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In This Issue:
Are You Confused Yet?
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Dollar Cost Averaging For The Win
The SEC Did What?
Coinbase Wins In The Supreme Court
Fire Gary Gensler And Restructure The SEC | Congressman Warren Davidson
Are You Confused Yet?
Lately, I've found myself deeply engrossed in the statements made by various regulatory bodies about the industry. It's almost as if I've become an obsessive character from a movie, piecing together the intricate pieces of a highly complex puzzle. Every time I shut my eyes, I envision a giant cork board adorning my wall, filled with a seemingly disordered collection of comments from different authorities, each one linked by a maze of colored threads and fastened with thumbtacks or pins.
The world of cryptocurrency can drive you nuts.
Rather than subjecting you to the outpourings of my thoughts, I've chosen to share a selection of key points from my mental cork board. My aim is to demonstrate that it may not be me who's losing the plot, but perhaps the regulators, agencies and institutions themselves. Their guidance often lacks clarity or sense.
Let's play a fun game and guess who said what. I'll present an official statement regarding an agency or institution’s view on cryptocurrency, and you can try to guess who uttered it. The answer will be provided in brackets below.
The ___ recognizes cryptocurrency as commodities.
Bitcoin and other virtual currencies are encompassed in the definition [of commodity] and properly defined as commodities, and are subject as a commodity to the applicable provisions of the [Commodity Exchange] Act and [CFTC] Regulations.
Bitcoin, Ether, Litecoin, and Tether tokens, along with other digital assets, are encompassed within the broad definition of commodity.
[CFTC]
The ___ recognizes cryptocurrency as property.
Virtual currency is a digital representation of value, other than a representation of the U.S. dollar or a foreign currency (“real currency”), that functions as a unit of account, a store of value, and a medium of exchange. For federal tax purposes, virtual currency is treated as property. General tax principles applicable to property transactions apply to transactions using virtual currency.
[IRS]
The ___ said the following: (this one is tricky)
Congress, too, needs to step up its efforts. For example, Congress should expand regulators’ powers to prevent misuses of customers’ assets—which hurt investors and distort prices—and to mitigate conflicts of interest.
In the coming months, the Administration will also unveil priorities for digital assets research and development, which will help the technologies powering cryptocurrencies protect consumers by default.
Regardless of the label used, a digital asset may be, among other things, a security, a commodity, a derivative, or other financial product.
[White House]
The ___ follows the guidelines of the CFTC, recognizing cryptocurrency as commodities.
Founded in 1974, the U.S. Commodity Futures Trading Commission (CFTC) is the primary regulator of the U.S. futures and options on futures markets. ___, CBOT, NYMEX and COMEX are separate CFTC-registered and regulated Designated Contract Markets (DCMs) with self-regulatory responsibilities.
[CME]
The ___ recognizes cryptocurrency as securities.
A few years ago - Three-quarters of the market is non-securities, it's just a commodity, cash, crypto.
Today - Crypto markets suffer from a lack of regulatory compliance. It’s not a lack of regulatory clarity. [...] The law is clear, if you’re a securities exchange, clearinghouse, broker, or dealer, you must come into compliance, and register with us. Everything minus Bitcoin is a security.
[SEC]
The ___ recognizes cryptocurrencies can be securities and commodities.
Stablecoins are a type of cryptocurrency that is backed by an asset, such as a fiat currency or a commodity…Cryptocurrencies that are considered “securities” for purposes of the Federal securities laws may be subject to the ___’s regulations.
[OCC]
Did you manage to guess correctly? Now, imagine you're an institution trying to navigate within the rulebook. What would your next steps be? Institutions brave enough to venture into the cryptosphere often find themselves in a high-stakes guessing game, a scenario seemingly preferred by the SEC.
If you participated in our earlier guessing game, you might have observed the unique position held by the SEC. They are the only authority insisting that all cryptocurrencies, except for Bitcoin, are securities. The SEC appears committed to consolidating the entire industry under one category within its purview. Why Gary Gensler adheres to such a stance is beyond me. His motivation could range from personal resentment, a strategic power play, or even political inclinations.
With a more open-minded approach from the SEC, I am convinced that regulators could come to a common understanding. While there are several disruptors in the mix, Gary Gensler seems to be the cog in the machine that could potentially derail the entire industry. A shift is long overdue.
The silver lining here is that a clear opponent brings us one step closer to a well-regulated crypto environment in the U.S. There will undoubtedly be obstacles, some of which we can't yet foresee. But if a single individual hinders significant progress, then we have surely made considerable strides. I'm eager for the day we overcome the SEC's resistance. It will be a moment of victory, indeed. Until then, the game continues.
Let's prepare for an exciting week ahead, everyone. I'm looking forward to connecting with all of you at Crypto Town Hall.
Bitcoin Thoughts And Analysis
Suddenly, then all at once.
What a weekly candle! Bitcoin broke through the 200 MA, key resistance at $28,600 and then engulfed the last 2 full months of price action. This was the highest weekly close in over a year, meaning price also made a new high and confirmed the higher low that we were watching and expecting around $25,000.
As I said, I was looking for one “trade” in the past few months, which was that retest of the $25,212 area. I went in heavily and am sticking with it.
Assuming you are also bullish, a retest of the $28,600 area looks like a potentially good entry if we see some retracement. There was a ton of bearish divergence with overbought RSI on lower time frames.
Altcoin Charts
There is a ton of local resistance in the current area, and Ethereum is struggling to break it. Some people use the top wick ($1,927), while others favor drawing resistance using the line most touched ($1,908). Either way, you can see that price is being repeatedly rejected here, with long wicks up that indicate sellers are aggressively stepping in anytime price pushes.
I am not actively trading this at the moment, but would be looking for a close above this entire area before being interested. A drop to the 50 MA around $1,820 would also be interesting.
Legacy Markets
Government bonds experienced a rally while stocks declined as investors sought to mitigate the risk of economic slowdown due to central banks' aggressive inflation control measures and rate hikes.
European bond yields dropped and the Stoxx Europe 600 Index fell for the sixth consecutive day due to concerns about Germany's struggling economy. The business outlook for Germany, Europe's largest economy, has reached its lowest point this year.
There are growing fears in equity markets that central banks' determined efforts to quell inflation by raising rates could damage fragile economies. After its worst week since March, futures on the S&P 500 indicated further losses, while US Treasury yields also fell.
Simultaneously, markets are adjusting to significant political changes in Russia. Russian officials met with key partners, including China, following Yevgeny Prigozhin's decision to halt the advance of his Wagner mercenary group towards Moscow.
Oil prices are rising due to concerns that prolonged instability in Russia could impact global oil markets. The ongoing war in Ukraine has already disrupted trade flows, leading major consumers in Asia, including China, to increase imports of Russian energy.
Moreover, European gas markets are experiencing their highest volatility since Russia's invasion of Ukraine. Shares of the Russian aluminum producer United Co. Rusal International PJSC dropped by almost 9%.
Key events this week:
US new home sales, durable goods, Conference Board consumer confidence, Tuesday
ECB President Christine Lagarde speaks at ECB forum in Sintra, Portugal, Tuesday
China industrial profits, Wednesday
US wholesale inventories, goods trade balance, Wednesday
Federal Reserve to unveil results of annual banking industry stress test, Wednesday
Policy panel with ECB’s Christine Lagarde, Fed Chair Jerome Powell, BOJ’s Kazuo Ueda and BOE’s Andrew Bailey at ECB forum in Sintra, Wednesday
Sweden rate decision, Thursday
US GDP, initial jobless claims, Thursday
Atlanta Fed President Rafael Bostic speaks on the US economic outlook at event in Dublin, Thursday
China manufacturing PMI, non-manufacturing PMI, Friday
Eurozone CPI, unemployment, Friday
Japan unemployment, industrial production, Tokyo CPI, Friday
US personal income and spending, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.3% as of 10:39 a.m. London time
S&P 500 futures fell 0.1%
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index fell 0.2%
The MSCI Emerging Markets Index fell 0.3%
Currencies
The Bloomberg Dollar Spot Index fell 0.1%
The euro was little changed at $1.0896
The Japanese yen rose 0.3% to 143.20 per dollar
The offshore yuan fell 0.3% to 7.2406 per dollar
The British pound rose 0.2% to $1.2737
Cryptocurrencies
Bitcoin fell 0.2% to $30,335.88
Ether fell 0.3% to $1,888.01
Bonds
The yield on 10-year Treasuries declined four basis points to 3.69%
Germany’s 10-year yield declined four basis points to 2.31%
Britain’s 10-year yield declined three basis points to 4.29%
Commodities
Brent crude rose 0.2% to $74.01 a barrel
Spot gold rose 0.4% to $1,929.80 an ounce
Dollar Cost Averaging For The Win
After you've read through the newsletter, I encourage you to revisit this segment and click on the featured image above to watch the video. It presents a timelapse that captures the ebb and flow of Bitcoin's price, overlaid with a graph that showcases the average cost of dollar-cost averaging. While the specifics in the provided screenshot might be challenging to make out, it's significant to note that we've returned to a phase where those employing dollar-cost averaging are seeing profits. As the Tweet clarifies, “when the entire orange line goes below the dotted white line, that’s when ALL daily DCA’ers are in profit.”
The SEC Did What?!
Let's affirm this - The SEC isn't particularly concerned about protecting investors. Last Friday, the SEC greenlit the first leveraged Bitcoin futures ETF, which is slated to debut tomorrow. Does it seem logical for a 2x leveraged futures ETF to gain approval before a spot ETF? No, it doesn't, but kudos to Volatility Shares for being the inaugural issuer to secure approval for a leveraged product.
Leveraged ETFs are not designed with the safety of the average consumer in mind, but are tailored for professionals. However, they are routinely misused by speculators. As a pragmatist, I would think that the SEC, having approved a 2x leveraged ETF, would logically follow up with approval for a spot ETF. But the SEC's decision-making, clearly not rooted in rationality and seemingly influenced by its own agenda, remains unpredictable.
Coinbase Wins In The Supreme Court
On Friday, five out of the nine Supreme Court Justices ruled in favor of Coinbase, enabling it to pursue arbitration against distinct class action lawsuits (unrelated to the SEC). This decision is advantageous for two reasons: firstly, it permits Coinbase to delay resolution of less significant issues and possibly settle for less; secondly, this case signifies the first instance where a crypto company has presented arguments before the U.S. Supreme Court, which could bear positive repercussions in the future. For Coinbase, their primary focus is currently on the SEC. If the SEC is overcome, it's a straightforward victory for Coinbase.
Fire Gary Gensler And Restructure The SEC | Congressman Warren Davidson
I talked to Congressman Warren Davidson about his SEC Stabilization Act, the role of Gary Gensler, and Davidson's vision of how the SEC should be structured.
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.