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In This Issue:
A Guide On Gas
Bitcoin Thoughts And Analysis
Legacy Markets
The Austrian School Of Economics
Coinbase Approved For Futures Trading In The US
The Helium Network Has Found Real Utility
Tom Lee Is Very Bullish
What A Shib Show!
Bitcoin Is Going To $40,000 | Sei Launch | Mike Alfred & Jeff Feng
A Guide On Gas
Brace yourself for the worst crypto dad joke of all time...
What do conducting crypto transactions and eating beans have in common?
You can't pass on the gas.
Yikes.
But while I still have your attention, I want to dive into an educational primer on gas because, after all, it is an extremely crucial and relevant part of crypto. Gas, for those uninitiated, can be thought of as a transaction toll paid to miners on a crypto network. At its most basic level, gas is a transaction fee.
Gas is most commonly associated with Ethereum, but it practically exists on every network that incorporates smart contracts and DeFi. For the sake of clarification, Bitcoin does NOT have gas fees, but there are still fees associated with conducting Bitcoin transactions. Let's name a few examples in crypto in which you can expect to pay gas:
Want to swap tokens? You pay gas.
Want to send ETH? You pay gas.
Want to buy an NFT? You pay gas.
Want to stake and unstake? You pay gas.
Want to yield farm? You pay gas.
Want to execute a smart contract? You pay gas.
Want to interact with a dApp? You pay gas.
Want to run a DAO? You pay gas.
Want to store data onchain? You pay gas.
Want to claim an airdrop? You pay gas.
Want to execute a loan? You pay gas.
So it's clear that gas is common, but how is the price determined, and how does it really work? Gas is commonly expressed as "gwei," which stands for "giga-wei.” A Wei is the smallest unit of ETH and a “giga-wei” is one billion wei. The concept is intriguing, but what really matters is the cost of gas.
When it comes to transacting in crypto, there is no such thing as set gas prices. The gas required to complete a transaction is determined by its complexity, the speed at which it will be executed, and most importantly, the activity of a network. Going back to my toll analogy, a semi-truck driver that wants access to the fast lane during Friday rush hour can expect to pay a lot more than a smart car driver cruising through the slow lane on an off hour. The same concept applies to crypto.
Sending your friend ETH is going to cost a lot less in gas than using your Ledger to unstake your STETH, then swap it for ETH before sending it. For simple activities, I usually don't spend too much time thinking about gas, but if I know the network is congested, I usually will preview the transaction or take a look at the Ethereum Gas Tracker, linked and imaged below.
One of the issues with gas is how quickly and steeply its cost can rise. For example, when the Pepe frenzy was happening, the average cost of a single transaction on Ethereum reached $15.82. For more complex transactions, the gas was easily in the 3 figure territory, rendering Ethereum only usable for those willing to light money on fire. The same occurrence happened when NFT season hit its peak, revealing that work needs to be done on scaling the size of the network.
Thankfully for us gas payers, Vitalik and the ETH devs spend a great deal of time working on expanding the ETH network to reduce gas, and the majority of ETH competitors have conceded into becoming layer 2's that contribute to ETH in some way, shape, or form.
Lastly, I want to address a point some of you may be thinking about: If we can create crypto how we want, why don't we just eliminate fees? It's a nice thought, but a feeless network in crypto is ripe for abuse. Gas helps keep out bots that would otherwise spam the chain for their benefit. Furthermore, gas prevents dangerous infinite loops and positively incentivizes stability and fair resource distribution. Gas in crypto is more than just a fee; it's the glue that holds DeFi together.
As always, I hope you learned something from this intro, and never forget that passing on gas fees is just as futile as blaming it on the dog! Sorry, that was my last bad joke.
Bitcoin Thoughts And Analysis
Finally, a little bit of volatility. Not in the direction people desired, but at least Bitcoin as become a bit “unstuck.” While people seem to be panicking, Bitcoin is sitting on a key support level, right around $28,600. As you know, this was the low in 2021 between the 2 all time highs.
To determine whether this support is holding, we need to see the weekly close on Sunday. Still, this is a key area, even on lower time frames.
Zooming in to the daily, we can see that the same support area is key. Price is resting on the 100 MA (light blue) and is retested $28,452.
This retracement was obviously no surprise. As I pointed out many times, we had overbought RSI with bearish divergence. That “should” send RSI back to oversold. RSI is currently around 35 - oversold is 30.
We also had the break down of the blue 50 MA.
That said, every time frame lower than the daily is already very oversold, so I will be watching for bullish divergences to form on those.
Right now we watch and see what happens here at support. If it breaks, we look lower to the 200 MA here on the daily and for oversold RSI.
Legacy Markets
US equity futures are showing signs of recovery from a recent retreat, while a global selloff in bond markets intensifies. S&P 500 contracts rose 0.2%, though Europe's equity benchmark fell 0.4%. The unexpected possibility of further interest rate hikes by the Federal Reserve, hinted at in the last meeting minutes, is shaking investors' confidence. The 10-year Treasury yield in the US is approaching its highest level since 2007 at 4.29%, while in the UK, equivalent gilts reached 4.71%, the highest since 2008. Investors are now adjusting to the likelihood of sustained higher interest rates. Meanwhile, concerns about China's real estate slump and efforts to control its currency are also affecting market sentiment. In corporate news, BAE Systems' purchase of Ball Corp.'s aerospace division for $5.6 billion led to a drop in BAE shares by 4.8%.
Key events this week
US initial jobless claims, US Conf. Board leading index, Thursday
Eurozone CPI, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.4% as of 10:17 a.m. London time
S&P 500 futures rose 0.2%
Nasdaq 100 futures rose 0.3%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index fell 0.4%
The MSCI Emerging Markets Index fell 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0871
The Japanese yen was little changed at 146.23 per dollar
The offshore yuan was little changed at 7.3421 per dollar
The British pound fell 0.2% to $1.2709
Cryptocurrencies
Bitcoin fell 1.4% to $28,534.32
Ether fell 0.9% to $1,791.33
Bonds
The yield on 10-year Treasuries advanced four basis points to 4.29%
Germany’s 10-year yield advanced four basis points to 2.69%
Britain’s 10-year yield advanced four basis points to 4.68%
Commodities
Brent crude rose 0.2% to $83.56 a barrel
Spot gold rose 0.1% to $1,894.01 an ounce
The Austrian School Of Economics
The Austrian school of economics was founded by Carl Menger in the late 19th century. Menger, along with fellow economists Friedrich von Wieser and Eugen von Böhm-Bawerk, is considered one of the founders of the school.
Menger’s book “Principles of Economics” was published in 1871 and was a major contribution to the development of the Austrian school. In it, he introduced the concept of marginal utility, which became a central part of the Austrian theory of value. More about that later.
Böhm-Bawerk, who was Menger’s student, is known for his work on capital and interest, which helped to establish the Austrian theory of the business cycle.
The Austrian school of economics was further developed by Ludwig von Mises, who is considered one of the most important figures in the history of the school. Mises was a leading advocate of the idea of the market as a discovery process, in which individuals make decisions based on their subjective valuations of goods and services.
In the 20th century, the Austrian school was represented by economists such as Friedrich Hayek, who won the Nobel Prize in Economics in 1974, and Murray Rothbard, who was a leading proponent of the ideas of laissez-faire capitalism and individual liberty.
Austrian economics is a school of economic thought that emphasizes the role of the individual in decision making and the importance of the subjective factors that influence their choices. It is based on the idea that individuals act rationally to maximize their own self-interest and that the market is the best way to allocate resources.
One of the key principles of Austrian economics is the concept of marginal utility. This refers to the additional satisfaction or benefit that a person derives from consuming one more unit of a good or service. For example, the first ice cream cone on a hot day might provide a lot of utility, but each additional cone will provide less and less enjoyment. This means that people will be willing to pay more for the first cone than for subsequent ones.
Another important concept in Austrian economics is the idea of opportunity cost. This is the cost of choosing one option over another. For example, if you decide to go to the movies instead of studying for a test, the opportunity cost is the potential grade you could have earned on the test. In a market economy, people make choices based on the opportunity cost of their actions, and this helps to determine the price of goods and services.
Austrian economists also believe that the market is inherently unpredictable and that it is impossible to accurately forecast future events. This means that attempts to centrally plan the economy, such as through government intervention, are likely to be ineffective. Instead, they believe that the market should be allowed to self-regulate and that individuals should be free to make their own economic decisions.
The concept of capital and interest also plays a central role in the theory of the business cycle and the determination of prices.
According to the Austrian theory of capital and interest, capital goods (such as factories, machinery, and equipment) are the result of savings and investment. When individuals save part of their income, they are able to use those savings to fund the production of capital goods. The capital goods, in turn, are used to produce consumer goods, which are sold to the individuals who saved their income.
The interest rate is the price of capital and reflects the time preferences of individuals. Those who prefer to consume goods in the present will be willing to pay a higher interest rate to borrow money and consume now, while those who prefer to save and consume in the future will be willing to lend money at a lower interest rate.
The Austrian theory of capital and interest also explains how changes in the interest rate can affect the economy. For example, if the interest rate is low, individuals will be more willing to borrow and invest in capital goods. This can lead to an increase in the production of consumer goods and a higher level of economic activity. However, if the interest rate is too low for too long, it can lead to an overproduction of capital goods and a subsequent economic downturn.
The concept of capital and interest is an important part of the Austrian theory of the business cycle and helps to explain how changes in the interest rate can impact the economy.
One of the main criticisms of Austrian economics is that it assumes that individuals always act rationally and in their own self-interest. However, this is not always the case, and people may make decisions that are influenced by a variety of factors, including emotions and social norms. Additionally, some argue that the market is not always the best way to allocate resources and that government intervention may be necessary in certain situations, such as to address market failures or provide public goods.
Today, the Austrian school continues to be an influential school of thought in economics, with proponents around the world. It remains committed to the idea of individual freedom and the power of the market to allocate resources efficiently.
Coinbase Approved For Futures Trading In The US
In 2021, Coinbase filed an application with the National Futures Association to offer crypto futures to its US customers, and the wait has finally ended. With the approval now secured, eligible customers can access regulated derivatives products through Coinbase Financial Markets, under the supervision of both the CFTC and NFA. With this news, it's a good time to explore why this move is significant for both Coinbase and the industry at large.
First, it's essential to recognize the immense size of the crypto futures market. According to the article, “the global crypto derivatives market represents ~75% of crypto trading volume worldwide.” This figure illustrates the enormous potential that the derivatives market holds within the crypto space. Second, this development isn't solely a milestone for Bitcoin, as Ethereum products will also be offered, broadening the scope of opportunities. Third, this approval adds to the strength of Coinbase's position, particularly in terms of being a suitable SSA partner for ETF approval.
The company expressed its enthusiasm by stating, “We believe this is a watershed moment to be able to bring regulated crypto products to US customers. Where regulations are clear and sensible, we will work with regulators to receive the authorizations needed to offer products that align with our purpose of using crypto to update the financial system to advance economic freedom and opportunity.”
These developments signify a positive step forward in the ongoing integration and legitimization of crypto within regulated financial markets. The introduction of these regulated products can foster greater stability and trust within the industry, further encouraging both individual and institutional participation.
The Helium Network Has Found Real Utility
The Helium Network has navigated a series of ups and downs, but putting history aside, I felt compelled to share this article as it exemplifies crypto's potential in finding tangible, real-world applications. The exciting news is that Helium Mobile has made its public debut to Miami residents. This is a new wireless carrier that blends service from the Helium network with the T-Mobile network, all for the staggering price of just $5 a month.
At this price point, users are granted unlimited talk, text, and data, without the need to sign any contract - a true embodiment of decentralization. Predicting the quality of the coverage might be premature, but the $5 monthly fee is undeniably appealing, especially since the data only begins to slow after 30 GB of usage. Given the essential role that cellphones play in our daily lives, the prospect of crypto transforming the cell service industry with an innovative approach is a refreshing thought.
The future of the Helium ecosystem remains uncertain, with their HNT token down by -96.3% and the IOT token falling -81.8%. However, Helium's perseverance in their mission deserves recognition. At one point, Helium was among the most buzzed-about projects, but as the crypto world has shown us time and again, ideas must be transformed into action to have lasting impact. The path that Helium is on with this development seems promising, and I'm eager to see if it succeeds. Their attempt to disrupt a traditional industry is a positive sign of the versatility and potential of cryptocurrency.
Tom Lee Is Very Bullish
Fundstrat's Tom Lee has made another audacious prediction for Bitcoin, this time targeting the end of next year. Before delving into his latest forecast, did you know that Tom has expressed a belief that Bitcoin could likely reach $500,000? While it's essential to note that such predictions are conceivable, they may also be more influential for business positioning and public perception. To reach these lofty heights, Bitcoin would require more catalysts than just the approval of an ETF.
When queried about Bitcoin's standing at the close of next year, Tom replied, “If the spot Bitcoin ETF is approved, the demand will be greater than the daily supply of Bitcoin and the clearing price is over $150,000 and could be $180,000. If the ETF isn't approved, there are still upside counts because of the halvening next year, so there will be a drop in supply, meaning the clearing price will have to increase, but it won't be six figures.”
Tom's prediction illustrates a dichotomy in potential outcomes. If a spot Bitcoin ETF receives approval, the increase in demand paired with the finite daily supply could drive the clearing price into the $150,000 to $180,000 range. On the contrary, without the ETF's approval, the upcoming halvening will still contribute to a reduced supply, necessitating an increased clearing price, albeit not reaching the six-figure mark.
These insights provide food for thought on the possible trajectories for Bitcoin, reminding us of the complex interplay of factors that can drive its price. While predictions are fascinating and often attention-grabbing, they should be approached with a degree of skepticism and awareness of the broader market dynamics at play.
What A Shib Show!
Shibarium, a newly launched blockchain platform, has run into significant trouble with more than 1,003 ether ($1.8 million) in funds stuck in pending transactions. The issue has led to a halt in confirmations, with no new transactions confirmed for five hours. Blockchain security team Beosin has advised users to avoid Shibarium for now, and there are unverified reports that recovery of the stuck ether may not be possible. The Shibarium RPC website appears inaccessible, and users have been blocked from the project's Discord. These issues have led to declines in the price of Shiba Inu and associated tokens Bone and Leash by 9%, 13%, and 25% respectively.
Maybe the meme coins should stick to being lottery tickets…
Bitcoin Is Going To $40,000 | Sei Launch | Mike Alfred & Jeff Feng
One of my favorite guests, Mike Alfred is coming to share his forecast for Bitcoin and crypto. Jeff Feng, the co-founder of Sei will come to the second part to talk about Sei launch.
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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.