The Wolf Den #794 - This Is Serious
Your self-worth ≠ the value of your investments.
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In This Issue:
This Is Serious
Watch For Bullish Divergence On Bitcoin
Stocks Signaling Relief Bounce
An Update On Ethereum
The Grayscale Decision May Be Tomorrow
This Miner Won The Lottery
Why Big Money is Betting on Crypto Again | Gavin Michael, Bakkt
This Is Serious
I've been reflecting on the recent market correction, and an idea struck me that I've never seen discussed, yet is profoundly pervasive in crypto: the entanglement of one's perceived self-worth with the value of their investments.
Ask yourself this question honestly: Have there been moments or extended periods when the price affected how you felt about yourself, either positively or negatively? I’ll be the first to admit that I've felt that way at times, being human, but that leads me to a powerful statement:
Your self-worth ≠ the value of your investments.
If that quote resonates deeply with you, take a moment to read it again. I assure you, it's true.
Over the years, I've come to recognize that, whether it's Bitcoin, Ethereum, NFTs, or any asset, regardless of its crypto or non-crypto nature, it's vital that our investments never influence our sense of self-worth, under any circumstances. That said, I do understand that price fluctuations can sway our emotions and confidence because of what’s at stake. However, as investors and humans, we must draw a definitive line and do our utmost not to cross it.
Why this phenomenon exists, I'm unsure, but it likely involves the significant risks inherent in holding crypto. We've all sacrificed hard-earned time, money, and perhaps much more, including reputation, quality of life, potential legal repercussions, and possibly strained relationships with those holding differing views – the world of crypto is not without its trade-offs.
Conversely, these risks bring immense rewards, which can also be mistaken for one's sense of self-worth. Imagine how you would feel if Bitcoin hit $100,000, and the entire market rose accordingly. Would you be flooded with intense feelings of vindication and accomplishment? I know I would be, and I'd be incredibly proud of all of you who succeeded, but I will also strive to adhere to the quote above because it rings true in both directions.
Hopefully, by now, you agree that intertwining your identity with your investments is perilous. Terrible things can happen when prices drop, and vice versa. You are all worth infinitely more than the value of your investments, now and always.
I may not know you personally, but the mere fact that you're reading this letter and have an interest in this space speaks highly of your character and worth. I love the game of crypto, and it's a part of me, but winning truly means not letting it consume who we are, no matter the outcome.
Your self-worth ≠ the value of your investments.
On a related note, before I conclude, I want to touch on some emerging news called Friend.tech that I’ve seen on my timeline. This new social platform, branding itself as “the marketplace for your friends,” allows users to tokenize their social networks and buy/sell shares of their friends. Built on BASE, it has quickly accumulated significant volume and $2.8 million in fees since its launch, which is impressive, but I remain skeptical about putting price tags on individuals. The platform's model is complex, and its design intricate, perhaps warranting a deeper examination if it continues to gain traction. Perhaps tomorrow, as we are doing a twitter spaces on it today. For now, I'll leave the introduction at that. These ideas haven’t yet proven successful beyond the hype.
Regardless, let’s approach the week with energy and uplift those around us. We're all in this together.
Watch For Bullish Divergence On Bitcoin
Nothing has changed on the weekly chart, which is good. We still have the clear hold of support at $25,214 for now, which is the line that bulls want to see hold. I would not be surprised to see this line swept, even if price is going to go up. That would trigger tons of shorts and also likely stop losses on people who are already line. That’s where the liquidity likely lies for a move up, if it is in the cards. If that happens, we want to see a wick below and a close above.
The 200 MA is officially resistance again for now on the weekly, as well as all other MAs… on the daily as well. Bulls have a lot of work to do.
If you know me at all, then you know what I will be discussing next! As mentioned last week, 4-hour RSI hit historic lows on this drop. That leaves the situation ripe for some oversold bullish divergence, which would require price to close below $25,900. This is also potentially there (with different lows) on almost every other time frame, daily and down.
I want to see a clear lower low on price with a higher low on RSI, then an elbow up on the indicator.
That would signal a bottom for me, at least in the short term.
Stocks Signaling Relief Bounce
U.S. equity futures rose on Monday, signaling a potential bounce back for stocks after a tough August. Contracts for the S&P 500 and Nasdaq 100 advanced, while European stocks rebounded from a six-week low, boosted by higher energy prices. European benchmark gas prices surged, and Brent traded above $85 a barrel. Treasury yields climbed, indicating a sell-off, and the mood in Asia was less optimistic, with stocks falling. Confusion over China's handling of its property slump led to strained sentiment, and the offshore yuan fell against the greenback. Investors are also keenly awaiting this week's gathering of central bankers at Jackson Hole, Wyoming, where Federal Reserve Chairman Jerome Powell is expected to speak.
Key events this week:
US existing home sales, Tuesday
Chicago Fed’s Austan Goolsbee speaks, Tuesday
Eurozone S&P Global Services & Manufacturing PMI, consumer confidence, Wednesday
UK S&P Global / CIPS UK Manufacturing PMI, Wednesday
US new home sales, S&P Global Manufacturing PM, Wednesday
US initial jobless claims, durable goods, Thursday
Kansas City Fed’s annual economic policy symposium in Jackson Hole begins, Thursday
Japan Tokyo CPI, Friday
US University of Michigan consumer sentiment, Friday
Fed Chair Jerome Powell, ECB President Christine Lagarde to address Jackson Hole conference, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.8% as of 10:35 a.m. London time
S&P 500 futures rose 0.4%
Nasdaq 100 futures rose 0.6%
Futures on the Dow Jones Industrial Average rose 0.3%
The MSCI Asia Pacific Index fell 0.5%
The MSCI Emerging Markets Index fell 0.4%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro rose 0.2% to $1.0896
The Japanese yen fell 0.2% to 145.72 per dollar
The offshore yuan was little changed at 7.3102 per dollar
The British pound was little changed at $1.2730
Cryptocurrencies
Bitcoin fell 0.7% to $26,048.43
Ether fell 1% to $1,672.97
Bonds
The yield on 10-year Treasuries advanced three basis points to 4.29%
Germany’s 10-year yield advanced three basis points to 2.65%
Britain’s 10-year yield declined two basis points to 4.66%
Commodities
Brent crude rose 0.6% to $85.34 a barrel
Spot gold was little changed
An Update On Ethereum
In about a month's time, a year will have passed since Ethereum completed the merge from POW to POS, so I figured I would share some progress updates here. First off, approximately 19.47% of the Ethereum supply is staked, equating to a market cap size of $39.8 billion. The APR for ETH staking is around 4%, and the entry queue to become an ETH validator currently stands at 24 days, whereas the exit queue is 2 minutes.
As for inflation and deflation in terms of supply, Ethereum has oscillated between the two but is currently deflationary by a small margin of -0.128%. Since the merge, Uniswap holds the number one position on the burn leaderboard, competing against rivals including Tether, OpenSea, layer 2 solutions, and various wallets. Overall, Ethereum continues to look healthy while the rest of the market is fighting for its footing. I’m bullish on Ethereum.
The Grayscale Decision May Be Tomorrow
The U.S. Court of Appeals for the District of Columbia Circuit has once again delayed its decision on the Grayscale vs. SEC case (as of last week), leading commentators to expect a verdict tomorrow. Remember, if the decision does come, it's essential to understand that Grayscale winning against the SEC does not guarantee immediate approval for a spot ETF, although it certainly does help. Grayscale sued the SEC because of its perceived unfair discrimination against a spot ETF, so a victory for Grayscale would at least heavily tip the scales in our favor. However, it's worth noting that either party can appeal the court's decisions, so basically, anything can happen. In other news regarding ETFs, the BlackRock decision is quickly approaching, now just 12 days away - brace for volatility.
This Miner Won The Lottery
Over time, the hash power of the Bitcoin network has increased to a point where a solo miner successfully solving the next block is akin to hitting the jackpot. Although this achievement may seem nearly impossible, there are rare instances of solo miners accomplishing this feat, and when it happens, it's truly remarkable. Just recently, an individual miner, using only an Antminer S9 with 17 TH, solved a block and earned an astonishing reward of 6.25 BTC. Statistically, such an event should occur approximately once every 450 years.
Why Big Money is Betting on Crypto Again | Gavin Michael, Bakkt
Gavin Michael, CEO of Bakkt — a crypto exchange backed by ICE, and a crypto loyalty platform collaborating with top-tier US and global brands — joins my show. Dive into our discussion on the resurgence of institutional interest in crypto, Gavin's perspective on a potential Bitcoin ETF approval, and the future of real-world asset tokenization!
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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.
Great article and so true.