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In This Issue:
The ‘High Price’ Bias
Twitter Spaces Today!
Bitcoin Thoughts And Analysis
Legacy Markets
Bitcoin, BRICS, and Dollar Dominance
JP Morgan Consumes First Republic Bank
The Next Meme Coin Is Here
The ‘High Price’ Bias
In the early 1970s, two visionary friends, Amos Tversky and Daniel Kahneman, revolutionized the way we perceive human cognition by unveiling the concept of 'cognitive bias' to the world. Today, more than 180 cognitive biases are widely recognized, with the list constantly expanding—a testament to the imperfections in our thinking.
Though I may not be familiar with all 180+ cognitive biases, I do know that investors offer a fascinating insight into the realm of flawed reasoning. There's likely already a bias that encapsulates what I'm about to discuss, but for the sake of originality, allow me to present what I call the 'High Price' bias.
The 'High Price Bias' is a cognitive phenomenon that emerges when investors begin to believe in the inherent value of an asset only after it has achieved a certain 'high' price. Ever encountered someone who refuses to buy Bitcoin until its price soars? That's the 'High Price' bias in action.
This erroneous thought process often stems from a few basic assumptions: if Bitcoin trades at a higher price, it must possess superior qualities, or if Bitcoin trades at a higher price, it has demonstrated its worth. Occasionally, this bias can be attributed to FOMO, but let's hope that FOMO isn't the sole driving force behind an investor's decision-making.
Now that we've established the bias, let's delve into how it manifests beyond the realm of 'high' prices. The 'High Price' bias, as initially described, is the most prevalent example, but this flawed reasoning also applies to 'low' prices. Know someone who loses faith in Bitcoin when it reaches a certain 'low' price?
The inverse thought process goes like this: if Bitcoin trades at a lower price, it must have inferior qualities, or if Bitcoin trades at a lower price, it hasn't proven its worth. It's worth noting that this bias can affect both investors without exposure and those with exposure to the asset.
Imagine Bitcoin as a life raft; this bias can help us gauge where everyone stands. A Bitcoin investor who relies solely on this bias can be seen as clinging to the life raft with one hand. Meanwhile, a non-Bitcoin investor who operates based on this bias alone is like someone on a sinking ship, awaiting a miracle to save them.
To clarify, price is indeed a vital aspect of evaluating an asset, but it should NEVER be the sole determining factor. On its own, price is deceptive, diverting attention from the true fundamental and inherent value of a network. However, when combined with thorough research, compelling narratives, and on-chain analytics, price becomes a powerful force that ties everything together.
Don't succumb to the 'High Price' bias, and if you know someone who has, consider sharing this newsletter with them. If it weren't for this bias, the value of Bitcoin would likely be much higher, but due to its existence, we can still seize early investment opportunities. After all, it's our biases that make investing a potentially lucrative endeavor.
Twitter Spaces Today!
I am hosting a Twitter Space today at 11:00 am EST with Illia Polosukhin, the founder of NEAR Protocol. Don’t miss it, as we will have other big guests join as well. You can tune in HERE.
Bitcoin Thoughts And Analysis
Meh.
Bitcoin price has continued to trend down, still effectively ranging sideways. That said, we have a potential head and shoulders in the works, which means literally nothing unless we see a breakdown of the blue ascending line with increasing volume. That would signal that the top is clearly in for now.
My bias remains towards and eventual test of $25,212 at the minimum, which we have not seen since the new bull trend commenced.
Price also has lost the 50 MA as support for now, which is a bearish signal. Bulls want to see price back above that blue ascending MA.
Not much to do here but wait.
Legacy Markets
European stocks fell and US equity futures fluctuated following Australia's unexpected interest-rate hike, reinforcing expectations that US and European central banks will tighten monetary policies to curb inflation. The Stoxx 600 index dropped by 0.4%, weighed down by growth-sensitive sectors like energy and real estate. Meanwhile, the Federal Reserve is anticipated to raise rates by a quarter point in its two-day meeting, and the European Central Bank is likely to opt for a 25 basis-point increase. The Reserve Bank of Australia raised benchmark rates by 25 basis points to 3.85%, citing persistently high inflation and the potential need for further tightening.
Key events this week:
US JOLTS job openings, factory and durable goods orders, Tuesday
ADP employment, S&P global US services PMI, ISM services, Wednesday
Fed Chair Jerome Powell holds news conference following rate decision, Wednesday
US initial jobless claims, trade balance, Thursday
European Central Bank rate decision, followed by ECB President Christine Lagarde’s news conference, Thursday
US unemployment, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.2% as of 5:29 a.m. New York time
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average fell 0.2%
The Stoxx Europe 600 fell 0.3%
The MSCI World index fell 0.1%
S&P 500 futures fell 0.2%
Nasdaq 100 futures were little changed
The MSCI Asia Pacific Index was little changed
The MSCI Emerging Markets Index was little changed
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.2% to $1.0954
The British pound fell 0.3% to $1.2459
The Japanese yen was little changed at 137.48 per dollar
The offshore yuan rose 0.2% to 6.9463 per dollar
Cryptocurrencies
Bitcoin rose 1% to $27,963.74
Ether rose 1.1% to $1,827.8
Bonds
The yield on 10-year Treasuries declined four basis points to 3.53%
Germany’s 10-year yield advanced five basis points to 2.36%
Britain’s 10-year yield advanced five basis points to 3.77%
Commodities
West Texas Intermediate crude fell 0.2% to $75.53 a barrel
Gold futures were little changed
Bitcoin, BRICS, and Dollar Dominance
Trust me when I say this: this thread is truly exceptional. Bitcoin enthusiast James Lavish has crafted a comprehensive 10-post thread that delves deep into the heart of a significant topic, rather than simply seeking to engage an audience. The acronym BRICS represents Brazil, Russia, India, China, and South Africa—a coalition of nations actively distancing themselves from the U.S. dollar. Initially coined in 2010, the term has evolved to include more countries in the alliance, thus transforming BRICS into BRIICSS (with the addition of Iran and Saudi Arabia).
The thread goes beyond exploring countries collaborating to diminish dollar dominance—it also presents Bitcoin as a potential replacement for the dollar. The challenge faced by the BRIICSS nations is their desire to break free from the U.S. dollar system without a clear alternative currency in sight. James elaborates on how gold is being accumulated to address this issue, but posits that, eventually, these countries will recognize Bitcoin as the superior option.
While this idea may seem far-fetched at first glance, the underlying logic is solid. If you have the time, I wholeheartedly recommend exploring this thread, as it not only builds a compelling case for Bitcoin, but also offers a glimpse into the intricate, anti-dollar geopolitical landscape that could shape our future.
JP Morgan Consumes First Republic Bank
The dramatic conclusion of First Republic Bank's collapse has seen JP Morgan triumph in the auction, amidst a whirlwind of controversy. The Federal Reserve, in a strategic move, has sweetened the deal for the already formidable banking giant. With the FDIC's agreement to shoulder $13 billion in losses and furnish $50 billion in financing, JP Morgan's acquisition has been facilitated with remarkable support. Though I haven't scrutinized the details, some analysts project that JP Morgan will secure an instant profit of $2.6 billion from the acquisition, while generating an additional $500 million annually. The Fed's decisive actions signal that those who step in during the collapse of regional banks can expect lucrative incentives.
However, beneath the veneer of a smooth resolution, the downfall of First Republic Bank was an unequivocal catastrophe. Shareholders endured the devastating obliteration of their investments, and the stock faced an astonishing 133 trading halts since March 10th. As the saga reaches its finale, 84 First Republic Bank branches across eight states are poised to make a grand comeback, rebranded as JP Morgan Chase Bank.
The Next Meme Coin Is Here
Meme coin enthusiasts may have recently discovered PEPE, but my intention is not to educate you about the coin or promote it. Rather, I aim to caution you about its volatility. If you've profited from this trade, that's fantastic! Take a moment to celebrate your success and consider withdrawing your initial investment. For context, if my memory serves me correctly, Doge secured a spot in the top 10 by market capitalization, while Shiba fell just short by a position or two. PEPE enthusiasts might find this encouraging, as PEPE has only cracked the top 100. However, this shouldn't be a sole reason to buy or hold blindly.
While PEPE could potentially follow in the footsteps of Shiba or Doge and make a dash to the top, it's important not to pin your hopes on this outcome. The odds are VERY unlikely. Meme coins typically have a limited ceiling, and their soaring highs are often fleeting. After reaching their peak, they can plummet by 99%, and still have further to fall. The future of this coin remains uncertain, so tread carefully.
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.