The Wolf Den #750 - We Have Been Here Before
Is the market making you feel physically ill?
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In This Issue:
We Have Been Here Before
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Tuesday Is A Huge Day
The Solana Foundation Fights Back
Beware Of FUD
UK To Become Web3 Hub?
Revolutionizing Crypto: How Fold Enables Bitcoin Earnings for Everyone | Will Reeves
We Have Been Here Before
If you have any involvement with cryptocurrencies, it's important to consider this critical question: do you feel a familiar stir of unease beginning to churn in your stomach's depths? Is there an escalating sense of discomfort starting to unsettle you from within, leading you to question your beliefs?
If your answer is 'Yes,' that's completely fine. Welcome this feeling and allow it to communicate with you.
If your answer is 'No,' that's equally acceptable. Embrace this sentiment as well, and let it guide you.
The category you fit into can be influenced by several factors: your identity, your experience, your assets, and the extent of your involvement in cryptocurrency. Since the intention of this newsletter is to create a personal bond, I am unafraid to confess that I am slowly gravitating towards the 'yes' category. However, I can assure you, with the utmost tranquility, that I am neither in a state of panic nor will I ever be because I have faith in the resilience of cryptocurrency. Now, let's delve deeper.
Over the past few years, there have been a few instances where market fluctuations have left me feeling uneasy.
Bitcoin ranging in the $3,000s
Covid lows
China bans
The Voyager, Celsius and FTX collapses
And now the SEC’s attack
I am sure there are others that I am forgetting.
During these challenging times, every fiber of my being wanted to surrender to nausea, but as an investor, I held myself accountable to two principles - buy and step away. As veteran players, we like to think that market experiences toughen us for future hurdles, but the reality is that no metaphorical armor can make us impervious to human emotions. Even the most successful investors occasionally doubt their convictions – it's part and parcel of the journey. Bear in mind, the discomfort I'm referring to is starkly different from panic, the two are NOT synonymous.
Before I proceed, I must clarify that none of this should be taken as financial advice. I'm merely recounting my experiences.
I am aware that certain unprecedented situations have emerged, putting investors in challenging circumstances. For instance, long-term holders of Solana, Matic, Cardano, etc. now confront the increasing probability of their investments being delisted in the U.S., much like XRP. Binance.US stakers are awaiting the release of their funds, and Prime Trust customers find themselves on uncertain terrain. The SEC's actions are compelling investors to make difficult choices, and it deeply saddens me to see anyone in such a predicament.
Having acknowledged the elephant in the room, let's revisit the sense of unease that many of us might be experiencing. The SEC has effectively created an ominous cloud of uncertainty looming over the industry. In the last newsletter, I suggested that Tether, Circle, or Ethereum could be the next targets, but neglected to mention that Uniswap, OpenSea, Ledger, Grayscale, CoinFlip, PayPal, HIVE, Riot, Microstrategy, and any other crypto-related company engaged in U.S. activities could also be in the crosshairs. If the SEC can target centralized exchanges, it can also come after NFTs, wallets, mining investment funds, ATMs, decentralized exchanges, and so on. We shouldn't hastily assume we've seen all the SEC has to offer.
The SEC understands that instilling enough fear in the industry could trigger an implosion, the initial signs of which we're starting to witness. If you haven't heard, Robinhood has already chosen to delist Solana, Polygon, and Cardano, while Crypto.com is suspending its U.S. institutional exchange entirely of its own volition – the industry is defensively battening down the hatches in fear of the SEC. Regarding altcoins, I want to touch on my views on the SEC's actions. I've observed much debate concerning the status of altcoins, so let's explore that.
To be clear, the SEC isn't banning altcoins as it lacks the authority to do so. However, its actions represent a threat with significant consequences, with XRP as the prime example. Keep in mind, not every exchange possesses Coinbase's resilience, implying more exchanges may follow Robinhood's lead, which could strike a fatal blow to altcoins.
In the end, the precise terminology doesn’t matter, we can argue about whether it's a 'ban,' 'attack,' 'compliance issue,' etc., but if U.S. exchanges delist tokens, it will severely disrupt the supply-demand dynamics, typically for the worse. Again, this isn't financial advice, but I would urge altcoin holders to proceed with caution.
Below is a complete list of every altcoin caught in the regulatory crosshairs.
Ripple (XRP), Filecoin (FIL), Binance Coin (BNB), Binance USD (BUSD), Solana (SOL), Cardano (ADA), Polygon (MATIC), Cosmos (ATOM), Tron (TRX), BitTorrent (BTT), Terra USD (UST), Luna (LUNA), Internet Computer (ICP), Near (NEAR), Voyager Token (VGX), Nexo (NEXO), The Sandbox (SAND), Decentraland (MANA), Axie Infinity (AXS), Telegram’s Gram (TON), LBRY Credits (LBC), OmiseGo (OMG), DASH (DASH), Algorand (ALGO), Naga (NGC), Monolith (TKN), IHT Real Estate (IHT), Power Ledger (POWR), Kromatica (KROM), DFX Finance (DFX), Amp (AMP), Rally (RLY), Rari Governance Token (RGT), DerivaDAO (DDX), XYO Network (XYO), Liechtenstein Cryptoasset Exchange (LCX), Kin (KIN), Salt Lending (SALT), Beaxy Token (BXY), DragonChain (DRGN), Mirror Protocol (MIR), Mango (MNGO), Ducat (DUCAT), Locke (LOCKE), EthereumMax (EMAX), Hydro (HYDRO), BitConnect (BCC), Meta 1 Coin (META1), COTI (COTI), Paragon (PRG), AirToken (AIR), Chiliz (CHZ), Flow (FLOW).
Despite the issues we've touched upon, I'd like to conclude this segment on a hopeful note. Firstly, the discomfort I'm currently experiencing is far less intense than in past episodes - Bitcoin and Ethereum are demonstrating impressive resilience. Secondly, this unease encapsulates a paradoxical truth: it is during these exact moments of fear and uncertainty that the most rewarding investment opportunities often surface. Once again, this is not financial advice, but a recounting of my personal journey. I'm firmly convinced that the SEC will eventually be surmounted, but not without causing some collateral damage along the way.
Crypto Town Hall will proceed daily this week as we strive to provide all the information you need to know. I look forward to your participation so we can continue our discussion.
Bitcoin Thoughts And Analysis
These are tense times for the crypto market, as the SEC ramps up its attacks on the industry. Bitcoin has remained somewhat stable, but altcoins have fallen off a cliff.
Bitcoin has officially lost the 200 weekly MA as support after battling it for weeks. Not ideal. That said, it is still holding above $25,212, which you know by now that I view as a key level. This “should” be retested as support after the breakout above it a few months ago, and we have now seen that effectively happen. I would really love to see this week back above the 200 MA and have this be more of a fake out than breakdown.
For now, as scary as this is, Bitcoin is still ranging.
Altcoin Charts
Bitcoin Dominance appears to be breaking out of a 2 year range and above 49% for the first time since April, 2021.
Dominance is a good gauge of how much money is flowing in and out of Bitcoin from altcoins. If Dominance is up and Bitcoin is up, altcoins tends to rise slightly against USD but down significantly against Bitcoin. When Dominance is rising but Bitcoin is falling, which is what we have seen here, you see Bitcoin down against USD and altcoins absolutely slaughtered.
There is a major gap in price action from 49% up to around 58%. A move to that level would absolutely destroy altcoins further, so best to just wait and see what happens from here. Let’s hope to see Dominance drop back into the range and settle down.
Thanks, SEC.
Quick update. ETH ended up being rejected at resistance, which highlights why we always wait for confirmation at the candle close. No break out as of yet.
Legacy Markets
Stocks rose as traders geared up for a week filled with interest rate decisions from major central banks. Consumer products and auto shares led the advance in Europe, with U.S. futures indicating a continued move into bull-market territory for the S&P 500. Adidas AG and Tesla Inc. shares increased due to an analyst upgrade and a series of positive news for the electric-car maker respectively.
Investors are awaiting Tuesday's U.S. inflation report, preceding the Federal Reserve's latest policy decision. Market positions suggest another Fed hike, with a higher probability for the next month. Central banks' rate decisions hinge on economic data, suggesting a range of potential scenarios.
Merger and acquisition (M&A) news also improved equity market sentiment. Notably, Novartis AG agreed to acquire Chinook Therapeutics Inc. for up to $3.5 billion, and Teck Resources Ltd. responded positively to Glencore Plc’s cash offer for its coal business.
Energy stocks, however, lagged in European trading due to concerns around the demand outlook and a downward adjustment of Goldman Sachs Group Inc.'s price forecast. Miners also weakened after a nearly 5% drop in iron ore prices, linked to anxieties over China's property industry.
Market uncertainty has been further stoked by last week's unexpected hikes from the Bank of Canada and the Reserve Bank of Australia. The European Central Bank is projected to increase its benchmark rate this Thursday, while the Bank of Japan is expected to maintain its current rates on Friday. Meanwhile, the People’s Bank of China is anticipated to add more monetary stimulus on Thursday, though most economists predict no rate changes just yet.
The S&P 500 has risen over 20% since October, indicative of a bull market. However, top strategists from Goldman Sachs and Morgan Stanley are divided on future market trends. While the former anticipates continued gains, the latter points to the potential of a market dip, citing historical trends from the 1940s.
Key events this week:
US CPI, Tuesday
FOMC begins two-day meeting, Tuesday
Eurozone industrial production, Wednesday
US PPI, Wednesday
FOMC rate decision, Wednesday
IEA oil market report released, Wednesday
China central bank meeting to decide on one-year policy loan rate, Thursday
China property prices, retail sales, industrial production, Thursday
ECB rate decision, Thursday
US initial jobless claims, retail sales, empire manufacturing, business inventories, industrial production
Eurozone CPI, Friday
Japan BOJ rate decision, Friday
US University of Michigan consumer sentiment, Friday
Some of the major moves in markets:
Stocks
The Stoxx Europe 600 rose 0.5% as of 9:50 a.m. London time
S&P 500 futures rose 0.3%
Nasdaq 100 futures rose 0.5%
Futures on the Dow Jones Industrial Average rose 0.2%
The MSCI Asia Pacific Index rose 0.4%
The MSCI Emerging Markets Index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.3% to $1.0779
The Japanese yen rose 0.2% to 139.18 per dollar
The offshore yuan was little changed at 7.1499 per dollar
The British pound rose 0.2% to $1.2592
Cryptocurrencies
Bitcoin fell 0.9% to $25,894.34
Ether fell 1.6% to $1,742.21
Bonds
The yield on 10-year Treasuries advanced two basis points to 3.76%
Germany’s 10-year yield advanced one basis point to 2.39%
Britain’s 10-year yield advanced five basis points to 4.29%
Commodities
Brent crude fell 1.8% to $73.42 a barrel
Spot gold rose 0.2% to $1,964.36 an ounce
Tuesday Is A Huge Day
Below is a list of everything happening tomorrow. Many of these outcomes will bear lasting effects on the market, expect volatility.
SEC ordered to respond to Coinbase's rulemaking request by Tuesday.
US District Court in DC to hold 2pm hearing on SEC's temporary restraining order request against Binance.US.
Internal SEC documents and communications regarding Bill Hinman's 2018 speech on Ethereum's decentralization expected to be unsealed in Ripple case, revealing further reasoning behind Ethereum not being considered a security.
House Financial Services Committee to hold 2pm hearing titled "The Future of Digital Assets – Providing Clarity for the Digital Asset Ecosystem."
Public comment period closing for SEC's proposed changes to "exchange" definition under the Exchange Act, potentially impacting decentralized finance applications.
The Solana Foundation Fights Back
The SEC has designated Solana as a security in both the Binance and Coinbase lawsuits. As if this wasn't vexing enough, the Solana community was recently embroiled in the fallout from the FTX collapse. It seems as though Solana holders just can't find a moment of respite. The silver lining here is that Solana is not alone in facing these challenges this time around, but nevertheless, the outlook remains gloomy. My strategy moving forward includes inviting major altcoin leaders to Crypto Town Hall to keep everyone informed. In the interim, I've appended below the statement from the Solana Foundation.
“The Solana Foundation disagrees with the characterization of SOL as a security. We welcome the continued engagement of policymakers as constructive partners on regulation to achieve legal clarity on these issues for the thousands of entrepreneurs across the U.S. building in the digital assets space.”
“The Solana builder community is the strongest in the industry, and continues to build exceptional projects and products. The Solana Foundation remains committed to those building for the long-haul to continue to create the best blockchain for a decentralized future.”
Beware Of FUD
The fund that liquidated $2B of altcoins late Friday…
Altcoins took a steep dive late Friday night, and the crypto community quickly churned out fear, uncertainty, and doubt (FUD) narratives to account for the downturn. I urge each one of you to exercise heightened vigilance when reading any news in this current period of market turbulence. It's worth remembering that the rumor mill tends to thrive on FUD when there's market unrest. Consequently, it's wise to approach everything you read with a dose of skepticism and to consistently verify information from primary sources.
The news posted above was completely fake… and a troll. The person who posted it has Scimitar in their bio, did a fake podcast about the fund, the Scimitar twitter only posted once and was created in March.
But people believed this joke.
UK To Become Web3 Hub?
Venture firm Andreessen Horowitz (a16z) is set to open its first international office in the U.K., in response to increasing U.S. regulatory scrutiny on cryptocurrencies. Chris Dixon, a general partner at a16z, revealed in a blog post that the U.K. government recognizes the potential of web3, the decentralized internet powered by blockchain. This move follows lawsuits by the U.S. Securities and Exchange Commission against Binance and Coinbase, which have negatively affected token prices and led the market to explore other jurisdictions. U.K. Prime Minister Rishi Sunak has welcomed the venture firm's move, highlighting the country’s support for web3 and its commitment to providing regulatory clarity for crypto businesses.
Revolutionizing Crypto: How Fold Enables Bitcoin Earnings for Everyone | Will Reeves
Join me in this comprehensive interview with Will Reeves, CEO & Co-Founder of Fold, as we dive deep into the mechanisms that are enabling everyday people to earn Bitcoin. We explore Fold's transformative role in the crypto space, discussing everything from its unique loyalty and rewards system, its focus on satoshis, the recent banking crisis, and El Salvador's significant investment in Bitcoin mining.
In this episode with Will Reeves, we discussed:
What is Fold
Earning Bitcoin
Banking crisis
Giving out $30 million
Loyalty and rewards
Focus on satoshis
Bitcoin only
Bull market
Bitcoin on and off ramps
El Salvador’s $250 million investment in Bitcoin miner
Adoption in El Salvador
Follow Fold and Will
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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.