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In This Issue:
Crypto Spring
Bitcoin Breaks Down
Stocks Show Optimism, Probably Misplaced
Standard Chartered Is Also Bullish On Ethereum
ARK Responds To SEC Comments
Coinbase Found Itself A New Foe
JPMorgan Launches Tokenization Platform - First Trade Settled With BlackRock.
Big Threat To Bitcoin, But BitVM Can Change Everything
Crypto Spring
Winter is the hardest season to survive in the crypto 4-year cycle.
More times than I want to admit, during this previous crypto winter I felt like curling into a ball in the fetal position and capitulating. Winter consistently imparts harsh lessons, but it's not the sole season that requires making crucial decisions for survival and success; lasting through the cold does not equal success.
It’s actually quite the opposite.
For some investors, enduring winter simply means prolonging portfolio death. I don't think this applies to any of my readers who have put the work in, but for many surviving investors, this is the harsh truth. The rest of us find ourselves in the midst of spring with limited time to make the most of last-minute portfolio preparations.
Allow me to elaborate.
Following the heavy winter months, spring is challenging because fluctuating temperatures can result in sudden frosts, heavy rains, and even late snowfalls. Farmers not in tune with weather patterns and risk management are left with damaged crops and disruptive planting schedules… Investing works exactly the same way - take on too much risk too early and a little bit of winter lag will crush over ambitious investors.
Why do I mention this? Because I am still extremely cautious with altcoins.
As the warmer weather rolls around, seasoned farmers are well prepared for the increases in pest and disease pressure. Newly emerged crops are especially vulnerable to insects and pathogens that are active in the spring. This is the equivalent of an investor letting their guard down to grifters, scammers, and fraudulent schemes. Winters are in fact deadly, but if they don't kill you, then they also don't kill some pests.
If winter is about surviving, then spring is about putting in work to set up for summer and fall. As the conditions change, preparing the soil for planting can be a time-consuming and physically demanding task. For optimal planting conditions, farmers may need to plow, till, and amend the soil in a tight window. This means investors looking to capitalize on an abundant harvest need to get aggressive in researching what’s new. Even conservative investors should spend some time learning what makes the current market cycle different.
Spring is about putting the work in, because winter survival never guarantees future success. It just means you survived.
Management and maintenance are pivotal for maximizing the potential of spring. Ensuring proper irrigation is essential, especially in fluctuating weather conditions, and it's equally important to keep tractors, planters, and other machinery in prime working condition to guarantee efficient planting and cultivation. Similarly, for crypto investors, this involves shedding underperforming assets that withered during the winter and rebalancing positions to maintain a well-weighted portfolio.
Spring is the season of providing TLC to your portfolio to nourish it back to life.
The point I'm trying to convey is that spring is a season that demands effort from investors who seek to be on cruise control in the summer. Seasoned professionals know that crypto’s bloom takes place in a very narrow window, so it's our responsibility to make the most of it by preparing as best we can. Eventually, there will come a time when your only task is to sit back, enjoy the results, and watch the numbers go up. But until then, there's work to be done in the fields.
Bitcoin Breaks Down
The weekly candle is not closed, so it is too early to judge. That said, it looks likely that bitcoin will print an evening star, one of the more bearish candlestick patterns there is.
From Investopedia on an evening star:
The first day consists of a large white candle signifying a continued rise in prices.
The second day consists of a smaller candle that shows a more modest increase in price.
The third day shows a large red candle that opens at a price below the previous day and then closes near the middle of the first day.
This does not just apply to daily candles, of course, as we are seeing it on the weekly.
On stock charts, an evening star requires a gap up between candles 1 and 2 and then a gap down between 2 and 3, but this is effectively impossible on Bitcoin because the market is 24/7 - so there are no real gaps.
This evening star is also forming at the 200 MA, which is acting as strong resistance.
Some would argue that an evening star is invalid here, as it is not truly in an uptrend, but that is up to each analyst to decide. Regardless, things are not looking great since the rejection from the 200 MA on both the weekly and the daily.
Am I worried? No. I expect nothing truly meaningful from Bitcoin in this part of the cycle.
Bitcoin quickly broke the support that I drew for you yesterday, as is tradition. That area is now clearly resistance. We call this a “bullish breaker.” When a demand area that is technically support is broken through in a single candle, it becomes strong resistance.
That said, price dipped to the 50 MA which has held so far as support. Bulls really want that blue line to remain strong.
I still view almost all of this price action as sideways chop in the pre halving year.
Stocks Show Optimism, Probably Misplaced
European markets are optimistic, with the Stoxx 600 Index hitting a three-week high, primarily driven by energy shares as oil prices rebound. On the flip side, Barclays Plc saw its shares drop by as much as 3.8%, attributed to comments by its CEO about stagnant deal activity and other factors affecting the banking sector. In the U.S., equity futures are climbing, extending the S&P 500's longest winning streak since August. However, Ford Motor Co. faced a setback as union members went on strike at a key plant.
Investor attention is now pivoting to the upcoming U.S. consumer price data, which is expected to show a slight decrease in inflation rates. This data will be a significant determinant for the Federal Reserve's future monetary policies. The Fed minutes have already suggested a more patient stance on rate hikes, but a cooler-than-expected inflation rate could potentially revive calls for rate cuts as early as the first half of next year.
Additionally, the dollar has been weakening for seven consecutive days, its longest run of losses in over three years, possibly reflecting the market's changing perceptions of the Fed's stance on rate hikes. Treasury 10-year yields are also trending slightly higher.
In Asia, the Hang Seng Index soared, thanks to China's state-owned Central Huijin Investment Ltd. increasing its stake in the country's major banks for the first time since 2015. On the other hand, oil prices took a dip for the third consecutive day, nullifying the surge seen after recent geopolitical tensions following Hamas' attack on Israel.
In the UK, the pound's upward streak came to a halt as new economic data revealed a modest recovery in August, with the services sector offsetting weaknesses in manufacturing and construction.
Key events this week:
US initial jobless claims, CPI, Thursday
European Central Bank publishes account of September policy meeting, Thursday
Fed’s Raphael Bostic speaks, Thursday
China CPI, PPI, trade, Friday
Eurozone industrial production, Friday
US University of Michigan consumer sentiment, Friday
Citigroup, JPMorgan, Wells Fargo, BlackRock results as the quarterly earnings season kicks off, Friday
G20 finance ministers and central bankers meet as part of IMF gathering, Friday
ECB President Christine Lagarde, IMF Managing Director Kristalina Georgieva speak on IMF panel, Friday
Fed’s Patrick Harker speaks, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.7% as of 10:31 a.m. London time
S&P 500 futures rose 0.3%
Nasdaq 100 futures rose 0.3%
Futures on the Dow Jones Industrial Average rose 0.3%
The MSCI Asia Pacific Index rose 1.1%
The MSCI Emerging Markets Index rose 0.8%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0621
The Japanese yen was little changed at 149.10 per dollar
The offshore yuan was little changed at 7.2975 per dollar
The British pound fell 0.1% to $1.2300
Cryptocurrencies
Bitcoin rose 0.1% to $26,744.28
Ether fell 0.7% to $1,553.23
Bonds
The yield on 10-year Treasuries advanced one basis point to 4.57%
Germany’s 10-year yield advanced one basis point to 2.73%
Britain’s 10-year yield advanced two basis points to 4.35%
Commodities
Brent crude rose 1.3% to $86.92 a barrel
Spot gold rose 0.3% to $1,880.79 an ounce
Standard Chartered Is Also Bullish On Ethereum
Earlier this year, British multinational bank Standard Chartered garnered attention with its bold Bitcoin prediction, forecasting a value of $120,000 by the close of 2024. Now, the bank has turned its attention to Ethereum. In a recent investment report authored by the head of crypto research, the bank has expressed a strong bullish sentiment toward the space’s second-largest asset. Hold tight to your seat, this one has some force behind it.
“Ethereum’s established dominance in smart contract platforms, along with emerging uses in gaming and tokenization, has the potential to push ETH to the $8,000 level by the end of 2026. We see the $8,000 level as a stepping stone to our long-term 'structural' valuation estimate of $26,000-$35,000. That (possibly 2040) valuation assumes future use cases and revenue streams that may not have emerged yet, although the real-world use cases of gaming and tokenization should support their development.”
ARK Responds To SEC Comments
ARK has revised its Bitcoin spot ETF application in response to the SEC's comments and concerns, bringing the ETF one step closer to potential approval. Given the SEC's recent move to preemptively delaying all filings, it's possible that conversations might go quiet until the next required response date. However, it's worth noting that if the SEC can prematurely reject ETFs, it can also expedite their approval. As Eric points out in his thread, the fact that the SEC is engaging in dialogue with filers is a huge step in the right direction. The spot ETF will happen, like it or not.
Coinbase Found Itself A New Foe
The North American Securities Administrators Association (NASAA - not to be confused with the space agency), representing state and provincial securities regulators has filed an amicus brief supporting the SEC in its case against Coinbase. Detailed in the filing are accusations that Coinbase has unlawfully operated an unregistered exchange and that the SEC’s theory is consistent and well within established law’s bounds--give me a break. Considering how pathetic the SEC has been performing, I don't think this amounts to anything stronger than a fart aimed at Coinbase.
JPMorgan Launches Tokenization Platform - First Trade Settled With BlackRock.
JPMorgan has introduced its blockchain-based tokenization platform, known as the Tokenized Collateral Network (TCN). The application was developed in-house and recently settled its first trade for asset management heavyweight BlackRock. TCN leverages blockchain technology to allow investors to use traditional assets as collateral more efficiently. In the inaugural transaction between JPMorgan and BlackRock, shares of a money market fund were tokenized and transferred to Barclays bank as security for an over-the-counter derivatives exchange.
The platform was initially tested internally by JPMorgan in May 2022 and has now gone live, offering a pipeline of transactions for other clients. One of the key advantages of TCN is that it significantly streamlines and scales the traditional settlement process. By using decentralized technology, the process becomes quicker, more secure, and efficient.
According to Tyrone Lobban, head of Onyx Digital Assets at JPMorgan, TCN has the potential to unlock capital and utilize it as collateral in ongoing transactions. The application enables the near-instantaneous movement of collateral, contrasting sharply with earlier, slower methods. Moreover, it allows clients to access intraday liquidity via secured repo transactions using tokenized collateral, reducing the need for expensive unsecured credit lines. Clients who participate can have their own node for settling trades and accessing reports.
This development marks a pivotal moment for JPMorgan, which has transitioned from being skeptical about the decentralized world to actively testing and launching various blockchain and crypto-centered services.
Big Threat To Bitcoin, But BitVM Can Change Everything
I am joined by Alex Miller, CEO at Hiro Systems, and Chris Inks, a Trader and Market Psychology Coach. We are going to talk about the threats to Bitcoin given the ongoing attack on Israel and the geopolitical risks it brings and also uncover BitVM and why it can become a game changer.
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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.