The Wolf Den #761 - Scott, Will You Manage My Money?

Hell No!

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In This Issue:

1. Scott, Will You Manage My Money?

2. Bitcoin Thoughts And Analysis

3. Altcoin Charts

4. Legacy Markets

5. The Daily Close

6. Bitcoin Correlation Hits Major Low

7. Binance Retreats

8. Hong Kong Approves Crypto ETFs

9. FTX Creditor Update

10. Crypto Macroeconomics: Bitcoin Supply & Demand, ETF, Debt Spiral | Macro Monday With James Lavish

Scott, Will You Manage My Money?

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Over the years, I've received the same question countless times: "Scott, will you manage my money?" I'm deeply honored by the trust implied in these requests, but I must set the record straight: I will not be managing anyone's money except my own.

Contrary to what you might assume, the role of an investment manager is not as different from ours as you'd think. It's easy to envision investment managers as market gurus, fully versed in the minutiae of the financial world, but that's not really the essence of their job. They are compensated to manage investors, not necessarily investors' money.

If any investment managers are taken aback by this statement, allow me to clarify: I wholeheartedly acknowledge the challenges you face in your profession. My intention is to highlight that the role of an investment manager is demanding in ways that people may not readily comprehend. These professionals excel in handling not just their own emotions but also those of their clients - a task that often involves navigating a labyrinth of irrational sentiments. The unvarnished truth is that people seek out investment advisors to delegate their time, emotional investment, and to compensate for their own lack of expertise. That's the stark reality of the investment world.

I love this quote from Meir Statman - Good financial advisors are good financial physicians. Good advisors possess the knowledge of finance, as good physicians possess knowledge of medicine, and good advisors add to it the skills of good physicians: asking, listening, empathizing, educating, and prescribing.

For those of you following along, prepare for some unvarnished truths.

I am quite certain that the majority of investors have the capacity to construct a well-balanced portfolio aimed at success, without the aid of an advisor. However, I am less assured that these same investors can effectively execute this meticulously crafted strategy, with emotions often being the stumbling block.

The most significant hurdle for both investors and investment managers is market volatility. Though a well-curated portfolio can weather financial storms, it holds no value if the investor succumbs to panic. The strength of a portfolio correlates directly with an investor's ability to control their emotions. Similarly, the success of an investment manager's portfolio hinges on their skill in managing their clients' emotional reactions - there you have it, unvarnished truth.

Regardless of whether you're an individual investor managing your own assets or a manager overseeing someone else's, setting expectations is crucial. Emotions are inevitable, regardless of your efforts to suppress them. However, if they're anticipated and understood, the potential for harm can be mitigated. Personally, I doubt I could manage the distress of clients worried about their retirement funds dropping even slightly. Simply sharing my thoughts here is emotionally taxing enough; any more could be overwhelming.

If you wish to derive value from these letters, begin by having faith in your capabilities. I am convinced that my readers have the ability to build a robust portfolio. When the financial storm clouds gather, I urge you all to keep checking in here for guidance and reassurance as you navigate the emotionally challenging landscape of investing - this is by no means an easy task. I commend all the advisors out there who safeguard our portfolios and respect the individuals who manage to do so on their own.

Remember, nothing in this letter should be construed as financial advice. We are all part of one team, and I eagerly anticipate our collective journey towards success.

Bitcoin Thoughts And Analysis

HOURLY CHART

After consolidating for a couple of days, Bitcoin is once again attempting a very low time frame breakout. I rarely zoom in this far, but this is all there is worth seeing at the moment - a perfect bounce from the red demand zone and then move through clear descending resistance. This should take price back to the highs around $31,500.

Higher time frames have not changed.

Altcoin Charts

I am starting to get interested. Sentiment on altcoins could not be much worse - consensus seems to be that Bitcoin will dominate forever and that altcoins are “dead.” This is when I start to pay attention.

I have taken very, very small positions (5-10% of what I want) in a few altcoins or added to existing ones, but do think they will drop a bit further before we really see them outperform. My working thesis is that Bitcoin will push again, altcoins will lose value vs. Bitcoin, then Bitcoin will consolidate and we could see a mini run for altcoins.

This is a decent time to start looking at the coins that you are interested in and watching for potential upcoming entries, especially if there are support areas below.

Legacy Markets

• Stocks Struggle to Shake Off Growth, Rates Fears: Markets Wrap

Equity markets rallied on Tuesday, driven by hopes of Chinese stimulus and a less severe economic downturn. However, the Stoxx Europe 600 Index surrendered early gains after ECB President Christine Lagarde signaled continued interest-rate hikes. Prosus NV shares surged nearly 10%, while Volkswagen's stock declined after announcing production cuts. Bond prices fell as commodities like iron ore and copper increased due to hopes of more Chinese economic support. The news of US Treasury Secretary Janet Yellen's planned visit to Beijing next month also boosted market optimism. Investors are now closely watching upcoming US data on business-equipment orders, home sales, and consumer confidence

Key events this week:

• US new home sales, durable goods, Conference Board consumer confidence, Tuesday

• US wholesale inventories, goods trade balance, Wednesday

• Fed 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 speak, Wednesday

• Eurozone economic confidence, consumer confidence, Thursday

• US GDP, initial jobless claims, Thursday

• Atlanta Fed President Rafael Bostic speaks, Thursday

• China manufacturing PMI, non-manufacturing PMI, balance of payments, Friday

• US personal income and spending, University of Michigan consumer sentiment, Friday

Some of the main moves in markets: 

Stocks

• The Stoxx Europe 600 was little changed as of 9:40 a.m. London time

• S&P 500 futures rose 0.2%

• Nasdaq 100 futures rose 0.3%

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index rose 0.3%

• The MSCI Emerging Markets Index rose 0.5%

Currencies

• The Bloomberg Dollar Spot Index fell 0.1%

• The euro rose 0.3% to $1.0937

• The Japanese yen fell 0.2% to 143.76 per dollar

• The offshore yuan rose 0.3% to 7.2186 per dollar

• The British pound rose 0.1% to $1.2731

Cryptocurrencies

• Bitcoin rose 0.7% to $30,379.86

• Ether rose 1.4% to $1,876.7

Bonds

• The yield on 10-year Treasuries advanced two basis points to 3.74%

• Germany’s 10-year yield advanced one basis point to 2.32%

• Britain’s 10-year yield advanced three basis points to 4.33%

Commodities

• Brent crude rose 0.6% to $74.63 a barrel

• Spot gold was little changed

The Daily Close

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Bitcoin Correlation Hits Major Low

• View The Tweet here

Cryptocurrencies were once heavily criticized for their strong correlation with equities, but that era has passed. It's conceivable that crypto might align with equities once again when the market stabilizes. However, given that our news cycle now significantly diverges from traditional equities, I anticipate this correlation will continue to decrease, barring a substantial recession or a sudden boom affecting all markets. So, there's one less concern for the critics to harp on.

Binance Retreats

• Binance withdraws license application in Austria: FinanceFWD

Binance seems to be retreating from numerous markets with surprising speed. This month alone, the company announced its departure from the Netherlands, Cyprus, the U.K., and most recently, Austria. Furthermore, after its exit from Canada last month, it is now under scrutiny from Belgian authorities. While Binance continues to operate globally, it's also facing investigations in Italy, Spain, and France over allegations of money laundering.

It remains to be seen whether these developments will prove to be a blessing in disguise, allowing Binance to regroup and emerge stronger, or a curse from which it may never recover. Time will inevitably reveal the outcome. If Binance withdraws from the U.S. market, it would represent a significant setback. However, it's evident that Coinbase has already secured its dominance there. Given that a substantial portion of Binance's activity originates from Europe, it's clear that maintaining a strong presence in this region is essential for its survival.

Hong Kong Approves Crypto ETFs

• HSBC Enables Bitcoin, Ethereum ETF Trading in Hong Kong

The Hong Kong and Shanghai Banking Corporation (HSBC) has officially launched its inaugural crypto products, which comprise three separate ETFs for Bitcoin and Ethereum futures. This move is significant as it represents the first instance of a bank in Hong Kong offering crypto products through ETF trading, even including an Ethereum product. Although these ETFs are currently futures-based, I wouldn't be surprised if spot ETFs were introduced ahead of the U.S. According to regional reports, regulators in Hong Kong have been encouraging HSBC and Standard Chartered to cater to crypto clients.

FTX Creditor Update

• Did Everyone Forget FTX Recovered Funds 2 Months Ago?

The crypto community is abuzz with the announcement that the FTX management team has reclaimed $7 billion of the $8.7 billion that was lost. This is indeed commendable, yet not entirely fresh news. While nothing is definite until the creditors have been compensated, we were aware as early as April that the FTX team was making considerable progress in recouping the funds. Despite this, social media platforms and major news outlets seem to be rehashing the story as if it had slipped everyone's mind. Whether this is a strategic move to boost engagement or just poor reporting, it's crucial that narratives like these maintain accuracy. FTX did file a new report recently, but the recovery of the funds isn't a new development. For those diligently tracking this matter, the next report is scheduled for release in August.

Crypto Macroeconomics: Bitcoin Supply & Demand, ETF, Debt Spiral | Macro Monday With James Lavish

In this video, Dave Weisberger, Mike McGlone, and our special guest James Lavish discuss macroeconomics and its impact on Bitcoin and other cryptocurrencies.

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.