pacific Index rose 1.5%
The MSCI Emerging Markets Index rose 2%
Currencies
The Bloomberg Dollar Spot Index fell 0.4%
The euro rose 0.7% to $1.0646
The Japanese yen rose 0.3% to 135.81 per dollar
The offshore yuan rose 1% to 6.8870 per dollar
The British pound rose 0.4% to $1.2071
Cryptocurrencies
Bitcoin rose 2.7% to $23,780.5
Ether rose 3.1% to $1,654.96
Bonds
The yield on 10-year Treasuries advanced two basis points to 3.94%
Germany’s 10-year yield advanced six basis points to 2.71%
Britain’s 10-year yield advanced four basis points to 3.86%
Commodities
Brent crude fell 0.4% to $83.12 a barrel
Spot gold rose 0.3% to $1,831.89 an ounce
Coinbase Will Delist BUSD
After the recent announcement that Binance will no longer mint and issue its dollar-pegged stablecoin BUSD, Coinbase has taken a cautious approach and decided to distance itself from the asset. As of March 13, Coinbase will suspend all trading of BUSD and only allow withdrawals. It appears that the SEC has won this battle without any resistance. Not too long ago, Binance required the conversion of USDC to BUSD on their platform, and now Coinbase has evened the score. The question remains whether USDC is the next target, or if BUSD was the industry's sacrificial lamb. Although I believe the latter to be true, we must remain prepared for the worst-case scenario.
Solana Went Down, And Nobody Knows Why
While I had no intention of covering the recent outage of Solana in the newsletter due to its frequent occurrence, this time was particularly noteworthy. Over the weekend, Solana experienced a 20-hour outage, which is typical, but the reason behind the downtime remains unknown, which is unusual. The Solana Foundation launched an immediate investigation, but as of yet, no explanation has been provided.
Some speculators have suggested that the network's design, which counts votes and messages as on-chain transactions, may have overwhelmed the system, but CEO Anatoly Yakovenko has dismissed these claims as a result of "pure ignorance." While I won't delve any further into this debate, the fact remains that Solana's outage reflects poorly on the entire industry, particularly when the cause is unknown.
The SEC Wants To Look Under Robin’s Hood
Robinhood has once again found itself in hot water with the Securities and Exchange Commission (SEC) after receiving an investigative subpoena regarding its digital asset business. The subpoena was delivered in December 2022, and while the exact reason for the inquiry remains undisclosed, many speculate it may be linked to the bankruptcies that occurred in previous months.
This is unfortunately not a new situation for Robinhood, which has been facing a continuous stream of fines and investigations since 2021. That year, the company paid a record-breaking penalty of $70 million to FINRA, the US securities industry's self-regulatory authority, and just last year, Robinhood paid an additional $30 million to the New York State Department of Financial Services (NYFDS) over issues related to options trading and its response to system outages.
It seems that Robinhood has become a sacrificial lamb for the industry, facing intense scrutiny and criticism that it can never seem to escape. But while some may argue that the company has brought these issues upon itself, it's important to consider the broader context of the industry in which Robinhood operates. The fintech firm has undoubtedly revolutionized retail investing, making it accessible to millions of new investors, but its rapid growth has also led to a number of operational challenges and regulatory missteps.
Despite its controversies, Robinhood has managed to maintain a loyal user base and remains a major player in the fintech industry. However, the company's repeated run-ins with regulators raise important questions about the broader digital asset industry's future. As the sector continues to grow and evolve, it's clear that there will be increased scrutiny and regulation, and it's up to companies like Robinhood to ensure that they are complying with the highest standards of accountability and transparency.
Grayscale’s War With The SEC Could Bring Billions Into Crypto | Michael Sonnenshein, Grayscale's CEO
On March 7 Grayscale will contest the SEC’s decision to deny the conversion of its GBTC to an ETF. If Grayscale wins, it will mean we will finally have a Bitcoin spot ETF and it will also potentially lead to a surge of investment into Bitcoin and cryptocurrency markets. I talked to Michael Sonnenshein, CEO Of Grayscale Investments, about GBTC, SEC, what the conversion will mean to crypto and GBTC investors, the Genesis bankruptcy and effect of FTX, and of course the crypto regulation.
In this episode with Michael, we discussed:
How does GBTC operate
GBTC vs ETF
Why Futures ETF was approved while spot ETF was not
GBTC investors would benefit from ETF conversion
Regulation
Is contagion over?
Genesis bankruptcy
SEC case
Can crypto companies work with SEC?
Seeking non-regulated jurisdictions
Ideal path for the US to be a tech leader
Will ETF unlock a massive audience?
What excites Michael in crypto
Wrap up
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.