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In This Issue:
The 99.9% Fallacy
Francis Suarez On Spaces
Bitcoin Breaks Down (A Little Bit) Further
Weak Earnings, China Looks Bad
Richard Heart Sued For Fraud
Fake News In The SEC Vs. Coinbase
Bald Rugged
Tether Has Another Successful Quarter
DeFi Is Broken - CRV Hack Explained
Lyn Alden: Were We Wrong? Will There Be No Recession? | Macro Monday
The 99.9% Fallacy
How often have you come across the statement that 99.9% of crypto projects will fail? Or that 99.9% of crypto traders will lose money? This sentiment is echoed frequently within the crypto community. But isn't it interesting how often we gloss over the subtle implications of this claim? The irony is that while many confidently cite this high failure rate, they might inadvertently be counted in that very statistic they mention.
Henceforth, I'd like to label this mindset as the "99.9% Fallacy." This fallacy is born from a rightful cautionary approach directed at the majority of crypto projects, juxtaposed with an unwarranted optimism about one's personal endeavors or investments. Essentially, it represents a cognitive dissonance stemming from an individual's limited exposure.
The 99.9% fallacy predominantly affects those who are neither raw beginners nor seasoned experts in the crypto domain. It's most pronounced in individuals teetering in the intermediate range—those still honing their understanding. They might have glimpsed the intricacies of the crypto sphere, but often overlook their own limitations. As a result, they remain convinced that their choices are the exception, the elusive 0.1% destined for success. They’re going to make it, but you aren’t!
This brings me to the "mid-curve" meme that's gained traction lately. If you haven't come across it yet, here it is:
Though more widely recognized than my "99.9% Fallacy," they both convey a cautionary tale about the perils of being in the 'middle.' While it's arguably advantageous to stay ahead of the curve, being slightly ahead doesn't exempt you from potential pitfalls.
As we accrue knowledge, it unveils new horizons, but also brings forth a fresh set of challenges and uncertainties.
In essence, always maintain your skepticism. Will your prized NFT truly emerge as a standout? Will your altcoin selection thrive amidst fresh contenders more attuned to the prevalent trends? Does constantly trading your Bitcoin genuinely surpass the returns from simply holding onto it? Will your ETH staking model still be relevant half a decade later?
While a 'yes' could be the answer to any of these questions, if success heavily leans on luck, was the gamble justified? My strategy revolves around holding a predominant share of Bitcoin, a fraction of Ethereum, and a curated list of altcoins. I recognize that delving deep into the risk spectrum might expose me to the 99.9% fallacy. I don't claim to have mastered investment nuances, hence it's imperative to stay vigilant against inherent biases and the perilous mid-curve.
I sincerely hope this perspective aids your investment journey. Wishing everyone the very best.
Francis Suarez On Spaces
In case you missed it yesterday, we hosted Miami Mayor Francis Suarez on twitter spaces to discuss his Presidential campaign and his intentions for Bitcoin and crypto.
Bitcoin Thoughts And Analysis
Bitcoin was predictably rejected at the bottom of the red range and the 50 MA which is now resistance. $28,600 is yet to be touched, with the 100 MA and 200 MA further down below.
Like I said, the range break down and retest as resistance was a gratuitous low time frame short. I don’t see any reason to be doing much at the moment, though, as these are tiny moves.
RSI should head to oversold, which means lower prices as an opportunity to buy.
Weak Earnings, China Looks Bad
Stocks declined due to multiple negative earnings updates, challenging recent investor optimism and strengthening the dollar. European auto stocks, particularly BMW AG, dropped significantly due to rising costs. The hedge fund firm Man Group Plc's revenue missed expectations, and disappointing guidance from DHL Group alongside weak China data for miners further dampened the market mood. Conversely, HSBC Holdings Plc and BP Plc posted positive results, offering some market respite. Despite the S&P 500 reaching a 16-month high, forthcoming risk events, such as the Bank of England's interest rate decision, have investors on edge. Notably, John Stoltzfus of Oppenheimer Asset Management remains bullish, predicting significant S&P 500 growth by year's end. Meanwhile, global economic trends, especially from China and Australia, suggest ongoing complexity in the financial landscape.
Key events this week:
Eurozone S&P Global Eurozone Manufacturing PMI, unemployment, Tuesday
US construction spending, ISM Manufacturing, job openings, light vehicle sales, Tuesday
China Caixin Services PMI, Thursday
Eurozone S&P Global Eurozone Services PMI, PPI, Thursday
Bank of England rate decision, Thursday
US initial jobless claims, productivity, factory orders, ISM Services, Thursday
Eurozone retail sales, Friday
US unemployment rate, non-farm payrolls, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.7% as of 10:48 a.m. London time
S&P 500 futures fell 0.3%
Nasdaq 100 futures fell 0.4%
Futures on the Dow Jones Industrial Average fell 0.3%
The MSCI Asia Pacific Index fell 0.1%
The MSCI Emerging Markets Index fell 0.2%
Currencies
The Bloomberg Dollar Spot Index rose 0.3%
The euro fell 0.2% to $1.0972
The Japanese yen fell 0.3% to 142.65 per dollar
The offshore yuan fell 0.4% to 7.1724 per dollar
The British pound fell 0.1% to $1.2820
Cryptocurrencies
Bitcoin fell 1% to $28,921.11
Ether fell 1.1% to $1,832.42
Bonds
The yield on 10-year Treasuries was little changed at 3.96%
Germany’s 10-year yield was little changed at 2.49%
Britain’s 10-year yield was little changed at 4.31%
Commodities
Brent crude fell 0.5% to $85.03 a barrel
Spot gold fell 0.4% to $1,957.24 an ounce
Richard Heart Sued For Fraud
It's puzzling to observe the course of action taken by regulatory bodies, such as the SEC's decision to pursue Coinbase prior to Hex. The broader crypto community had raised eyebrows about Richard Heart’s operations for years, yet it took the SEC a considerable amount of time to address the issue. Why such a delay?
While I don't claim comprehensive expertise on the Hex ecosystem, my understanding suggests that its structure lacked genuine utility. Many investors, swayed by Richard's assertions, chose to lock in their assets, receiving minimal dividends in return. Meanwhile, Richard Heart seemingly enjoyed a luxurious lifestyle funded by others - hallmarks of a classic pyramid scheme and fraudulent activities.
The SEC, a body meant to safeguard the public, allowed the subsequent events to unfold:
Hex, the original token behind the scheme currently trades at $0.007, from a high of $0.48.
PLS, the native token for PulseChain currently trades at $0.000065, from a high of $0.00289.
PulseX, the native token for PulseX currently trades at $0.00001951, from a high of $0.00013.
“If you want to get rich, [Hex is] built for that.”
“Hex was built to be the highest appreciating asset that has ever existed in the history of man.”
“I like owning the world’s largest diamond.”
If you wish to read the complaint, you can do so HERE.
Fake News In The SEC Vs. Coinbase
The narrative around this issue has been muddled, so let me clarify things. An article that went public yesterday alluded to a communication purportedly between the SEC and Coinbase before the SEC filed a lawsuit against the latter in early June. However, this alleged communication turned out to be nonexistent.
To put it more plainly, here's the misinformation that was disseminated: It was suggested that before announcing their lawsuit, the SEC had advised Coinbase to delist all assets with the exception of Bitcoin. This tale was amplified by influential Twitter accounts, which shared it devoid of any background or clarification. This led many investors to mistakenly think that this was a recent directive from the SEC to Coinbase. To be clear, no such instruction was ever given by the SEC to Coinbase.
Here are the fictitious quotes attributed to Brian Armstrong regarding the SEC’s non-existent request. It's vital that journalists ensure accuracy in their reporting.
“They came back to us, and they said . . . we believe every asset other than bitcoin is a security, and, we said, well how are you coming to that conclusion because that’s not our interpretation of the law. And they said, we’re not going to explain it to you, you need to delist every asset other than Bitcoin.”
“We really didn’t have a choice at that point, delisting every asset other than Bitcoin, which by the way is not what the law says, would have essentially meant the end of the crypto industry in the US. It kind of made it an easy choice . . . let’s go to court and find out what the court says.”
Bald Rugged
Is anyone genuinely taken aback that a meme coin titled “Bald” skyrocketed to a $100m market cap overnight, only to rapidly descend into a fleeting rug pull? Such an episode should solidify the fact that Brian Armstrong had no association with the token. However, there's potential speculation about the developer possessing a significant amount of cbETH. The entire "Bald" saga casts a shadow over the Base platform, especially as it's in its nascent stages. Base wasn't envisioned as a hotspot for volatile altcoins. It remains to be seen how, or even if, Coinbase will address this debacle.
Also, there’s a widely accepted conspiracy theory (already) that SBF was behind the entire thing.
Crypto is such a mess.
Tether Has Another Successful Quarter
Tether has once again reported a successful quarter. However, a notable difference from the last quarter is the absence of any mention of new Bitcoin acquisitions. Still, the company has embarked on several other promising ventures, including a share buyback plan and investments in energy-related projects that aren't sourced from the reserves.
A Tether spokesperson stated, “only a marginal number of the shares were bought back, demonstrating Tether's shareholder commitment to the Business.” This suggests that investor confidence in the company remains robust. On top of this, Tether has reiterated its pledge to keep an abundance of reserves, ensuring that 100% of its tokens are fully backed with an extra 4% set aside in the reserves as a contingency.
Despite its tumultuous history, Tether's recent ascent can ironically be attributed to the U.S. government's economic disruptions and fluctuating rates. Tether astutely identified the profitability of T-bills and wholeheartedly adopted that approach, leading to its success. While the profit margins will likely stabilize over time, by establishing its investments early on, Tether might cement its lead in the stablecoin market to a point where competitors lag far behind. Kudos to Tether and its risk management team for their achievements.
DeFi Is Broken - CRV Hack Explained
Wondering what happened to CRV? This quick 4 minute video gives a great explanation, and discusses the risks associated with DeFi.
Lyn Alden: Were We Wrong? Will There Be No Recession? | Macro Monday
Lyn Alden joins the Macro Monday show with Dave Weisberger and Mike McGlone. Don't miss it!
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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.