The Wolf Den #779 - Cathie Wood's Predictions Aren't High Enough

Yup. I said it.

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In This Issue:

1. Cathie Wood’s Predictions Aren’t High Enough

2. BTC Is Boring… Or Bleeding?

3. The Dollar Is Pounding Markets - Legacy Markets

4. FedNow Launches

5. Coinbase Will Fully End Its Borrow Program

6. Congress Proposes A New Framework For Digital Assets

7. SOS! Gensler Wants More Money, RFK Wants BTC-Backed-USD, Coinbase Wants 8 Billion People On-Chain

Cathie Wood’s Predictions Aren’t High Enough

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Cathie Wood's recent predictions for Bitcoin's value in 2030—$1.25 million in a bullish scenario and $625,000 as a baseline—have sent ripples throughout the crypto community. These estimates don't materialize from thin air; they involve intricate quantitative analyses. Simplistically, one might imagine assembling a team of quants, brainstorming a variety of theories, running numerous Excel models, and voilà: a groundbreaking Bitcoin price prediction emerges.

Of course, such a portrayal is a vast oversimplification of an intricate procedure. I hold profound respect for Cathie Wood and the invaluable insights she has imparted to the financial world. Inspired by her, I thought, why not embark on my own Bitcoin forecasting adventure?

While I may not have a battalion of PhD-level quants or seasoned Wall Street veterans on speed dial, I bring forth a unique perspective. Recognizing that price predictions are a formidable endeavor, I've chosen to delve into the AUM (Assets Under Management) of the top 10 largest asset managers. I'm keen to investigate the potential ramifications if 1%, 5%, or 10% of their assets were reallocated to Bitcoin.

HERE… WE… GO…

For starters, we need to know the AUM of the institutions and what 1%, 5%, and 10% represent.

BlackRock - $9,090,000,000,000 AUM

• 1% - $90 billion

• 5% - $454.5 billion

• 10% - $909 billion

Vanguard - $7,600,000,000,000 AUM

• 1% - $76 billion

• 5% - $380 billion

• 10% - $760 billion

Fidelity Management & Research - $4,240,000,000,000 AUM

• 1% - $42.4 billion

• 5% - $212 billion

• 10% - $424 billion

State Street Global Advisors - $3,600,000,000,000 AUM

• 1% - $36 billion

• 5% - $180 billion

• 10% - $360 billion

Morgan Stanley - $3,131,000,000,000 AUM

• 1% - $31.31 billion

• 5% - $156.55 billion

• 10% - $313.1 billion

JP Morgan Chase- $3,006,000,000,000 AUM

• 1% - $30.06 billion

• 5% - $150.3 billion

• 10% - $300.6 billion

Goldman Sachs - $2,672,000,000,000 AUM

• 1% - $26.72 billion

• 5% - $133.6 billion

• 10% - $267.2 billion

Credit Agricole - $2,660,000,000,000 AUM

• 1% - $26.60 billion

• 5% -  $133 billion

• 10% - $266 billion

Alianz Group - $2,300,000,000,000 AUM

• 1% - $23 billion

• 5% - $115 billion

• 10% - $230 billion

Capital Group - $1,350,000,000,000 AUM

• 1% - $13.5 billion

• 5% - $67.5 billion

• 10% - $135 billion

Now for the fun part.

The Grand Totals:

• 1% - $378.49 billion

• 5% - $1.982 trillion

• 10% - $4.164 trillion

If The Grand Totals Were Added To The Entire Crypto Market Capitalization

The current market cap is $1.2 trillion

• 1% - $1.57 trillion (30.8% increase)

• 5% - $3.18 trillion (165% increase)

• 10% - $5.36 trillion (346.6% increase)

If The Grand Totals Were Added To Bitcoin’s Current Market Cap:

The current Bitcoin market cap when I calculated this was $579 billion - keep in mind this figure fluctuates.

• 1% - $957.56 billion (65.2% increase) - Bitcoin is $49,560

• 5% - $2.56 trillion (342.1% increase) - Bitcoin is $132,630

• 10% - $4.74 trillion (718.6% increase) - Bitcoin is $245,580

Up to this juncture, we've derived three distinct Bitcoin price predictions based solely on minor capital shifts from the world's top 10 asset managers. However, when considering the broader landscape of price predictions, this methodology only scratches the surface, perhaps covering a mere 5% of the entire picture. Gauging the potential influx from institutions isn't as straightforward as aggregating the assets of the top 10 managers and drawing a conclusion; the process is much more nuanced.

For a comprehensive prediction, the equation should ideally encompass the following factors:

(Institutions x (1%, 5%, or 10%)) + (Companies x (1%, 5%, or 10%)) + (Government x (1%, 5%, or 10%)) + (Retail x (1%, 5%, or 10%)) = Bitcoin Price

To accurately compute the potential capital inflow from institutions into Bitcoin, we'd need to consider a broad spectrum of financial entities. This would encompass banks, credit unions, insurance companies, brokerage firms, asset management firms, pension funds, hedge funds, sovereign wealth funds, venture capital entities, private equity firms, and mutual funds.

When looking at corporate involvement, our calculations would have to factor in a diverse range of business structures, from sole proprietorships, partnerships, corporations, limited liability companies (LLCs), cooperatives, joint ventures, and conglomerates, to privately-owned enterprises, publicly-traded companies, startups, small businesses, multinational corporations, and even non-profit organizations.

On the government front, we'd be delving into the financial reserves and policies of 195 countries.

And for the retail segment, we'd be attempting to account for the potential Bitcoin interests and investments of a staggering 8 billion people worldwide.

While predicting Bitcoin's trajectory may seem like venturing into the vast unknown, it's undeniably an exhilarating endeavor. The sheer magnitude and complexity of the factors at play remind us of the intricate web of global finance and its potential intersections with the world of cryptocurrencies.

The crux of my argument is that the figures $49,560, $132,630, and $245,580 are solely derived from the bold and italicized entities within the 'institution' category, as you might've discerned. Naturally, there can be overlaps among these categories, but the underlying proposition is that the potential ceiling for Bitcoin's price is significantly high when all contributing factors are taken into account.

For Bitcoin to touch those astronomical figures, several elements would need to come together in a serendipitous manner. However, a milestone of $100,000 in this cycle seems attainable, and with the right conditions, we could see it skyrocket even further. Wishing everyone a splendid weekend. As you revel in this optimism and excitement for the future of Bitcoin, remember to enjoy these exhilarating moments — there are promising times on the horizon.

BTC Is Boring… Or Bleeding?

4-HOUR CHART

Bitcoin is boring… but showing signs of weakness as it bleeds down the range lows. Still, nothing to do until we are either below or above the red trading range. For now, we wait.

The Dollar Is Pounding Markets - Legacy Markets

• Stocks Struggle With Earnings and Rates in Focus: Markets Wrap

Stocks fluctuated as investors reacted to diverse corporate earnings and positive signs from the US and UK economies, hinting at potential interest-rate hikes. Tech shares, notably SAP SE, dropped after reporting unsatisfactory sales, while bioprocessing firm Lonza Group AG adjusted its 2023 outlook downwards. Despite a downturn in the Nasdaq 100 index, there's hope for recovery in US equity contracts.

Europe's earnings season began slowly, with most significant profits coming from major companies. Morgan Stanley reported an unprecedented mention of "weaker demand" in corporate forecasts. Unfavorable reports from Netflix and Tesla interrupted the Nasdaq 100's record streak.

Strong signs from the US and UK economies raised questions about central banks' strategies on inflation and rate hikes. The UK saw an unexpected retail sales boost in June, while US jobless claims reduced.

Amid these developments, the UK pound rose, the US dollar gained, and treasury yields remained stable. The Bloomberg Commodity Index is set for another increase, spurred by tensions between Russia and Ukraine affecting wheat prices. Natural gas futures are also projected to rise due to increased demand, while gold prices dipped.

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 was little changed as of 9:54 a.m. London time

• S&P 500 futures rose 0.2%

• Nasdaq 100 futures rose 0.4%

• Futures on the Dow Jones Industrial Average rose 0.1%

• The MSCI Asia Pacific Index fell 1.5%

• The MSCI Emerging Markets Index fell 1.8%

Currencies

• The Bloomberg Dollar Spot Index rose 0.3%

• The euro was unchanged at $1.1130

• The Japanese yen fell 1.3% to 141.90 per dollar

• The offshore yuan fell 0.2% to 7.1863 per dollar

• The British pound fell 0.1% to $1.2855

Cryptocurrencies

• Bitcoin rose 0.2% to $29,803.33

• Ether rose 0.2% to $1,892.26

Bonds

• The yield on 10-year Treasuries was little changed at 3.85%

• Germany’s 10-year yield was little changed at 2.49%

• Britain’s 10-year yield advanced three basis points to 4.30%

Commodities

• Brent crude rose 0.7% to $80.20 a barrel

• Spot gold fell 0.4% to $1,962.62 an ounce

SPX (S&P 500 INDEX)

The stock market looks VERY toppy. As you know, I sold off quite a bit of stock last week that I had bought near the lows, anticipating an incoming correction.

As you can see, price put in an evening star pattern. From investopedia, here is a description and the criteria.

An evening star is a stock-price chart pattern used by technical analysts to detect when a trend is about to reverse. It is a bearish candlestick pattern consisting of three candles: a large white candlestick, a small-bodied candle, and a red candle.

Evening star patterns are associated with the top of a price uptrend, signifying that the uptrend is nearing its end. The opposite of the evening star is the morning star pattern, which is viewed as a bullish indicator.

1. The first day consists of a large white candle signifying a continued rise in prices.

2. The second day consists of a smaller candle that shows a more modest increase in price.

3. The third day shows a large red candle that opens at a price below the previous day and then closes near the middle of the first day.

This is a classic top signal, so we will see if it actually plays out.

QQQ (NASDAQ)

The Nasdaq is also looking toppy and due for a correction. With one day to go, it looks like it is likely to print a shooting star on the weekly chart.

From Investopedia: A shooting star is a bearish candlestick with a long upper shadow, little or no lower shadow, and a small real body near the low of the day. It appears after an uptrend. Said differently, a shooting star is a type of candlestick that forms when a security opens, advances significantly, but then closes the day near the open again.

For a candlestick to be considered a shooting star, the formation must appear during a price advance. Also, the distance between the highest price of the day and the opening price must be more than twice as large as the shooting star's body. There should be little to no shadow below the real body.

KEY TAKEAWAYS

• A shooting star occurs after an advance and indicates the price could start falling.1

• The formation is bearish because the price tried to rise significantly during the day, but then the sellers took over and pushed the price back down toward the open.

• Traders typically wait to see what the next candle (period) does following a shooting star. If the price declines during the next period they may sell or short.

• If the price rises after a shooting star, the formation may have been a false signal or the candle is marking a potential resistance area around the price range of the candle.

Let’s see if the market is finally ready for a much needed correction after being overbought across the board!

FedNow Launches

• Fed Dramatically Speeds Up U.S. Payments With 'FedNow' Service, but Downplays Any Tie to CBDCs

It appears the Fed is finally catching up with the advancements the payments sector has achieved over recent decades. The Fed has rolled out a new system, dubbed FedNow, which has already garnered participation from 35 banks and credit unions. Essentially, it's a round-the-clock payments service designed to settle transactions instantaneously. While some have speculated that FedNow is a precursor to the Fed launching a Central Bank Digital Currency (CBDC), the claims, as mentioned earlier, have been refuted.

Coinbase Will Fully End Its Borrow Program

• Coinbase to fully sunset bitcoin-backed loan program for retail customers

In May, Coinbase declared that it would cease accepting new loans through its Borrow program. Fast forward, and Coinbase has now communicated that all borrowers have until November 20 to settle their outstanding balances. Failing this, the exchange will liquidate the collateral to reconcile the loan. I believe this is a judicious strategy on Coinbase's part to manage their risk efficiently. While extending loans during a bullish market might seem advantageous, the unpredictability of market downturns could spell trouble. According to Coinbase, this decision was anchored by the desire to "focus our resources on the products and services that our customers care about most."

Congress Proposes A New Framework For Digital Assets

• Click Here To View The Full Text

A whopping 212-page bill has just been tabled in Congress, and there's a lot to delve into. If you're curious about the specifics of this bill, join us at Crypto Town Hall or my YouTube stream today or revisit our newsletter next week. I'd prefer to reserve my analysis until experts have weighed in, and ideally after hearing from some of those who crafted the bill. If you would like a summary of the bill, you can read that HERE.

SOS! Gensler Wants More Money, RFK Wants BTC-Backed-USD, Coinbase Wants 8 Billion People On-Chain

Join Nathaniel Whittemore and the Charting Man Dan as we discuss the latest in crypto.

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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.