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The Wolf Den #804 - The Price Is Wrong, B*tch
Hopefully you have seen Happy Gilmore and understand the title!
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In This Issue:
The Price Is Wrong, B*tch
Bitcoin Thoughts And Analysis
Chinese Data Goes From Bad To Worse
Lido Is Crushing The Staking Market
How The White House Tried To Kill Crypto And Failed | Caitlin Long
The Price Is Wrong, B*tch
In 1965, a classic game show known as "The Price Is Right" made its television debut. This iconic show challenged contestants to accurately guess the prices of various consumer products without exceeding the actual retail prices. Successful contestants had the opportunity to participate in a variety of pricing games, all in pursuit of winning coveted showcase prizes.
"The Price Is Right" became a beloved and enduring fixture of daytime television, catering to viewers' love for making suspenseful predictions and the chance to strike it big. This predictive enthusiasm is not unlike the world of financial markets, where individuals closely track and forecast asset prices to meet their financial aspirations.
To uphold the tradition of one of America's greatest shows one last time and pay homage to the legacy of Bob Barker, I pose a question to all of you: is the price of Bitcoin truly right?
On a literal and logical level, an astute student of the market might instinctively respond with a resounding 'Yes.' After all, in a free and open market, the price of any asset should inherently reflect its true value at any given moment. However, delving into a more intriguing investment perspective, based on 'suspenseful predictions' and 'the chance to strike it big,' I contend that the answer is 'No.'
Allow me to elaborate.
Here's a simple way to frame my argument: In 2010, the highest price Bitcoin reached for the year was a mere $0.39. Can we confidently assert that Bitcoin's price was indeed 'right' when it capped at $0.39? One could argue that during that time, Bitcoin lacked widespread usability, and its true potential remained obscured from the world. On the other hand, one could also argue that Bitcoin represented a groundbreaking, undiscovered technology with untapped potential. You decide.
If you firmly stand in the 'yes' camp, then the rest of this introduction may not align with your perspective. However, if you possess a degree of foresight and suspect that the current market price may not truly reflect an asset's value, then prepare yourself, because I've got news to share. From here, I will outline why the current Bitcoin price does not accurately represent its true worth. The crux of the matter lies in the fact that, while major market players grasp the intricacies of various assets, they still struggle to fully comprehend Bitcoin.
Here’s what they are missing:
Prior to BlackRock's submission of an ETF, did any other major asset manager even entertain the idea of a Bitcoin ETF's existence, let alone its imminent arrival? Even at this juncture, with BlackRock's participation, prominent asset managers find themselves compelled to weigh whether they should pursue an ETF submission or opt for providing access to approved products. The clock is ticking.
How many traditional finance managers can elucidate the concept of the "halvening" or its implications for Bitcoin's supply issuance? The fact that Bitcoin operates with a fixed supply and that the halving events historically act as catalysts for price appreciation remains a relatively obscure concept. If you were to inquire about the halving event with your retirement planner, the response you receive might be quite revealing.
Is the U.S. public aware that several pro-crypto candidates are vying for the presidential race in the upcoming election cycle? Robert F. Kennedy, Vivek Ramaswamy, Mayor Suarez and Ron DeSantis, among others, stand as significant contenders who have expressed pro-crypto stances. Remarkably, this development has largely gone unnoticed by everyone except crypto investors. Yet, it has the potential to exert a substantial influence on crypto policy within the United States.
The era of crypto contagion is drawing to a close, indicating that there are fewer distressed assets to be written off from bankruptcy-laden balance sheets. Furthermore, the majority of over-leveraged venture capitalists have been purged from the market, creating room for a fresh wave of investors to propel the market upwards. This collective shift implies a reduced presence of toxic assets in need of disposal, offering investors with sidelined cash a favorable opportunity to accumulate.
The SEC has cast a shadow over the crypto market, but this cloud is gradually giving way to clear skies. If Gary Gensler is not replaced or opts to resign, his term is set to conclude in mid-2026, and new leadership could bring significant enhancements to crypto innovation. While Coinbase anticipates a pivotal triumph and altcoins await complete regulatory clarity, the market may continue to face constraints in the interim.
Outside of crypto, there exists an unmistakable, yet often temporary, correlation with equities, particularly during periods of extreme market conditions. Should major indexes surge past their all-time highs, I anticipate that crypto will likely embark on a parallel upward trajectory. Amidst uncertain traditional markets, crypto can independently rise through compelling narratives and favorable price action, irrespective of explicit positive crypto news. This possibility is often underestimated.
Last but not least, there are several miscellaneous future positive possibilities for crypto, including institutional inflows, a potential reversal of China's ban, the addition of Bitcoin to corporate balance sheets, nation-state adoption, collapsing banks, and ongoing improvements in Bitcoin's code. While I anticipate these developments will materialize over time, the ‘when’ and ‘how’ remain uncertain.
Long story short, the price of Bitcoin is right, for right now, but it is NOT right when you take into account tomorrow, next month, or next year. It’s this reason why I buy the asset now because the prize diminishes for those who buy at later dates; that’s the way the game works. Don’t make the game harder than it is - buy Bitcoin and win at a later date.
Bitcoin Thoughts And Analysis
I have not shared a monthly chart since the last candle close, so I chose to take a quick look. This shows us that Bitcoin is still above the key support area of $25,214, with a close there to prove it in August. For now, there’s no reason to be particularly bearish on this larger time frame. This simply looks like a retest of resistance as support.
September is a historically down month, although the downside usually happens in the first 15 days. Let’s see what happens.
Price attempted a push up last week on the Grayscale news, only to be smacked back down by bears. While the last weekly candle looks ugly, context and placement are important. At the top, a long wick up and small body (there are various names for this candle, this one is almost an inverted hammer) is considered bearish. At the bottom, it can actually be a sign of bear exhaustion and can be a bullish signal.
Bottom line - Bitcoin remains sideways after the big drop a few weeks ago. Naturally, that means consolidation leans more bearish than bullish, so we will see what happens. I still. believe we are likely in the miserable 3rd slow year of the 4 year cycle and that things will ramp up again a year from now, a few months after the halving. I have been prepared for boring since last year and that’s what we’ve got.
I am not ready to post more charts here… yet. Sentiment is bad, Bitcoin is shaky and the market is very unlikely to give meaningful gains in this part of the cycle. You have likely seen a number of narratives come and go in a matter of days. Trading bots pumped and dumped, Friend.tech etc. Nothing has lasted. The market is not ready.
I am seeing a number of coins that are oversold on the daily with bullish divergence forming. This is usually a signal that we at least get a relief bounce. If things look a bit better, I will share a few.
Chinese Data Goes From Bad To Worse
European stocks are in retreat, with the Stoxx 600 dropping by 0.8%, amid lackluster economic data from both the Eurozone and China. The situation has led to the euro sinking to a nearly three-month low against the U.S. dollar. China's services sector showed its slowest growth of the year in August, sparking concerns that its economic recovery is stalling. Meanwhile, in Europe, the composite purchasing managers' index contracted for the third consecutive month, fueling fears of a looming recession. This grim economic landscape has caused particular damage to European sectors closely tied to China, such as luxury brands and sportswear manufacturers, which have seen losses of more than 2%. On the flip side, the U.S. dollar is gaining strength, buoyed by a relatively robust American economy and low likelihood of immediate interest rate cuts. All these factors combined have created an atmosphere of uncertainty and caution in global markets.
Key events this week:
US factory orders, Tuesday
ECB President Christine Lagarde chairs panel focused on central banks and international sanctions at ECB Legal Conference, Tuesday
Australia GDP, Wednesday
Eurozone retail sales, Wednesday
Germany factory orders, Wednesday
US trade, Wednesday
Canada rate decision, Wednesday
Bank of England Governor Andrew Bailey testifies to the UK parliament’s Treasury Select Committee, Wednesday
Federal Reserve issues Beige Book economic survey, Wednesday
Boston Fed President Susan Collins speaks on the economy at New England Council, Wednesday
China trade, forex reserves, Thursday
Eurozone GDP, Thursday
US initial jobless claims, Thursday
Bank of Canada Governor Tiff Macklem to speak on the Economic Progress Report, Thursday
New York Fed President John Williams participates in moderated discussion at the Bloomberg Market Forum, Thursday
Atlanta Fed President Raphael Bostic speaks on economic outlook at Broward College, Thursday
Japan GDP, Friday
France industrial production, Friday
Germany CPI, Friday
Some of the main moves in markets:
The Stoxx Europe 600 fell 0.3% as of 10:28 a.m. London time
S&P 500 futures fell 0.2%
Nasdaq 100 futures fell 0.3%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index fell 0.8%
The MSCI Emerging Markets Index fell 0.9%
The Bloomberg Dollar Spot Index rose 0.5%
The euro fell 0.4% to $1.0750
The Japanese yen fell 0.4% to 147.08 per dollar
The offshore yuan fell 0.5% to 7.3087 per dollar
The British pound fell 0.6% to $1.2544
Bitcoin fell 0.5% to $25,693
Ether fell 0.2% to $1,624.67
The yield on 10-year Treasuries advanced four basis points to 4.21%
Germany’s 10-year yield advanced two basis points to 2.60%
Britain’s 10-year yield advanced one basis point to 4.47%
Brent crude fell 0.6% to $88.43 a barrel
Spot gold fell 0.6% to $1,931.20 an ounce
Founded in 2017, Stake has quickly become a massive online gambling platform, commonly advertised on various social media platforms and marketed towards a young crowd. The multi-billion-dollar company exclusively operates as a crypto-only casino and sportsbook service provider, meaning it does not accept conventional payment methods.
Over the weekend, Stake fell victim to malicious actors who successfully breached its security, gaining access to private keys and causing a total loss of $41 million. Approximately $15.7 million and $25.6 million were drained from different wallets. Presently, on-chain experts have traced the stolen funds, which have been converted into ETH and transferred to separate externally owned wallets.
While the compromised wallets have likely been secured, my advice is to exercise caution and refrain from keeping funds on the platform. I did some digging, and according to Dune, the platform has $320 million in cumulative deposits, but that figure may be undershooting the reality if this Tweet, from the co-founder is true.
Lido Is Dominating The Staking Market
In recent months, the Ethereum community has grown increasingly concerned about the rising dominance of Lido Finance in the liquid staking market. The rapid growth has raised fears of potential centralization risks in the network, as Lido's overwhelming influence could potentially enable its validators to manipulate Ethereum's transaction organization mechanism. In response to these concerns, four liquid staking providers, Rocket Pool, StakeWise, Stader Labs, Diva Staking, and Puffer Finance have committed to limiting their validator power, but Lido hasn’t agreed, sparking a contentious debate in the staking community. The question remains: Is Lido's dominance a genuine threat or an outcome of natural market dynamics? I do find this to be an important topic for the next couple of years, but that being said, I have not picked a side of the debate.
This podcast will shock you. Caitlin Long, the founder of Custodia Bank, reveals what happened in the White House and who the puppet master behind the ongoing attacks on crypto is. We continue with crypto regulation in each state, Bitcoin ETFs, and the future of Custodia Bank. You don't want to miss this episode, trust me.
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.
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