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In This Issue:
Hello 911? Gary Gensler Is Dead.
Bitcoin Thoughts And Analysis
Altcoin Charts
Oil Rages While Yields Skyrocket
Coinbase Made A Cameo
Crypto Wallets May Come To Xbox
Winklevii Withdrew $280M Months Before Gemini Collapse
Is Gary Gensler About To Get Destroyed? | What's Next For Bitcoin?
Hello 911? Gary Gensler Is Dead.
Like the Wizard of Oz, Gary Gensler is a deceptive charlatan, concealing himself behind a curtain and resorting to dubious tactics to impress and control those who fall for his scheme. The sound machine, roaring flames, and theatrical effects aren’t fooling us. Time is ticking because the investment community is close to ripping down your curtain and revealing your true character.
It’s going to be glorious.
We stand at the castle door, our efforts proving effective. Even the Emerald City is turning against you, this isn't just a crypto battle, it has become much bigger.
Okay, metaphor aside, a lot has taken place in the past 72 hours and I’m going to do my best to cover every highlight here.
Let’s get to it.
The first point of discussion was the strongly worded letter sent directly to Gary Gensler from a bipartisan group consisting of four Congressional committee members - two from each party - demanding the approval of a spot Bitcoin ETF. Representatives Tom Emmer (R-Minn.), Mike Flood (R-Neb.), Ritchie Torres (D-N.Y.), and Wiley Nickel (D-N.C.), signed the letter.
This letter was entirely crypto-focused. Below are some of the best quotes from within:
A spot Bitcoin ETF is indistinguishable from a Bitcoin futures ETF. Thus, the SEC’s current posture is untenable moving forward.
The Court of Appeals concluded that “in the absence of a coherent explanation, this unlike regulatory treatment of like products is unlawful.”
Following the Court of Appeals’s decision, there is no reason to continue to deny such applications under inconsistent and discriminatory standards.
Congress has a duty to ensure the SEC approves investment products that meet the requirements set out by Congress.
To that end, we urge you to approve the listings of spot-Bitcoin ETFs immediately.
That letter, as I said in the newsletter two days ago, must have been read by the head of the snake, because the SEC's response came swiftly: within just 30 minutes, the SEC issued a preemptive denial for proposals from ARK and 21Shares, signaling a potential delay for others in the pipeline. We see through the smoke and mirrors.
The next development was the arrival of another letter, again addressed directly to Gary Gensler's inbox. It came from all of the GOP members on the House Financial Services Committee just before a scheduled hearing (the plot thickens). While this letter didn't explicitly reference crypto, it did highlight the agency's shortcomings regarding rulemaking, which are directly impacting the crypto sphere. The relevant quotes are provided below.
The Commission should stop finalizing or implementing any rule until it has comprehensively evaluated the real and cumulative impact of its rulemaking, including the impact on competition.
The Department of Justice has raised similar concerns regarding the Commission’s failure to account for the aggregate impact of rulemaking.
If the Commission fails to evaluate the aggregate impacts of related rules and subsequently plan staggered compliance, it will risk stultifying U.S. capital markets, and, ultimately, U.S. competition.
Addressing these concerns promptly is essential to ensure a fair, transparent, and ultimately beneficial rulemaking process for investors, market participants, and the broader U.S. capital markets.
So far, Gensler has received two letters from multiple members of Congress, both preceding a significant hearing. Now, let's fast forward to the hearing that took place yesterday. This is where the real excitement begins.
Patrick McHenry, the Chairman of the Financial Services Committee, led the Hearing Entitled: Oversight of the Securities and Exchange Commission, which turned out to be a proper bloodbath of crypto soundbites and idiotic kiss-assery, and I can’t wait to share the highlights.
Keep in mind that the agenda covered a wide range of topics, including the possibility of a looming government shutdown, ESG, capital markets, and, of course, crypto. Congressional representatives from across the land had their concerns and issues to address.
At the start of the testimony, Mr. McHenry wasted no time asking Gary a simple ‘yes’ or ‘no’ question on the status of Bitcoin being a security, which he described as a “softball before harder questions.”
Gary’s stubbornness shined like a bright star.
After multiple heated back-and-forth demands between the two, Gary reluctantly conceded, “Bitcoin does not meet the Howey Test which is the law of the land for being a security” - this was only the beginning.
Not long into the hearing, it became clear, who the munchkins were, championing their supreme wizard, and who were sentient humans, demanding more from the ‘leader’ tasked with looking after the land.
Ms. Waters sang Gensler’s praises. “Since we started out on Bitcom, let’s go further into crypto… the failures and fraud of crypto firms like Terror Luna cost investors as much as $60 billion, larger than the Madoff Ponzi Scream in 2008.”
No those were not typos, Ms. Waters did in fact say “Bitcom,” “Terror Luna” and “Ponzi Scream,” probably because she is geriatric and needs to be admitted to a nursing home rather than be discussing digital asset legislation. Not to mention, she took donations from SBF and hasn’t paid them back. Where’s the hearing on that?
Aside from Ms. Waters, there were a lot of incredible jabs and hooks thrown at Gary, which I plan to detail below. Please keep in mind not all of these are explicitly related to crypto, but the behaviors of Gensler do directly affect our industry.
Mr. McHenry: “Our patience is wearing thin. You refuse to be transparent with Congress regarding your interactions with FTX and Sam Bankman-Fried. I don't want to have to be the first Chair to issue a congressional subpoena and you don't want to be the first SEC Chair to receive one.”
Mr. Torres: “If I were to purchase a tokenized Pokemon card on a digital exchange via a blockchain, is that a security transaction?”
Mr. Davidson: “You’re pushing a woke political and social agenda and are abusing your role in the SEC, as cover. You’re front-running Congress, the courts, and your own administration. I wish the Biden administration would say you are fired.”
Mr. Emmer: “I'm convinced you're not an impartial regulator. Instead, it's clear that you working to consolidate your own power even though it means crushing opportunities for everyday Americans...”
Mr. Barr: “Even a gold medalist must keep training, if the U.S. capital markets are a gold medalist, you are the Tonya Harding of securities regulation, because you are kneecapping the U.S. capital markets with the avalanche of red tape coming out of your commission.”
Mrs. Wagner: “Which Gary Gensler should the American public believe? The academic version or the SEC version?”
Mr. Ogles: “Open up the floodgates, hit him with subpoenas, get the information we need, the obfuscation and not answering questions, I am sick and tired of it… you wear tap dancing shoes better than Fred Astaire.”
There were other good comments, but the hearing ended with Chairman McHenry once again alluding to the possibility of compulsory processes and subpoenas, something we are all rooting for.
Following the meeting, in fear of a shutdown, the SEC began flying through paperwork at godspeed, which may explain why the previous delays were posted early. The SEC has officially posted Grayscale’s Ethereum futures ETF, along with Hashdex’s Bitcoin ETF filing, and delayed decisions on ARK’s and VanEck’s Ethereum spot ETFs.
I won’t venture too far down the conspiracy theory rabbit hole, but basically, we are closing in on the castle and the last thing the wizard wants is a forced shutdown that approves crypto ETFs by default - what a day that would be.
Please keep in mind that all of this is happening in real-time, very fast, so if anything is missed, I will do my best to address everything as it comes. The past 72 hours are most definitely the most pressure the SEC has ever felt.
Tomorrow’s outcome is anyone’s guess, but at this rate, all it will take is a well-timed tug, and Gary, the great and powerful Wizard of the SEC, will be exposed for the meek man he really is. The crypto community welcomes a subpoena, along with other investment communities that are beyond fed up. Fair investor laws and protections should be a basic human right - the only standard we should accept. The clock is ticking and we aren’t moving.
#FireGaryGensler.
Bitcoin Thoughts And Analysis
Absolutely ridiculous. Yesterday saw a nice move to the upside on decent increasing volume in a 4-hour candle… only to see it completely retraced on higher volume to the downside on the next candle.
This market is toxic in this part of the cycle. Utterly avoidable.
Altcoin Charts
Ethereum has been losing value against Bitcoin this entire year, and really since last summer. It has currently found its way to a key support at .059 and is showing a bit of bounce - not much yet, but this could end the day as a bullish engulfing candle. This is an important area to watch. If Ethereum can show some cajones here, then perhaps we can see some positive moves in the altcoin market, although I would expect them to be temporary.
Oil Rages While Yields Skyrocket
September is shaping up to be the worst month for global stocks in a year, driven by rising oil prices and interest rates. U.S. benchmark oil briefly crossed $95 a barrel for the first time in over a year, impacting inflation expectations and keeping 10-year Treasury yields at their highest since 2007. This financial landscape has led experts to call it a "toxic cocktail," diminishing any near-term hopes for lower interest rates.
Other factors, like comments from Minneapolis Federal Reserve President Neel Kashkari, suggest less aggressive central bank moves could be in the cards if the U.S. economy slows down due to potential government shutdowns and autoworker strikes. Furthermore, a large options position held by a JPMorgan Chase equity fund could also put additional pressure on global stocks. Meanwhile, Peloton's stock soared 13% in premarket trading after announcing a partnership with Lululemon Athletica Inc.
Key events this week:
US initial jobless claims, GDP, Thursday
Fed Chair Jerome Powell town hall meeting with educators while Richmond Fed President Tom Barkin, Chicago Fed President Austan Goolsbee make speeches, Thursday
Eurozone CPI, Friday
Japan unemployment, industrial production, retail sales, Tokyo CPI, Friday
US consumer spending, wholesale inventories, University of Michigan consumer sentiment, Friday
ECB President Christine Lagarde speaks, Friday
New York Fed President John Williams speaks, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.3% as of 10:44 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index fell 0.8%
The MSCI Emerging Markets Index fell 0.6%
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.3% to $1.0536
The Japanese yen rose 0.3% to 149.24 per dollar
The offshore yuan rose 0.2% to 7.3090 per dollar
The British pound rose 0.6% to $1.2205
Cryptocurrencies
Bitcoin rose 0.6% to $26,393.31
Ether rose 1.6% to $1,618.95
Bonds
The yield on 10-year Treasuries advanced three basis points to 4.63%
Germany’s 10-year yield advanced six basis points to 2.91%
Britain’s 10-year yield advanced 11 basis points to 4.47%
Commodities
Brent crude fell 0.4% to $96.20 a barrel
Spot gold was little changed
Coinbase Made A Cameo
During the hearing, behind Gary’s head was a blue shield, to his right was a blue cold-brew can, and on the street was a blue armored truck, all ingeniously marketed by Coinbase, supporting crypto in America. Absolutely iconic. On the back of the can, the nutrition label is branded with all the cold hard facts of crypto’s existence and adoption in America. Click HERE if you want to see it. Outside, stationed on the street, an armored blue truck sported a compelling message: “The future of money doesn't move on a money truck.” Talk about seizing the moment to convey a powerful message - Coinbase clearly is not going down without a fight.
Crypto Wallets May Come To Xbox
Leaked internal documents from Microsoft mentioned the inclusion of crypto wallets on the Xbox gaming console. Specifics weren’t included and the head of Xbox said he was disappointed to see the leaks, but that doesn’t mean the news isn’t fair game for the newsletter. The overlap of crypto with real gaming platforms is a collaboration the crypto community has been discussing for years. Given the widespread use of in-game purchases, the idea of gamers having access to a universal currency through a crypto wallet makes perfect sense. I wouldn't be surprised if we witnessed this development within the next calendar year.
Winklevii Withdrew $280M Months Before Gemini Collapse
The Winklevoss twins, co-founders of the Gemini cryptocurrency exchange, reportedly withdrew more than $280 million from their company's bank months before the firm faced a liquidity crisis that left customers unable to access their deposits. The withdrawal occurred amid a legal battle with Barry Silbert, whose company, Digital Currency Group, owns the now-bankrupt crypto bank Genesis. The issue centers on the "Gemini Earn" program, which promised customers an 8% annual return on digital currency deposits.
The timing of the twins' withdrawal raises questions about what they knew regarding Genesis's financial health. While the withdrawn funds did not include customer deposits, the move could weaken their ongoing lawsuit against Silbert and Digital Currency Group, in which they allege that Silbert misled them about Genesis's financial stability.
This comes at a turbulent time for Gemini, which has seen a drop in trading volume, layoffs, and a lawsuit against Silbert. Even if current securities laws do not apply to the withdrawal, the Winklevoss twins and Gemini could face legal repercussions like class-action lawsuits or standard fraud claims.
Is Gary Gensler About To Get Destroyed? | What's Next For Bitcoin?
Join Dan Gunsberg, co-founder of Hxro Network, and Chris Inks, as we break down the latest news in crypto.
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.