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In This Issue:
You Can’t Diversify Risk In A Casino
Bitcoin Thoughts And Analysis
Legacy Markets
Binance Clears Up The Delisting Process
Galaxy Digital Exits Stage Left
I Haven’t Laughed This Hard In A Long Time
IRS Steps Ahead Of FTX Creditors
$48,000 Bitcoin By The End Of June | MEMES GONE WILD! | Should You Buy Pepe?
You Can’t Diversify Risk In A Casino
In crafting the newsletter, I stumbled upon a compelling CoinDesk article which I'm choosing to highlight here rather than the 'Education Section' to delve deeper into its insights.
The article, titled "Crypto Isn’t Ready for Jack Bogle," immediately grabbed my attention. For those unfamiliar, Jack Bogle, a personal hero of mine, is widely revered as the pioneer of index investing. In 1976, he transformed the investment landscape with the concept of index investing.
Presently, index investing is considered the gold standard in investing because it consistently outperforms the majority of actively managed funds over the long term. Index funds expertly eliminate the pitfalls of human decision-making in investing, but does this hold true for crypto?
One might initially assume that an index fund would be a safe bet in crypto, given that other coins often seem to outpace Bitcoin. However, the aforementioned article examines this presumption. Let's delve into the chart below.
What you just looked at was Bitcoin vs. everything else. Here’s how CoinDesk describes it: “We compared BTC’s returns to passive, market-cap-weighted portfolios of the top 10, 25, 50, and 100 tokens over the past five years. None of these passive portfolios were able to outperform BTC. And some of them lost money over this period. BTC is also one of the lowest-volatility digital assets, so this outperformance is impressive on a risk-adjusted basis as well.”
Revisiting the idea of 'pace,' it's important to remember that most altcoins can only maintain their rapid growth for brief periods. This explains why many altcoins struggle to return to their all-time highs following high-intensity, short-lived runs. Bitcoin, on the other hand, has consistently managed a steady pace. The concept can be best understood by examining the fluctuations in the top 10 or 100 market capitalization. Refer to the chart below.
“Assets that fell out of the top ranks of the market have historically not been able to re-enter. We analyzed the annual rankings of the top digital assets by market cap. If a token fell out of the top 10 or top 100, how often were they able to re-enter? We found that there were 12 assets that fell out of the top 10 rankings, and none were able to re-establish their position in the top 10. There was more turnover in the top 100: 115 assets fell out of the ranking, and only 12, or 10%, were able to re-enter.”
Long-term data suggests that Bitcoin is likely to outperform all else. Bitcoin also exhibits lower volatility and smaller drops, allowing for quicker recovery compared to other coins. While short-term profits may be possible outside Bitcoin, sustained success seems to favor Bitcoin investment.
However, it's crucial to note that this is the current situation and may not persist indefinitely. Index investing is effective in traditional markets due to the availability of numerous proven assets across various classes over a long period. In the digital asset sector, we can only consider Bitcoin and Ethereum as proven investments, and even that is somewhat debatable. Bearing in mind that asset trading started back in 1792, the digital asset sector is in its infancy.
Ultimately, some investors might believe they're dodging the casino with a crypto index fund, but in reality, they're just playing multiple games simultaneously. If Jack Bogle were here today, he would likely concur - crypto isn't quite ready for indexing.
Bitcoin Thoughts And Analysis
Still watching for potential bullish divergence.
For now, our bigger problem is that there is no liquidity left on exchanges, which means the chop is going to be far more volatile. With the world’s biggest market makers leavings, there is nobody to keep the spread tight and make sure orders are filled without slippage. Look at that candle yesterday, with the long wick down. There was no reason, just a random large order sent prices flying down.
Not great… unless it happens on the way up!
Legacy Markets
US equity futures and European stocks have seen an uptick as investors anticipate the Federal Reserve might pause interest-rate hikes due to slowing inflation. The S&P 500 and Nasdaq 100 contracts both advanced about 0.3%. In premarket trading, Walt Disney Co. shares fell due to a projected higher loss for its streaming service, while Robinhood Markets Inc. saw an increase following promising results.
On Thursday, investors are bracing for the Bank of England's expected tightening of policy for the 12th consecutive meeting, potentially raising its key rate by 25 basis points to the highest since 2008. Other economic indicators to watch include US initial jobless claims and producer prices data.
US inflation showed signs of moderation on Wednesday, following a year of Fed rate hikes and recent credit stress. Despite this, prices continue to rise rapidly, and the job market remains strong. Industrial metals prices dropped due to concerns about Chinese demand, following reports of close-to-zero consumer inflation and deflation in producer prices in April.
Furthermore, the potential of a first-ever US debt default is still a concern for investors. Treasury Secretary Janet Yellen emphasized the global impact of such an event during a meeting with the Group of Seven finance ministers in Japan.
Key events this week:
UK BOE rate decision, industrial production, GDP, Thursday
US PPI, initial jobless claims, Thursday
Group of Seven finance minister and central bank governors meet in Japan, Thursday
US University of Michigan consumer sentiment, Friday
Fed Governor Philip Jefferson and St. Louis Fed President James Bullard participate in panel discussion on monetary policy at Stanford University, Friday.
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.4% as of 9:59 a.m. London time
S&P 500 futures rose 0.3%
Nasdaq 100 futures rose 0.3%
Futures on the Dow Jones Industrial Average rose 0.1%
The MSCI Asia Pacific Index fell 0.4%
The MSCI Emerging Markets Index fell 0.2%
Currencies
The Bloomberg Dollar Spot Index rose 0.3%
The euro fell 0.5% to $1.0928
The Japanese yen fell 0.3% to 134.80 per dollar
The offshore yuan fell 0.1% to 6.9473 per dollar
The British pound fell 0.3% to $1.2583
Cryptocurrencies
Bitcoin fell 1.7% to $27,410.17
Ether fell 2.1% to $1,819.75
Bonds
The yield on 10-year Treasuries declined one basis point to 3.43%
Germany’s 10-year yield advanced one basis point to 2.30%
Britain’s 10-year yield declined one basis point to 3.79%
Commodities
Brent crude rose 1.1% to $77.24 a barrel
Spot gold fell 0.4% to $2,022.62 an ounce
Binance Clears Up The Delisting Process
In a different approach to outright delisting, Binance has recently decided to offer one final chance to crypto projects teetering on the brink. In a general announcement, Binance identified 18 coins, now categorized as "no progress projects," that will be moved to the so-called "Innovation Zone" for reassessment before potential dismissal. In my mind, the "Innovation Zone" could more aptly be termed the "Danger Zone."
Binance's evaluation criteria is not to be taken lightly: “commitment of team to project, level and quality of development activity, trading volume and liquidity, stability and safety of network from attacks, network / smart contract stability, level of public communication, responsiveness to our periodic due diligence requests, evidence of unethical/fraudulent conduct or negligence, contribution to a healthy and sustainable crypto ecosystem.”
While this may be a hard truth to accept, Binance's actions are arguably beneficial for the community. The coins currently at risk are AMB, ARK, BTS, DREP, FTT, GFT, JASMY, LOOM, MLN, OAX, OMG, PERL, PNT, SNM, SRM, VGX, WRX, and YFII. If you hold any of these coins as a long-term investment, it's time to critically reassess your bias and the project's merits. Given Binance's stringent criteria, it's doubtful that many of these coins will meet the high standards being set.
Galaxy Digital Exits Stage Left
Another day passes and another crypto company has decided to leave the U.S. On the bright side consumer interest in the U.S. hasn’t diminished, which means that those that do weather the storm should in theory see more demand, but the drawback is that competition is diminishing.
The news of shifting operations offshores came during Galaxy Digital’s first-quarter investor call, also when Galaxy announced a remarkable turnaround profit-wise from the loss they incurred last year. Perhaps some of Galaxy Digital’s profit is the direct result of capital having fewer options to choose from.
When discussing the situation here in the U.S., Mike Novogratz said the following: “when I look at the short term, we still have a regulatory headache in the United States, I don’t see that breaking anytime soon. We still have a hangover, as well, from the denting of trust that FTX and other bad actors in the space created.”
I Haven’t Laughed This Hard In A Long Time
It was a good thing I wasn’t eating or drinking when I watched this video. Congressman Brad Sherman said the following, word for word during a hearing, “Crypto bros ... made over a trillion dollars out of thin air. They'll accuse the U.S. government of making money out of thin air. Maybe we do, but we're the U.S. government.” You seriously can’t make up content this good… unless you’re the U.S. government f**king everyone over and admitting it with a smirk on your face. As ridiculous as all of this is, at least we have something to laugh at while the entire fiat regime collapses. Thanks, Rep. Brad Sherman.
IRS Steps Ahead Of FTX Creditors
What an absolute shit show for FTX creditors.
The U.S. Department of Treasury and Internal Revenue Service (IRS) have lodged 45 claims totaling $44 billion against the bankrupt cryptocurrency exchange FTX and its subsidiaries. The IRS evaluated a tax bill of $20.4 billion in partnership and payroll taxes for FTX's affiliate, Alameda Research LLC. The IRS also filed a $7.9 billion claim against Alameda Research LLC, and two claims against Alameda Research Holdings amounting to $7.5 billion and $2.0 billion. These claims have been filed under "administrative priority," meaning they will take precedence over unsecured creditors during bankruptcy proceedings. Despite Alameda Research being based in Hong Kong, its founders and key personnel, including Sam Bankman-Fried and Caroline Ellison, are U.S. nationals. They are liable for taxes on their global income due to the U.S.'s taxation-by-citizenship policy, regardless of their residency or time spent in the U.S.
$48,000 Bitcoin By The End Of June | MEMES GONE WILD! | Should You Buy Pepe?
Chris Inks and Fiboswanny are here to find out what's going on with the meme coins and what you should do: invest or ignore it.
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.