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In This Issue:
Is It Logic Or Is It Luck?
Where Is Bitcoin’s Follow Through?
Altcoins Bad, EGLD Good?
UBS Books Record Profit, Supports Euro Market
Bloomberg Predicts The ETF Is Very Likely
Ethereum Handled Friend.tech Like A Champ
Coinbase Will Win
Massive Bitcoin Pump l Grayscale Defeats The SEC! l ETF Inevitable?
Is It Logic Or Is It Luck?
As America's beloved football season draws near, it got me thinking – how frequently have we encountered athletes and fans immersed in utterly bizzare pre-game rituals?
The answer: it's a very common occurrence. This behavior isn't confined to football alone - it's a staple across all sports. Athletes don lucky underwear and adhere to unconventional diets, they make grand entrances through tunnels and even engage in bald head-rubbing if one happens to be nearby. On the fan side, there are those who must occupy their designated spot, assign blame to jinxes, and hold emotional conversations with their television screens.
If Ricky down the street refuses to shave his hideous porn stache starting next week, we may know why.
Sports indeed serve as a breeding ground for superstition, yet this behavior doesn't end there; gamblers, too, are guilty as charged. Casino enthusiasts have no shortage of their quirky beliefs. Have you ever seen a gambler blow on dice with a blend of concentration and theatrical flair? Craps players tossing hard for high numbers and soft for low numbers? While these scenarios might evoke a chuckle, the reality is that such conduct isn't exclusive to athletes, fans, and gamblers—it permeates the world of investing as well.
Superstitions surrounding investing might not be as overt, but they are indeed prevalent. Some of the more frequently observed instances include traders staunchly believing that a trend must reverse if it persists in one direction for too long, making investment choices based on personal preferences, heeding recommendations and hot tips without due diligence, blindly following seasonal trends, and the most concerning practices involving numerology and astrology.
For the love of god, please explain to me how Mercury going retrograde will help me determine where to place my stop loss. On second thought, forget it.
To protect against superstitions in the investing world, I have come up with a list of questions we should be asking ourselves to keep our decisions in line with reality.
Am I fully aware of the potential spectrum of outcomes when investing in stocks?
How did I respond to previous market turmoil?
Did I build my portfolio with the understanding that stocks can and will fall on occasion?
Does my investment strategy fit with my personality?
Have I overstepped into a sector I don't know enough about?
What do I own and why do I own it?
If I sell my stocks now what is the plan for getting back in?
If I buy stocks now, what is my plan for selling them?
What is at the core of my conviction?
Would a continued drop in stocks significantly impact my lifestyle?
(You can replace “stocks” with any other asset, be it crypto or Pokemon cards.)
To those of you who dedicated time to work through these questions, what is your sincere reaction to your responses? It's crucial to recognize that there are no definitively "correct" answers; however, certain answers can certainly steer you toward more favorable trajectories.
If your responses are steering you in the right direction, the next logical stride is to contemplate how you would address these questions in the event of unwelcome volatility. There's no space for superstition to seep into the investing realm. History has shown it rarely leads to positive outcomes.
To counter this temptation, I recommend formulating a solid plan when your mind is at its sharpest and resolutely sticking to it. By maintaining a focus on the realities of the market and disregarding its illusory aspects, you'll be firmly on the path to success.
As we close the week on a strong note, let's remain hopeful for a favorable ETF announcement. If resorting to your lucky underwear brings comfort, that's perfectly fine. Just remember not to panic if the market takes a dip due to delay or rejection. In time, things will align, with or without our idiosyncratic habits.
Where Is Bitcoin’s Follow Through?
You know we are grasping at straws and looking for something to analyze when we zoom into the hourly chart! That said, the follow through after Grayscale has been muted. Disappointing. Lame. If you are looking for an entry and believe we go higher, than there is a clear level of theoretical support at $26,800. I have no idea if we will get there, but that’s a classic area to look for a resistance to support flip and an entry.
As I have mentioned, I find it hard to expect any more upside than the $28,600 area for now. The Grayscale news is very important, but we still remain in the down year of the 4 year cycle entering the worst month historically for Bitcoin in terms of seasonality - September.
I think things remain mostly boring (barring ETF approval) for quite a while. I could easily be wrong.
Altcoins Bad, EGLD Good?
I am hesitant to share any altcoin charts in the current environment, but Chris Inks pointed this out on my livestream yesterday and it is a coin that I have been holding for years. I am not actively trading it.
If you were here from the beginning, you will remember us trading this from 15 SATS (not dollars) to 300 SATS+ when it was ERD, before the rebrand, then from $10 as EGLD to near the highs.
The weekly chart above shows price coming into the last major support before a trip down to the original lows. That means that invalidation below this level is pretty clear (there’s often a wick down, so be careful). Weekly RSI is almost oversold as well. Remember, trading is about probabilities and about the ability to invalidate your ideas as soon as possible. You can only control how much you lose, so an entry in the blue zone has well defined invalidation with much more upside than down.
All important levels of support and resistance are marked.
Daily RSI is oversold with bullish divergence. That is the real kicker here. Daily oversold bullish divergence at support.
We missed the bottom already, so this could see another dip to make a larger divergence. So be careful of that. But this looks like it is in the process of bottoming.
TRADING ALTS IS STILL VERY RISKY!
UBS Books Record Profit, Supports Euro Market
European shares rose, largely driven by UBS Group AG's record profits following its emergency takeover of Credit Suisse. This positive news helped the Stoxx 600 index reduce its monthly losses. However, gains were tempered as European inflation data didn't show the expected slowdown, complicating the European Central Bank's upcoming policy decisions.
In the U.S., futures were stable after mixed economic data, with markets keenly awaiting upcoming Fed meetings and job reports for direction. A rise in U.S. jobless numbers and expectations of slower wage growth have caught attention.
Chinese stocks declined as manufacturing activity contracted and services growth slowed, despite government efforts to ease lending and stimulate the housing market. Experts question the effectiveness of China's piecemeal economic measures.
Globally, most stock indices are headed for their worst month since February. Brent crude oil and gold continue to rise, while Bitcoin remains stable above $27,000.
Key events this week:
Eurozone CPI, unemployment, Thursday
ECB publishes account of July monetary policy meeting, Thursday
US personal spending and income, initial jobless claims, Thursday
China Caixin manufacturing PMI, Friday
Eurozone S&P Global Eurozone Manufacturing PMI, Friday
South African central bank governor Lesetja Kganyago, Atlanta Fed President Raphael Bostic, BOE’s Huw Pill, IMF’s Gita Gopinath on panel at the South African Reserve Bank conference, Friday
Boston Fed President Susan Collins speaks at virtual event, Friday
US unemployment, nonfarm payrolls, light vehicle sales, ISM manufacturing, construction spending, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.1% as of 10:37 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average rose 0.3%
The MSCI Asia Pacific Index was little changed
The MSCI Emerging Markets Index fell 0.5%
Currencies
The Bloomberg Dollar Spot Index rose 0.1%
The euro fell 0.5% to $1.0872
The Japanese yen rose 0.3% to 145.86 per dollar
The offshore yuan was little changed at 7.2980 per dollar
The British pound fell 0.3% to $1.2679
Cryptocurrencies
Bitcoin fell 0.2% to $27,205.6
Ether was little changed at $1,704.67
Bonds
The yield on 10-year Treasuries declined two basis points to 4.09%
Germany’s 10-year yield declined five basis points to 2.49%
Britain’s 10-year yield declined four basis points to 4.38%
Commodities
Brent crude rose 0.4% to $86.19 a barrel
Spot gold was little changed
Bloomberg Predicts The ETF Is Very Likely
Eric Balchunas and James Seyffart, two leading experts in the crypto ETF space, have increased their estimates of the SEC approving a spot ETF approval following the Grayscale win. One of the points Eric makes is that the SEC isn't just suffering from a legal loss, they are also facing the consequences of a PR loss. These two losses, legal and PR, Eric claims, “will combine to make denial politically untenable.”
Here is what Eric had to say on Twitter.
The Chances of the SEC approving spot Bitcoin ETFs this year have risen to 75% from 65% following Grayscale’s court win, we believe, while the odds by the end of 2024 reach 95%. The judges unanimously repudiated the SEC’s arguments, and the agency will struggle with further denials as it faces deadlines, negative PR, and Hashdex’s novel approach.
Getting asked about deadlines coming this Friday. We will not be surprised if the SEC delays given the ruling JUST happened. That said, not sure timelines will matter as much in this situation, prob more likely we wake up one day and hear SEC has given in and launch imminent.
Both Eric and James will be on my YouTube stream at 9 AM today!
Ethereum Handled Friend.tech Like A Champ
Friend.tech's lackluster performance has turned into a bust. However, there is a silver lining – the frenzy potentially showcased the effectiveness of layer 2 scaling in alleviating congestion and mitigating elevated gas fees. At its peak, the platform drew in more than 100,000 users, generating a substantial $25 million in fees, a level of activity that would easily have led to congestion in earlier times. Remarkably, gas fees have continued to decline post-launch according to research from FalconX, thanks to Arbitrum, Optimism, zkSync, and of course Base.
Coinbase Will Win
In the event that you were unaware, the Judge presiding over the SEC versus Coinbase lawsuit has recently dismissed a class action lawsuit targeting Uniswap, marking yet another favorable development for the anticipated Coinbase verdict. The judge's rationale included a multitude of crypto-positive viewpoints, encompassing the acknowledgment of Uniswap's decentralization, the private identity of token issuers, the shortcomings of Congress and the courts in establishing definitions, and the assertion that software developers shouldn't be held accountable for the misconduct of third parties. Long story short, if the preceding judge is this pro-crypto, I can’t see how it is possible for Coinbase to lose.
Massive Bitcoin Pump l Grayscale Defeats The SEC! l ETF Inevitable?
Join Dave Nadig, the ETF guru, and John E. Deaton, the crypto lawyer, as we discuss the implications of the Grayscale’s Victory. Chris Inks is joining me later on to discuss the markets.
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.