The Wolf Den #775 - Maximalists Are Coping
Imagine being a Bitcoiner and cheering for the SEC...
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🔥 Today’s Newsletter is Sponsored By MELD!
🔥 I am really excited to share MELD because, at the bottom of this newsletter, I have a 40-minute interview with Ken Olling, the CEO of MELD.
🔥 In this interview, Ken and I talked about the forbidden 4-letter word ‘yield’ and how MELD is doing things differently this time.
🔥 If you have been thinking about trying out MELD, I highly recommend you watch the YouTube video linked below to learn more.
In This Issue:
Maximalists Are Coping
Bitcoin Dip Coming Soon?
Dollar Dumping, But Stocks Struggling - Legacy Markets
Fiat Is The Real Ponzi
Can The Torres Decision Be Overturned?
The SEC Is Ready To Review ETFs
The Perfect Time For DeFi | Ken Olling, CEO Of Meld
Maximalists Are Coping
Last Thursday, July 13th, marked a significant victory for the entire industry. Ripple's triumph over the SEC was a boon for the XRP ecosystem and simultaneously advantageous for aspiring crypto entrepreneurs, distressed altcoins, major exchanges, and ETF filers. However, Bitcoin maximalists chose not to join the celebration.
Discussing this isn't pleasant, but it's necessary to be forthright. Bitcoin maximalists were not thrilled with the SEC’s verdict. If they had their way, XRP and all other altcoins would be categorized as securities, a move ironically detrimental to Bitcoin.
Following the verdict, the total market cap saw an immediate increase between $60-70 billion - a modest gain, but with potential for monumental long-term effects. Key here is that if XRP isn't a security, then most other altcoins likely won't be either. Now, let’s ponder the alternative scenario.
XRP would have plummeted, eradicating billions instantly.
Altcoins would be under immense sell pressure.
The SEC's scrutiny would severely impact altcoins.
Altcoins, DeFi, and NFTs would be in danger.
Exchanges' future business models would be jeopardized.
COIN's value would plummet, the SEC’s case strengthened.
Crypto VCs would face increased liquidation risks.
The Grayscale discount would deepen across all assets.
Fear of contagion would reignite.
Bitcoin's ETF approval likelihood would dwindle.
Bitcoin's price would drop, mirroring the market.
Aside from Bitcoin maximalists or those waiting for Bitcoin to drop below $10,000, I can't think of any crypto investor content with these potential outcomes. Despite the inherent uncertainties in crypto, the broader narrative remains robust currently.
Ironically, Bitcoin bears would lose in either XRP outcome. If XRP were deemed a security, the consequences listed above could cause a harsh Bitcoin slump. But with XRP not being a security, altcoins can thrive, a situation even more painful for Bitcoin maximalists.
The largest short-term risk to prices is the SEC delaying the ETF decision. Although trivial in the long run, it could cause short-term disturbances. Additionally, a Binance.US DOJ investigation could emerge, especially considering the SEC’s allegations.
However, Binance.US's ongoing struggles could potentially soften the blow of a DOJ investigation. Public awareness of their issues - price discrepancies, layoffs, halted deposits, etc., has allowed the market to anticipate and prepare for potential disaster.
Despite these challenges, I believe the market is resilient enough to weather a DOJ lawsuit against Binance.US without inducing a mini-bear market. At worst, we might see a brief and sharp 'V' shape price movement. The current macro structure is robust - sorry, maximalists.
I realize today's intro reads like a rant, but with no recent news, I thought it worthwhile to share some thoughts.
Maximalism does not champion crypto or Bitcoin. Maximalists may not recognize it, but the reason Vitalik parted ways with Bitcoin was his identification of this harmful belief. While maximalists deserve credit for propelling Bitcoin from its lows, their beliefs no longer have a constructive place in the market.
To conclude, I'd like to share a prescient post from Vitalik Buterin in 2014, addressing this very issue. Vitalik, an early Bitcoin contributor, saw what was coming before anyone else.
“One of the latest ideas that has come to recently achieve some prominence in parts of the Bitcoin community is the line of thinking that has been described by both myself and others as "Bitcoin dominance maximalism" or just "Bitcoin maximalism" for short - essentially, the idea that an environment of multiple competing cryptocurrencies is undesirable, that it is wrong to launch "yet another coin", and that it is both righteous and inevitable that the Bitcoin currency comes to take a monopoly position in the cryptocurrency scene…. It is a stance that building something on Bitcoin is the only correct way to do things, and that doing anything else is unethical.”
Bitcoin Dip Coming Soon?
While I am generally bullish, I am still approaching Bitcoin with caution for now. $31,000 has been a VERY tough nut to crack, with 4 consecutive weekly candles pushing through and then closing above, leaving wick through resistance. Sellers are clearly very interested in this area and there’s a ton of liquidity.
This usually means price needs to drop a bit to find enough fuel for the next push up. I am watching the $28,600 area and the 200 MA below if we see a drop.
The daily overbought bearish divergence is still valid, because no hidden bullish divergence has replaced it. RSI has already cooled to almost 50, which is the bullish/bearish line. A drop below and we should see a trip to oversold, which would coincide with a dip.
Most importantly, Bitcoin is sideways and ranging, looking for direction. As you can see, every test of the top and bottom of this range has been met with major volume spikes. There is a ton of buying at the bottom and selling at the top. Stalemate. A break of the range either way should see continuation in the direction of that breakout.
A sweep of the lows looks quite likely for now, at the very minimum.
I am looking to a buy a bit more lower, or for a convncing breakout above $31,000.
I could easily be wrong!
Dollar Dumping, But Stocks Struggling - Legacy Markets
European stocks experienced their first drop in seven days due to concerns over China's sluggish economy, affecting primarily luxury and commodity stocks. Major resource companies like Anglo American Plc, Glencore Plc, and Rio Tinto Plc saw a drop in response to China's second-quarter growth missing estimates. Luxury sector leaders such as LVMH and Hermes International also experienced a slump. Meanwhile, Cartier owner Richemont witnessed a surprising drop in sales in the Americas.
Europe's strong reliance on Chinese imports makes it particularly susceptible to China's economic slowdown. Energy and raw materials companies account for about 12% of the Stoxx Europe 600, with consumer discretionary industries making up another 11%. JPMorgan Chase & Co. strategists anticipate continued weakness in the region due to lower bond yields and earnings disappointments.
Over the next few weeks, company earnings will be critical for market direction. S&P 500 firms are predicted to see a 9% decline in second-quarter profits, the worst since 2020. In Europe, the slump could be steeper at 12%.
On the bright side, big Wall Street banks are showing promising results, with rising interest rates leading to record profits for JPMorgan and other major rivals.
China's mainland shares were the worst performers in Asia on Monday, while trading in Hong Kong was halted due to a storm. The dollar remained stable after a five-day loss, and the yen rose slightly after Bank of Japan Governor Kazuo Ueda commented on high uncertainty over the US and global economies.
Key events this week:
G-20 finance ministers and central bankers are meeting in India, Monday
European Central Bank President Christine Lagarde speaks, Monday
US empire manufacturing, Monday
US retail sales, industrial production, business inventories, cross-border investment, Tuesday
Eurozone, UK CPI, Wednesday
US housing starts, Wednesday
China loan prime rates, Thursday
US initial jobless claims, existing home sales, Conf. Board leading index, Thursday
Japan CPI, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.4% as of 9:53 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures rose 0.1%
Futures on the Dow Jones Industrial Average fell 0.2%
The MSCI Asia Pacific Index was little changed
The MSCI Emerging Markets Index was little changed
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro rose 0.1% to $1.1244
The Japanese yen rose 0.3% to 138.34 per dollar
The offshore yuan fell 0.2% to 7.1753 per dollar
The British pound was little changed at $1.3095
Cryptocurrencies
Bitcoin was little changed at $30,301.24
Ether was little changed at $1,928.34
Bonds
The yield on 10-year Treasuries declined four basis points to 3.79%
Germany’s 10-year yield declined three basis points to 2.48%
Britain’s 10-year yield declined three basis points to 4.41%
Commodities
Brent crude fell 1.7% to $78.54 a barrel
Spot gold was little changed
Fiat Is The Real Ponzi
This image captivates me as it succinctly illustrates the distinction between fiat and Bitcoin in a comprehensible manner. Critics often dodge Bitcoin, deeming it overly complex, but that's not necessarily true. The crux of understanding lies in recognizing the flawed fiat system, burdened by its infinite supply. Once you grasp this, you're already one step ahead. Unlike the government, which resorts to printing more money to tackle issues, Bitcoin resolves them through its inherent scarcity. The math isn't complicated: Bitcoin > fiat.
Can The Torres Decision Be Overturned?
Yes, it could. As appealing as it is to believe in the everlasting safety of XRP and altcoins, it's crucial to recognize the fluid nature of law and the possibility of a higher court reversing Judge Torres' decision. Certainly, such a development would take considerable time, meaning that the current decision stands as law in the interim. While nothing is guaranteed, my hope rests on the continued positive growth and legal compliance of our industry, to ensure this issue doesn't reemerge. However, it's important to be aware that it could.
The SEC Is Ready To Review
The SEC has formally acknowledged the submitted ETF proposals, indicating readiness to initiate the review process. The exact timeline is uncertain due to various changing factors, but according to K33 Research, the earliest possible date for an ETF approval is August 12th, unless the Grayscale decision precedes it.
My perspective is this - a delay, although disheartening, only postpones the inevitable. If a 2x futures ETF gets the green light, a spot ETF will likely follow. Furthermore, the ETFs are currently in a public commentary phase. If you wish to contribute to the BlackRock filing, you can do so HERE.
Remember, you don't need to be a noted economist to participate - all viewpoints are welcomed and will be made public.
The Perfect Time For DeFi | Ken Olling, CEO Of Meld
After FTX, Voyager, and Celsius collapses last year it is not apparent to see a word yield again and talk about it. But here is Meld, a new product that will be launched soon and… disrupt financial markets. Check out this interview with Ken Olling, CEO of Meld, remember always to do your own research.
In this episode with Ken, we discussed:
Yield… Again??
Risk
Meld in the USA
Central Banks & control of USD funds
Bitcoin’s value proposition
Ripple’s win over the SEC
What is Meld?
Collateral & tokenization
Next 10 years
Disruptive creativity
Flash loans
Meld’s launch
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.