The Wolf Den #772 - Welcome To The Future
Nobody Is Safe
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In This Issue:
Welcome To The Future
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Support and Resistance
Coinbase Is The Chosen One
Vanguard Is Bullish On Mining Stocks
Bitcoin To Reach $120,000 By The End 2024 | Dan Gunsberg & Alessio Rastani
Welcome To The Future
During bull runs, writing this newsletter is a total joy because there's loads of upbeat content to delve into. But every so often, I need to pivot to more serious matters that can't be ignored. Today's one of those days.
Have you heard of Arkham? No, not Batman's Arkham. I'm talking about Arkham Intelligence - a contentious crypto firm that's suddenly burst onto the scene, causing a bit of a ruckus in the community.
Yesterday on CryptoTownHall, we had the chance to dive into Arkham and ask their CEO some tough questions. You can listen HERE. But for those that didn't get the chance or want to learn more, I am going to briefly discuss here.
For those out of the loop, Arkham is a crypto intelligence firm that's set its sights on "Deanonymizing the Blockchain," for better or worse. You might remember Arkham from a market-crashing incident around three months back (see below), or perhaps from their insights into SBF's wallets. The screenshot below shows when they shared an incorrectly ID’d wallet. The more you dig into Arkham, the more you realize it's making waves everywhere - and not always in a good way.
Today, we're going to tackle the reason Arkham's been the talk of the town lately – their new product dubbed the "Arkham Intelligence Exchange." To keep things fair and balanced, I'll start by giving you their own rundown of the platform. Then I'll chime in with my take on what's really happening. Our perspectives (yours and mine) are likely to differ somewhat, and that's cool.
What is Arkham? Here is the answer from Arkham’s POV:
What is Arkham? Here is my POV:
Let me make one thing clear, I'm not out to vilify Arkham. I think the premise is intriguing and the concept is quite fascinating. I'm all for the free market making its choices, and I appreciate that I live in a place where innovators have the freedom to push boundaries. But, I do have serious concerns about where Arkham could end up.
Arkham touts itself as a platform focusing on public information about trading firms, market makers, exchanges, and institutional players, but it's easy to see how the platform could quickly morph into something much more. There's talk about using Arkham to expose scammers, which sounds great, but I worry these tools are too powerful for a community that can sometimes be reckless.
Arkham may have the best of intentions, but the platform is poised to become a breeding ground for novice internet detectives eager to misinterpret on-chain data and get rewarded for it. Miguel Morel, the head honcho at Arkham, assures us there are robust rules in place, protections against harmful behaviors, and rigorous reviews of bounty submissions. But is that really sufficient? I suppose privacy isn't a privilege anymore.
Arkham aspires to be a beacon of truth, but I worry they're heading in the exact opposite direction.
The Arkham Intelligence Exchange seems to be offering a service that could potentially allow scammers to amp up their scams with some strategic social and technical manipulation or deception. If a scammer wants to mislead the public or if some newbie user is after a quick buck, all they'd need to do is outsmart Arkham by setting up a doxed or private wallet. The potential downsides of a platform that incentivizes doxing are limitless.
If Miguel Morel were reading this newsletter, I suspect his response to my concerns, based on the hour-long conversation we had, would be something like, "all current financial platforms and interactions function on trust and incentives already exist in all systems." But not to this degree. The Arkham Intelligence Exchange is a first in the financial world, aside from shady markets and unregulated corners of the web.
I get that innovation has to start somewhere, but this isn't a baby step - it's a huge leap into uncharted tech territory. Just think about the havoc that AI and deep fake tech could wreak on markets with Arkham's help. I'd rather not even go there.
How can we be sure Arkham isn't in cahoots with the government? How can we trust Arkham to handle data responsibly? How can we trust Arkham's data to always be accurate? How can we trust Arkham not to dox innocent people? How can we trust Arkham not to manipulate the market? This list of concerns about the can of worms Arkham opens with its tech could go on forever. No one is prepared to handle this kind of power.
Miguel argues that Arkham will simply fold if they lose the market's trust, and I believe there's truth in that. But a whole lot of harm could be done before the platform is erased from existence. FTX is a case in point. FTX fell apart after billions of dollars had already been poured into the platform. Arkham may not be collecting money, but the trust it builds could cause significant harm if it suddenly collapses. Trust is as valuable as currency.
Having been on the receiving end of attacks using false and incomplete information, I can tell you it's a horrible experience that I wouldn't wish on anyone in this field. There will always be a premium attached to honest on-chain analysis, but I'm not convinced that Arkham has built the right tool to fulfill this need.
I sincerely wish the best for Arkham and Miguel and appreciate the frank conversations we're having. I also want to give Miguel props for stepping into our Space and defending his beliefs. I really hope Arkham will be put to good use, but I can't shake my doubts. Privacy is important, and I hope we can preserve it as a core aspect of our industry, rather than commoditizing it.
Bitcoin Thoughts And Analysis
BITCOIN IS SIDEWAYS!!!
Legacy Markets
The US dollar weakened, while stocks rose and Treasury yields declined as expectations of slowing US inflation reduced the likelihood of further interest rate hikes. The Stoxx Europe 600 index saw gains, with tech and bank sectors performing well. However, travel and leisure shares fell due to Deutsche Bank downgrading recommendations on certain stocks. Futures for the S&P 500 and Nasdaq 100 also increased following previous gains. The trend of decreasing US inflation is seen as crucial for policymakers, although an unexpected rise in core inflation could impact markets negatively. In Asia, there were mixed results in the stock markets, with declines in Japan and increases in Australia and India. Hong Kong stocks rose due to strong credit expansion, and Chinese tech firms saw gains on optimism about policy support. The yen's strengthening beyond the 140 level is attributed to speculation about potential policy changes by the Bank of Japan.
Key events this week:
Canada rate decision, Wednesday
Bank of England Governor Andrew Bailey speaks, Wednesday
US CPI, Wednesday
Federal Reserve issues Beige Book, Wednesday
Fed speakers include Neel Kashkari, Loretta Mester, Raphael Bostic, Wednesday
China trade, Thursday
Eurozone industrial production, Thursday
US initial jobless claims, PPI, Thursday
US University of Michigan consumer sentiment, Friday
US banks kick off earnings, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.8% as of 10:18 a.m. London time
S&P 500 futures rose 0.2%
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average rose 0.1%
The MSCI Asia Pacific Index rose 0.5%
The MSCI Emerging Markets Index rose 0.7%
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.1% to $1.1021
The Japanese yen rose 0.5% to 139.70 per dollar
The offshore yuan rose 0.2% to 7.1954 per dollar
The British pound was little changed at $1.2924
Cryptocurrencies
Bitcoin rose 0.5% to $30,724.63
Ether rose 0.8% to $1,889.35
Bonds
The yield on 10-year Treasuries declined three basis points to 3.94%
Germany’s 10-year yield was little changed at 2.65%
Britain’s 10-year yield declined six basis points to 4.60%
Commodities
Brent crude rose 0.4% to $79.73 a barrel
Spot gold rose 0.1% to $1,934.94 an ounce
Support and Resistance
The first nugget of wisdom traders pick up on their journey is the concept of support and resistance, yet it's baffling how often it's misunderstood. Adrian Zduńczyk, the chap behind the thread I've linked above, happens to be a friend of mine and one of the sharpest analysts I've come across. In his thread, Adrian drills into the finer points of S/R, likely shedding light on aspects many of you aren't familiar with. Once you're done here, circle back to this and take a gander at his work—you won't regret it.
Coinbase Is The Chosen One
Coinbase has now officially been chosen to set up surveillance-sharing agreements with Wise Origin Bitcoin Trust, WisdomTree Bitcoin Trust, VanEck Bitcoin Trust, Invesco Galaxy Bitcoin ETF, and ARK 21Shares Bitcoin ETF. Before this news, Coinbase was already pegged to be the selected exchange, but after the SEC asked for some clarity, we've got the confirmation, hence the upswing in COIN stock.
Speaking of COIN's performance, I assume what we're seeing at the moment is the market buzzing over the rumor (of ETF approval). Some believe that COIN's boost is due to insiders in the know, but I'd say the more likely reason is the market realizing that COIN is seriously undervalued IF the spot ETF gets the nod. Most folks who analyze this stuff, including yours truly, believe a spot ETF will happen — that's not exactly top-secret info. But, if the ETF gets knocked back or put on hold, I'm expecting a sizable downturn in this stock.
Even their cofounder is buying… heavily. See below.
Vanguard Is Bullish On Mining Stocks
SEC filings from earlier this week have unveiled that Vanguard, a money manager overseeing $7.2 trillion, now holds exposure to over half a billion dollars in Bitcoin mining stocks. This, in itself, debunks the notion propagated by some doom-mongers that the mining industry is teetering on the edge of oblivion as the halving looms. Another way to interpret this news is that Vanguard is, in effect, buying Bitcoin, underscoring the need for a spot ETF.
To restate my point from a couple of days ago, the halving will inevitably push some mining operations into unviability due to escalating costs. Nonetheless, those miners in advantageous positions will leverage this event to consolidate their foothold even more. I urge you to view with suspicion articles peddling fear, uncertainty, and doubt about the halving - it's an inherently bullish event. Vanguard now holds $280.5 million in Marathon shares and $281 million in Riot shares.
Bitcoin To Reach $120,000 By The End 2024 | Dan Gunsberg & Alessio Rastani
Standard Chartered forecasts Bitcoin could reach $120K by the end of 2024. How real is this forecast? I talk to my favorite guests: Dan Gunsberg (Hxro) and Alessio Rastani, who will cover the markets and provide his own forecast.
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.