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In This Issue:
The Other Halving
Bullish Divergence Helps Bitcoin
Treasuries Are Getting Rocked, US Downgraded
The Binance FUD Train Continues
Big 4 Accounting Firm Says BTC Mining Is Good For The Environment
Fannie Mae And Freddie Mac Get Their Own Downgrades
I Hosted The Hexicans
The Other Halving
Litecoin, a cornerstone in the realm of digital currencies, has once again come under the spotlight with its recent halving. Such intrinsic protocol events, occurring roughly every four years, underscore the cryptocurrency's resilience and its foundational role in the broader digital currency ecosystem.
On August 2, coinciding with the mining of block 2,520,000, the reward for miners was reduced from 12.5 to 6.25 Litecoin (LTC) per block. These halvings are more than just technical occurrences. They possess profound implications for Litecoin's economic structure and also ripple through the market sentiment, often with significant anticipation.
Historically, halvings for leading cryptocurrencies like Litecoin and Bitcoin have dual implications. They serve as a mechanism to control inflation by curtailing the influx of new coins into circulation. Additionally, they highlight the inherent scarcity of the digital asset, often fuelling anticipatory buzz in the market. Even though immediate price reactions might vary, over extended periods, halvings have generally been linked to price appreciation.
Litecoin, often characterized as the "silver to Bitcoin’s gold," stands out with its distinctive journey since its introduction. Charlie Lee's vision in 2011 gave birth to Litecoin, which he perceived as a nimbler version of Bitcoin. With a block generation time of merely 2.5 minutes, in contrast to Bitcoin's 10 minutes, Litecoin promises faster transaction confirmations.
Charlie Lee, ahead of this notable event, humorously shone a light on the inconsistencies among various online halving countdowns. He tweeted, “This is funny. I googled 'Litecoin Block Halving Countdown' and checked the first 4 hits. The ETA for the halving is all over the map! From my quick calculation, I believe NiceHash's countdown is the most accurate. I expect the halving to occur in about a 1 day, 2 hours, and 30…” (@SatoshiLite) on August 1, 2023.
While price movements are an integral aspect of the crypto discourse, Litecoin's pertinence in the expansive cryptocurrency arena cannot be sidestepped. With its increasing clout as a preferred payment alternative, Litecoin is making its presence felt. Recent figures indicate both Litecoin and Bitcoin Lightning payments achieving record volumes on several platforms. In some instances, by June, Litecoin even outpaced Bitcoin.
The embrace of Litecoin transcends established markets like North America, Europe, and the UK. In emerging territories, particularly Africa, Litecoin adoption is surging, reflecting a global shift where cryptocurrencies are gaining an edge over traditional banking systems. This trend in Africa could potentially provide insights into future patterns in regions like Latin America.
As of now, Litecoin stands as the 12th largest cryptocurrency in terms of market capitalization, boasting a valuation of $6.8 billion. It sees daily trade activities around the ballpark of $1.14 billion, indicative of strong engagement with the coin. Out of its maximum potential cap of 84 million LTC, a staggering 73.5 million coins are already in circulation.
However, not all is rosy. The anticipation around the recent halving event took Litecoin’s price on a roller-coaster ride, witnessing a sharp ascent in early July, only to face challenges in maintaining the bullish momentum. This culminated in the coin's price taking a hit post-halving, contradicting some bullish expectations. Buy the rumor, sell the news.
Regardless of such market dynamics, the halving event serves to spotlight Litecoin's meticulously crafted monetary structure and its burgeoning influence on a global scale. As it continues to make inroads across diverse regions, Litecoin's stature as a pioneering digital currency looks poised for further growth.
Bullish Divergence Helps Bitcoin
Bitcoin printed oversold bullish divergence on multiple timeframes, right after the newsletter went out yesterday. You can see this led to a pop that sent price back above $30,000, before retracing the bulk of the move.
The divergence is still valid, with one potentially brewing on the daily. I would anticipate RSI at least making it to overbought, but the move may not be that big as we just saw with this initial divergence. Not much to do here, still relatively sideways. The real trade was to play this yesterday, so I am more pointing it out for educational purposes.
Let’s see if we get one on the daily.
Treasuries Are Getting Rocked, US Downgraded
Tensions in the financial markets are escalating as Treasury bonds continue their selloff, pushing the 10-year yield to its highest level in nine months. This has caused a stir in the equities sector, with European stocks decreasing by 0.8% and indicators suggesting further losses for the S&P 500 in the US. The dollar is also gaining strength for the fourth consecutive day.
Prominent investor Bill Ackman added to the prevailing pessimistic sentiment, revealing his decision to short 30-year Treasuries as a safeguard against the effects of rising long-term rates on equities. A combination of robust US economic data, increased issuance of securities by the Treasury, and a downgrade of the US's AAA credit rating by Fitch Ratings are contributing to market anxieties.
Financial experts like Gerry Fowler from UBS Group AG emphasized the sensitivity of the US stock market, especially the Nasdaq, to the increasing yields. European markets are also under pressure due to a disappointing earnings season.
In Europe, major stocks such as Infineon Technologies AG and Deutsche Lufthansa AG saw significant declines. The Bank of England is anticipated to release its rate decision soon, with expectations leaning towards a rate hike to address the UK's soaring inflation.
In the commodities sector, iron ore prices fell due to concerns about China's commitment to stimulating growth and calls for trading restrictions. Concurrently, the Bank of Japan is making efforts to stabilize its bond yields, leading to the yen's strengthening.
In essence, global financial markets are currently navigating a mix of economic data, policy decisions, and investor sentiments, with a particular focus on bond yields and their potential impacts on equities.
Key events this week:
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 0.8% as of 11 a.m. London time
S&P 500 futures fell 0.2%
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average fell 0.2%
The MSCI Asia Pacific Index fell 0.6%
The MSCI Emerging Markets Index fell 0.4%
Currencies
The Bloomberg Dollar Spot Index rose 0.1%
The euro was little changed at $1.0932
The Japanese yen rose 0.3% to 142.92 per dollar
The offshore yuan rose 0.2% to 7.1847 per dollar
The British pound fell 0.3% to $1.2669
Cryptocurrencies
Bitcoin was little changed at $29,123.54
Ether fell 0.4% to $1,833.73
Bonds
The yield on 10-year Treasuries advanced six basis points to 4.14%
Germany’s 10-year yield advanced four basis points to 2.57%
Britain’s 10-year yield advanced two basis points to 4.42%
Commodities
Brent crude fell 0.5% to $82.96 a barrel
Spot gold rose 0.1% to $1,936.39 an ounce
The Binance FUD Train Continues
Binance, the world's largest crypto exchange, may face fraud charges from the U.S. Department of Justice. However, due to concerns about potential repercussions similar to the FTX bank run, prosecutors are considering other measures like fines or non-prosecution agreements, as reported by Semafor. The announcement led to a drop in the value of Bitcoin (BTC) and Binance's BNB token. Although U.S. officials have previously examined Binance, with the Commodity Futures Trading Commission (CFTC) suing them earlier, the risk associated with targeting such a significant institution in the crypto industry is evident. This is underscored by the collapse of FTX last year, which had a widespread negative impact on the cryptocurrency market. Binance has not commented on the situation, and the Justice Department has yet to respond to inquiries.
If this story is true, the DOJ is obviously more concerned with protecting retail than their cousins over at the SEC.
Big 4 Accounting Firm Says BTC Mining Is Good For The Environment
KPMG, one of the Big Four professional services firms, has published a report analyzing Bitcoin's impact within an ESG (environment, social, and governance) framework. The study emphasizes that Bitcoin's emissions, rather than its energy usage, are a better metric for environmental impact. It found Bitcoin's emissions to be lower than many sources, including tobacco and tourism, and only surpassed by video content in the US. The report also highlighted that Bitcoin contributes minimally to money laundering, with only 0.24% of its transactions involved, a figure significantly lower than Ether, stablecoins, and altcoins. On the governance front, Bitcoin is praised for its robustness due to its decentralized nature, preventing potential misuse or abuse. KPMG's report, which sources secondary data, aims to clarify misunderstandings about Bitcoin and highlights its various positive applications, including fundraising initiatives in Ukraine and electrification projects in rural Africa.
Why do I get the feeling that KPMG got a call from Larry Fink at BlackRock!?
Fannie Mae And Freddie Mac Get Their Own Downgrades
After Fitch Ratings downgraded the U.S. rating on Tuesday, it proceeded to downgrade the Long-Term Issuer Default Ratings (IDR) and senior unsecured debt ratings of U.S. mortgage finance institutions Fannie Mae and Freddie Mac to 'AA+' from 'AAA' on Wednesday. This decision was a direct consequence of the U.S. rating downgrade and was not based on any deterioration in the firms' credit, capital, or liquidity. Gennadiy Goldberg of TD Securities noted that the downgrade was expected due to the interlinking of the ratings of the two entities. Despite the anticipated nature of the downgrade, its announcement followed the resolution of the U.S. debt ceiling crisis, which surprised and drew criticism from the White House and investors.
The cracks are starting to widen.
I Hosted The Hexicans
I hosted two Hexicans and allowed them to make the case for their favorite protocol. I was unconvinced, but it was a great conversation nonetheless. Enjoy.
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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.