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In This Issue:
Pack Your Bags, We Are Headed To Shanghai
Bitcoin Thoughts And Analysis
Legacy Markets
Your Mac Has The Whitepaper Installed
Crypto’s Big Advantage
Treasury Department Says Crypto Is A Threat To National Security
What Moves Crypto Markets? Live Panel With Joshua Frank, Yoann Turpin, & Conor Ryder
Pack Your Bags, We Are Headed To Shanghai
The countdown has officially begun, as Ethereum is about to achieve something that many skeptics never thought possible. In just 5 days, on Wednesday, April 12th, Ethereum will introduce a significant upgrade. It is more than just enabling withdrawals; it marks the culmination of an 8-year journey that began shortly after Ethereum's inception in 2015. The long-awaited proof-of-stake and withdrawal capabilities are almost here, making it an exciting time to own Ethereum.
While recent focus has been on Bitcoin, the narrative may soon shift towards Ethereum if no major banking issues arise. To bring everyone up to speed, Ethereum Improvement Proposal (EIP-4895) will enable withdrawals, boosting confidence and increasing the total percentage staked once initial uncertainties pass. The question now is, how will the market react?
Before diving into the game theory of predicting investor behavior when withdrawals are enabled, let's review some key Ethereum statistics:
Current Supply: 120,441,061
Issuance: 675K ETH/Year
Supply Growth: -0.32%
Ethereum Staked: 17.9m ETH
Ethereum Staked in Lido - 22.89%
Ethereum Staked in Coinbase - 10.48%
Ethereum Staked in unknown/solo stakers - 36.14%
Ethereum Staked in others - 30.49%
Percentage of Ethereum staked 14.86% vs.
Avalanche - 61% staked
Cosmos - 66% staked
Solana - 72% staked
Cardano - 68% staked
And for the breakdown of where the Ethereum is staked:
Now for the intriguing part: what will happen to Ethereum's price when withdrawals are enabled? It's crucial to understand how Ethereum withdrawals will function. Two types of withdrawals can be initiated, each with its own rules. Partial withdrawals apply to validators with over 32 ETH staked in the network and only remove earned rewards. These automatic withdrawals allow validators to continue participating in the network as usual. In the past two years, approximately 1 million ETH has been earned as staking rewards.
Full withdrawals entail completely exiting the network and removing both the total balance and rewards. To initiate a full withdrawal, a staker must join a queue that processes only 54,000 ETH per day. This is where things become complex, as numerous variables affect what a staker may do on day one. Here are a few possibilities:
Bankrupt companies needing liquidity may sell, but their unstaking creates incentives for others to stake as rewards fluctuate = bearish for price.
The appeal of Liquid Staking Derivatives (LSDs) might lead some stakers to unstake from the Beacon Chain and then re-stake with an LSD = neutral for price.
Sidelined institutions and conservative investors waiting for the upgrade may drive up the % staked = bullish for price.
Most Ethereum stakers (about 75%) are underwater in $$ value, so there isn't a strong incentive to unstake and sell at a loss if they are long-term believers = neutral for price.
The upgrade may not work due to unforeseen circumstances = bearish for price.
While there are many other potential outcomes, the key takeaway is that heightened volatility is likely leading up to and after the upgrade as the market reacts to staker behavior. As an ETH holder, there's no reason to be concerned about the upgrade; even if the market dips, it should be temporary. Ethereum has consistently outperformed Bitcoin since its inception, and the narrative is gradually shifting back in favor of Ethereum. The future looks promising.
If you are an Ethereum validator, I suggest you read this. As for everyone else, I’ll see all of you in Shanghai, Nǐ hǎo, and Zàijiàn.
Bitcoin Thoughts And Analysis
28K. For 3 weeks.
That’s it for now.
Legacy Markets
US stock futures remained stable as underlying indexes saw modest gains in low-volume trading ahead of a three-day weekend and an important jobs report. European markets were mostly closed for Good Friday, with US equity markets also closed. The jobs data will be closely examined for indications of the Federal Reserve's next policy move. The S&P 500 finished its first losing week in four, as economic data fueled concerns over a potential US recession. The payrolls report is expected to reveal a slowdown in hiring but still indicate strong job growth, with the unemployment rate holding near historic lows.
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 2:45 p.m. Tokyo time
Nasdaq 100 futures fell 0.1%
The Topix gained 0.3%, while the Nikkei 225 added 0.2%
The Shanghai Composite Index added 0.3% and the CSI 300 gained 0.6%
Bonds
Treasury futures were little changed
Currencies
The euro was little changed at $1.0918
The yen was little changed at 131.70 per dollar
Cryptocurrencies
Bitcoin was little changed at $27,996
Your Mac Has The Whitepaper Installed
Surprisingly, it has been discovered that every modern copy of macOS sold since 2018 contains a complete copy of the Bitcoin White Paper hidden deep within the system files. Blogger Andy Baio, credited with the find, stumbled upon the document while trying to fix a printer issue. Among the sample documents available for printing, he noticed a PDF of the Bitcoin White Paper. Given Apple's cautious approach to crypto, the document was likely added as an Easter Egg for an eventual discovery. To see it for yourself, follow the steps below.
There are a couple of ways to locate the Bitcoin Whitepaper. The least technical method is to open Finder and navigate through the following folders:
Macintosh HD > System > Library > Image Capture > Devices.
Upon reaching the Devices folder, hold down Control on your keyboard and click VirtualScanner, then select Show Package Contents. Open the Contents and Resources folders, where you should find a document called simpledoc.pdf. This file is the Bitcoin Whitepaper, as demonstrated on Andy Baio's MacBook Pro.
Crypto’s Big Advantage
It's easy to get caught up in distractions and forget that one of the reasons we believe in crypto is the difference it can make in remittances. The traditional banking system is slow, expensive, and operates only during business hours. In contrast, crypto is inexpensive, fast, and available 24/7/365, making it a superior alternative. Did you know that with an average fee rate of 6.18%, Americans spend nearly $12 billion on remittance fees annually? Or that remittances can take 1 to 10 business days to process? Frankly, the remittance system is outdated and in dire need of improvement. Sending Bitcoin or Ethereum costs less than a couple of dollars, and it's time for the old way of doing business to be replaced.
“Tl:dr: Americans spend over $12 billion a year in fees just to send money to friends and family abroad. These remittances are a vital lifeline for underbanked communities, enabling those who need it most to buy essential household goods, invest in healthcare, and fund education. Yet the process for international transfers is shockingly slow and expensive. Crypto international money transfers are significantly faster and over 96% cheaper, substantially relieving the burden placed on communities who wish to provide support for their families and friends abroad.”
Treasury Department Says Crypto Is A Threat To National Security
The U.S. Treasury has released a 42-page report analyzing the risks associated with decentralized finance (DeFi), asserting that various bad actors exploit DeFi to "transfer and launder their illicit proceeds." The report warns that DeFi could pose a national security threat and urges increased oversight. Despite these concerns, the report acknowledges that illicit finance represents only a small portion of the overall virtual asset ecosystem, and most illegal activities still involve traditional assets rather than virtual ones. The Treasury aims to strengthen federal oversight and regulatory policies and recommends extending regulations covering traditional finance to decentralized finance to close gaps exploited by cybercriminals and scammers.
Clearly we remain in the “then they fight you” phase.
What Moves Crypto Markets? Live Panel With Joshua Frank, Yoann Turpin, & Conor Ryder
Today's guests:
Joshua Frank (The Tie): https://twitter.com/Joshua_Frank_
Yoann Turpin (Wintermute): https://twitter.com/YoannTurpin1
Conor Ryder (Kaiko): https://twitter.com/ConorRyder
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.