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In This Issue:
Uncomfortably Idiosyncratic
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
OpenSea Is Stepping Up Its Game
SushiSwap May Have Swapped Away Your Money
Chamath’s Thoughts On De-Dollarization
How Tether Crushes FUD And Embarrasses Haters While Making Billions | Paolo Ardoino, CTO Of Tether
Uncomfortably Idiosyncratic
News in the crypto world is in a constant state of flux, with cycles of frenzied activity and periods of relative calm reflecting the ebb and flow of developments and disruptions. Currently, the crypto news cycle appears to be experiencing a lull, prompting me to reflect on some of my deeper convictions. As I considered what to write today, I couldn't escape the concept of "uncomfortably idiosyncratic."
Long-time readers will know that I often discuss contrarianism, but today, I wanted to explore a new angle on the idea. The term "uncomfortably idiosyncratic" comes from renowned American investor David Frederick Swensen. Swensen (January 26, 1954 – May 5, 2021) was an American investor best known for managing Yale University's endowment fund and pioneering the Yale Model of investing.
To understand this concept, I wanted to examine what it means for institutions to take a leap of faith into crypto. First, let's define the term:
"Idiosyncratic" refers to a quality or behavior unique to an individual or group, often peculiar or unusual. It can also denote something distinctive or characteristic of a specific thing or system. By adding "uncomfortably" before "idiosyncratic," it implies that this unique quality or behavior causes discomfort, awkwardness, or unease due to its unusual or unexpected nature.
A traditional fund manager like David Swensen might have considered investing in cryptocurrency as uncomfortably idiosyncratic. While Swensen made headlines in 2018 for "dipping Yale's toes into crypto," our perspective on what is uncomfortably idiosyncratic differs significantly from that of a traditional investor - the beauty of investing.
This excerpt from Swensen on institutions highlights the challenges institutions face in breaking away from their norms: "active management strategies demand uninstitutional behavior from institutions, creating a paradox that few can unravel. Establishing and maintaining an unconventional investment profile requires acceptance of uncomfortably idiosyncratic portfolios, which frequently appear downright imprudent in the eyes of conventional wisdom."
Swensen's statement, although not specifically referring to crypto, offers insight into the current financial landscape. Financial institutions have spent centuries building and perfecting their world (above the dotted line), while crypto (below the dotted line) has emerged in the past decade with the potential to disrupt it all—an example of discomfort taken to the extreme.
Asset allocation, capital appreciation, capital gains, dividends, yield, equity, fixed income, debt securities, bonds, stocks, shares, options, futures, derivatives, hedge funds, private equity, venture capital, mutual funds, exchange-traded funds (ETFs), index funds, active management, passive management, alpha, beta, Sharpe ratio, P/E ratio, price-to-book ratio, price-to-sales ratio, return on investment (ROI), market capitalization, risk-adjusted return, volatility, standard deviation, correlation, diversification, portfolio management, investment banking, underwriting, initial public offering (IPO), secondary offering, mergers and acquisitions (M&A), due diligence, valuation, financial modeling, fundamental analysis, technical analysis, market timing, efficient market hypothesis, and behavioral finance.
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Bitcoin, altcoin, cryptocurrency, blockchain, distributed ledger, mining, proof of work (PoW), proof of stake (PoS), consensus algorithm, hashing, public key, private key, wallet, cold storage, hot wallet, exchange, decentralized exchange (DEX), centralized exchange (CEX), liquidity, order book, bid, ask, spread, market order, limit order, stop order, margin trading, leverage, smart contract, gas, transaction fee, block reward, halving, soft fork, hard fork, node, peer-to-peer (P2P), whitepaper, initial coin offering (ICO), initial exchange offering (IEO), security token offering (STO), decentralized finance (DeFi), yield farming, liquidity pool, automated market maker (AMM), impermanent loss, rug pull, tokenomics, stablecoin, cryptocurrency wallet, hardware wallet, software wallet, blockchain explorer, digital identity, and consensus mechanism.
The point I aim to emphasize is that the concept of uncomfortably idiosyncratic investing illuminates the tension between the traditional finance world and the realm of cryptocurrency. While some traditional investors might regard cryptocurrency as excessively unusual or risky, others are embracing its potential and venturing into this new and disruptive market. Time alone will reveal who will and will not be unraveled by cryptocurrency. However, for now, we can appreciate the discomfort and unease accompanying the journey into this uncharted territory. Institutions must step out of their comfort zone.
Bitcoin Thoughts And Analysis
Bitcoin has been $28,000 for nearly a month. Yes, it’s gone above and below by a few hundred dollars here and there, but it has largely traded sideways around this level.
Boring.
We also have the third consecutive doji (some would call it a spinning top) on the WEEKLY chart, meaning that price continues to open and close at nearly the same level each Sunday.
Absolutely ignorable and forgettable. Think of all of the things we could have done with our time this month if we had not spent a second staring at this chart!
Altcoin Charts
Amidst all of the FUD surrounding Binance, the BNB chart remains attractive for traders and investors alike.
We have a clear breakout through descending blue resistance. This pattern could be viewed as a descending broadening wedge or bull flag, depending how you draw the bottom (I did not bother). If it is a wedge, the target is $346. If it is a flag, the target is around $398, which perfectly aligns with horizontal resistance from the last major push up in November.
As you can see, price held the blue 50 MA well before making this move.
The only concern I have is the lack of volume on the breakout through descending blue resistance, which means there is more than the normal odds of a fake move. In theory, we want to see significantly rising volume, which we do not have, so I would proceed with caution. This may just continue to chop sideways.
I own some BNB, but am not actively trading it at the moment. This is purely analysis.
Legacy Markets
US equity futures remained stable and Asian stocks rose in holiday-reduced trading as investors evaluated the Federal Reserve's policy direction following Friday's US jobs data. S&P 500 contracts fell slightly, while the MSCI Inc.'s Asia-Pacific equity index increased by 0.2%. European, Hong Kong, and Australian markets were closed for Easter holidays, and trading volumes were expected to be low.
Treasury yields fell across the curve in Asia after rising on Friday due to US monthly payrolls data, which increased bets on a Fed rate hike in May. The data also alleviated concerns that the world's largest economy is heading for a recession.
Investors are closely monitoring new Bank of Japan Governor Kazuo Ueda, who will hold his inaugural press conference later today. Chinese military exercises near Taiwan added a sense of caution in Asian markets.
Oil prices stabilized, gold dipped below $2,000, and cryptocurrencies saw little change. US payrolls increased by 236,000 in March, in line with predictions, while the unemployment rate fell to near-record lows at 3.5%. The odds of a quarter percentage point interest rate hike at the Fed's May meeting increased to about two in three, up from roughly 50-50 before the data release.
The next major data point for the Fed is a consumer prices report due on April 12. The Fed will announce its next rate decision on May 3. OPEC+'s production cuts have revived inflation concerns, so upcoming US data must show significant easing from the services side for investors to feel comfortable that inflation risks have been mitigated.
Key events this week:
US wholesale inventories, Monday
New York Fed President John Williams takes part in discussion hosted by the Economics Review at New York University, Monday
China PPI, CPI, Tuesday
IMF world economic outlook, global financial stability reports, Tuesday
Chicago Fed’s Austan Goolsbee, Minneapolis Fed’s Neel Kashkari and Philadelphia Fed’s Patrick Harker speak at separate events, Tuesday
Canada rate decision, Wednesday
US FOMC minutes, CPI, Wednesday
Richmond Fed’s Thomas Barkin speaks, Wednesday
China trade, Thursday
US PPI, initial jobless claim, Thursday
US retail sales, business inventories, industrial production, University of Michigan consumer sentiment, Friday
Major US banks JPMorgan Chase, Wells Fargo and Citigroup report earnings, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 8:56 a.m. London time
Nasdaq 100 futures fell 0.4%
The MSCI Asia Pacific Index rose 0.2%
The MSCI Emerging Markets Index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0912
The Japanese yen was little changed at 132.05 per dollar
The British pound was little changed at $1.2419
Cryptocurrencies
Bitcoin rose 0.6% to $28,303.98
Ether rose 0.2% to $1,860.78
Bonds
The yield on 10-year Treasuries declined three basis points to 3.36%
Commodities
Brent crude was little changed
Spot gold fell 0.5% to $1,997.36 an ounce
OpenSea Is Stepping Up Its Game
To compete with rival NFT marketplace Blur, OpenSea is launching a new platform called "OpenSea Pro," offering users more advanced features. It is essential to note that the "Pro" platform is actually a rebrand of Gem v2, which OpenSea acquired in April last year. While OpenSea may not be thrilled about Blur, competition in the NFT space will ultimately benefit users and potentially trigger a new bull run.
OpenSea Pro aims to become the most efficient NFT trading tool on the market. Operating with 0% fees, it will pull listings from 170 marketplaces to provide the best deals for traders. OpenSea Pro will support advanced "floor sweeping" for traders, instant sales, inventory management, gas fee optimization for efficient trades, a watchlist feature, and more. Additionally, the platform will be available on mobile devices.
SushiSwap May Have Swapped Away Your Money
There's a lot happening in the world of Sushi - Kanye's school served too many rolls, the SEC is issuing subpoenas, and now the crypto protocol has been hacked for $3.3 million. Over the weekend, an exploiter identified a bug that enabled funds to be surreptitiously stolen from users who made swaps in the past few days. If you have made any swaps recently, you should revoke all approvals as soon as possible, as advised by head chef Jared Grey.
Chamath’s Thoughts On De-Dollarization
In terms of news about dollar dominance, I'll focus less on commentary and more on sharing handpicked insights, as this topic falls outside my area of expertise. Here are Chamath Palihapitiya's thoughts on the matter. If more news emerges in the coming weeks, I'll do my best to present both perspectives.
“This whole thing is a huge nothingburger. This is the third deal that China has done. The other two countries are Pakistan and [Russia]. And the reason why is I’ve seen a lot of people on Twitter now breathlessly rambling on de-dollarization, and all of this stuff.
And I think if any of these people would think from first principles, the first thing that you would know is that the yuan is pegged to the US dollar. And so as long as it is pegged, whether you trade through the US dollar or you don’t and you directly go to yuan, you’re indexed to the US dollar. And then you use a dollar swap to convert it to the currency you need.
So I think this is kind of like a lot of folks who don’t really know what’s going on.”
How Tether Crushes FUD And Embarrasses Haters While Making Billions | Paolo Ardoino, CTO Of Tether
Join us as Tether's Chief Technical Officer, Paolo Ardoino, shares insights on why Tether has proven to be the most secure asset in the volatile crypto market. In this episode, Paolo delves into how Tether weathered the storm during the recent crypto crisis and discusses the worst-case scenario for the stablecoin. He also provides an in-depth explanation of Tether's peg and sheds light on its innovative approach to maintaining stability. Don't miss out on this informative and engaging conversation with one of the industry's leading experts.
In this episode with Paolo, we discussed:
How Tether survives the crypto turmoils
Banking crisis
Exposure to T-bills
Black swans
Stablecoins is a killer app for crypto
What is a peg?
Could USDC blow up?
Worst-case scenario
Bitcoin mainstream adoption
CBDCs: a threat to Tether?
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.