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In This Issue:
We Played Ourselves
Bitcoin Thoughts And Analysis
Legacy Markets
CoinTelegraph Fails To Take Responsibility
Uniswap Adds A New Fee
Larry Fink Calls Crypto A “Flight To Quality”
Bitcoin Spot ETF Approved, Then Proven Fake News! Global Markets Brace For Volatility | Macro Monday
We Played Ourselves
I invite everyone reading this newsletter to proceed to the nearest sink, turn on the faucet, place your hands under the running water, and gently remove the clown makeup from your face. I will do the same.
Yesterday morning, one of the most significant crypto pump-fakes in history occurred, briefly causing us to question whether there was an approval of a spot Bitcoin ETF. Here’s the story and why it matters…
It all started when the official CoinTelegraph Twitter account tweeted the following (screenshot below). All hell immediately broke loose.
In true crypto fashion, EVERYONE on Crypto Twitter (and I mean EVERYONE) was sharing the news like it was an STD at a college orgy. Reuters, Benzinga, Wu Blockchain, Fox Business, Bloomberg (even the Bloomberg Terminal), and every influencer who happened to have their phone nearby (including me for a brief moment) shared the news.
We all need to get tested.
In response to the news, Bitcoin teleported to $30,000, and on some platforms, even higher. However, there's a catch. After a moment passed when the news broke, many of us weren’t genuinely convinced the news was true. It didn't require mental gymnastics to notice that every ‘source’ reporting on the ETF approval was just another ‘source,’ who heard of the approval from another ‘source,’ leading back to CoinTelegraph.
I quickly questioned the news on my Macro Monday stream. Then I saw that James Seyffart from Bloomberg had tweeted that it was likely fake. Price dropped immediately.
Then this happened…
So does this mean when the spot ETF is approved that $30,000 is the destination? I doubt it. If you want to continue with what CoinTelegraph said as the day went on, make sure to read the first news story below. It’s a case study in crypto media incompetence.
Let’s get back to the price reaction.
I anticipate Bitcoin will surge significantly higher when the news breaks for real.
Who were the primary buyers when the news broke? In my assessment, there were relatively few. The primary buyer appeared to be the potential market manipulator behind the stunt (if there was one) and retail investors who promptly caught wind of the news. While a few major players might have seized a trading opportunity, when it comes to substantial investment inflows, we observed relatively little.
When the ETF is approved, the outcome will be vastly different. First of all, there will be tangible evidence of approval, on the SEC’s site for everyone to verify and confirm. There may even be a video or statement from the SEC that accompanies the approval which gives a nod to the industry (we can hope). Second, there will likely be approval of all of the ETFs, not just one, and Grayscale will win approval to convert its trust to an ETF. Third, there will be a MUCH larger spillover into mainstream media - the splash radios of yesterday’s pump fake was relatively minimal. Fourth, there will be a huge media push from approved filers. The news will marinate over the following days as late Wall Street doubters are faced with the reality of a Bitcoin ETF.
What does this stunt mean for industry credibility? Very little, I would imagine. The crypto press already has a dubious history of jumping the gun and irresponsible reporting. While many believe that this could give the SEC more ammo for their argument that Bitcoin is a manipulated market, I don’t think this will make a difference.
As for the timing of approval, I don't have any more insight than the next person, but I find Eric Balchunas’s 90% prediction by January 10, the final date for ARK to earn approval this filing cycle, quite appealing. The fact that the SEC has engaged in discussions with ARK is an incredibly positive sign. In a recent interview, Cathie Wood, a trusted source, expressed the following view: “The SEC knows so much and they are so good that I believe this was much more Gary Gensler standing in the way. I don't know for sure because they could never say something like that. I just know from how we discussed Bitcoin with them - they really understand it, and they understand its merits most importantly.”
Long story short, CoinTelegraph loses some credibility, an intern may be going to jail, crypto media is still bad at reporting, and Bitcoin is still criminally undervalued. Notably, I find it encouraging that Bitcoin didn't fully retrace its gains, indicating that investors are beginning to factor in the immediate potential impact of an ETF once it's officially approved.
Bitcoin emerged as the prominent winner in response to the fake news, it will win when the ETF happens legitimately, and it will win over the next few years - prepare accordingly.
I have both Eric Balchunas and James Seyffart from Bloomberg joining my livestream this morning to discuss all of this, as well as Ben Cowen. This will be a good one.
Bitcoin Thoughts And Analysis
We are all aware of what happened yesterday. Check out that massive wick to the upside from the fake ETF news! Even though we have that wick, we still have a huge bullish body on the candle, so I am not particularly discouraged. Price is trading above key resistance at $28,473 (barely) and also has finally broken strongly above the 200 MA (red line in red box). That area was already tested as support today and price bounced nicely.
I am glad the day still closed well up instead of retracing all of the gains. I am still optimistic.
I am sharing this to show you just how dramatic the pump and dump was. A single 30m candle went up $2000 and it fully retraced within the next 30m candle on increased volume. Welcome to crypto!
Legacy Markets
Stocks and bonds are down as markets closely monitor escalating tensions between Israel and Hamas. President Biden's upcoming visit to the region is seen as a stabilizing move. Meanwhile, mixed earnings reports are affecting U.S. equities, with Bank of America and Johnson & Johnson in focus. The U.S. 10-year yield has crossed 4.7%, and the dollar is strengthening against other currencies. Market analysts express concern about the conflict affecting global supply chains and financial stability. On the corporate side, investors are eyeing upcoming earnings reports from big names like Netflix and Tesla. Overall, sentiment among investors has turned more cautious, as evidenced by rising cash levels in portfolios.
Key events this week:
Chinese President Xi Jinping hosts world leaders at the Belt and Road Initiative forum from Tuesday to Wednesday, with Russian President Vladimir Putin expected to attend
Joint European Central Bank/IMF policy and research conference, Tuesday
US retail sales, business inventories, industrial production, Tuesday
Goldman Sachs, Bank of America earnings, Tuesday
New York Fed President John Williams moderates discussion, while Richmond Fed President Tom Barkin speaks at a separate event, Tuesday
Reserve Bank of Australia Governor Michele Bullock speaks, Wednesday
China GDP, retail sales, industrial production, Wednesday
UK CPI, Wednesday
Eurozone CPI, Wednesday
Morgan Stanley, Netflix, Tesla earnings, Wednesday
Federal Reserve issues Beige Book economic survey, Wednesday
Philadelphia Fed President Patrick Harker and New York Fed President John Williams speak at separate events, Wednesday
Australia unemployment, Thursday
Japan trade, Thursday
China property prices, Thursday
US initial jobless claims, existing home sales, leading index, Thursday
Federal Reserve Chair Jerome Powell, Chicago Fed President Austan Goolsbee, Atlanta Fed President Raphael Bostic, Philadelphia Fed President Patrick Harker, Dallas Fed President Lorie Logan speak at different events, Thursday
Japan CPI, Friday
China loan prime rates, Friday
Philadelphia Fed President Patrick Harker speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.2% as of 6:52 a.m. New York time
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average fell 0.2%
The Stoxx Europe 600 fell 0.1%
The MSCI World index rose 0.1%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro was little changed at $1.0552
The British pound fell 0.5% to $1.2158
The Japanese yen was little changed at 149.58 per dollar
Cryptocurrencies
Bitcoin rose 0.5% to $28,541.25
Ether was little changed at $1,587.06
Bonds
The yield on 10-year Treasuries advanced five basis points to 4.76%
Germany’s 10-year yield advanced three basis points to 2.82%
Britain’s 10-year yield advanced one basis point to 4.49%
Commodities
West Texas Intermediate crude rose 0.2% to $86.84 a barrel
Gold futures were little changed
CoinTelegraph Fails To Take Responsibility
We waited all day yesterday for CoinTelegraph to provide an explanation or a sincere apology, but all we received was Kristina Lucrezia, the editor-in-chief, shifting the blame on everything else. I recognize that this is a complex issue, but the crux of the problem lies with media companies prioritizing being the first to publish news over-delivering quality stories. The events of yesterday cast a negative light on the crypto world and an even darker light on CoinTelegraph. Notice how Mario looks surprised?
Here’s what Kristina said: “Yes, this was disastrous and this is an example of what cannot happen. But this is what happens when we have constant pressure to be the first with every news. This is not a problem of journalism. It’s a problem of the society and technology and the indexation of Google and social media and whatever… if you're not the first, you're the last. There is no second or third.” Yeah, okay, and we expect to be taken seriously right?
Uniswap Adds A New Fee
Starting tomorrow Uniswap will charge an additional 0.15% swap fee on certain tokens in the web app and wallet ie. ETH, USDC, wrapped ETH, USDT, DAI, wrapped BTC, plus more. The entire list of tokens and fee levels will be kept updated in the help center on the platform, and the purpose behind the new fee is to help fund the company’s development efforts. Hayden Adams, who made the announcement made it clear that this fee is different from the traditional Uniswap Protocol fee, which is voted on by Uni token governance.
Larry Fink Calls Crypto A “Flight To Quality”
Larry Fink added his two cents about the rally we saw today. I like his take because it's different from what else everyone is saying in regards to price reacting to the pump fake. “This rally is way beyond a rumor. The rally today is about a flight to quality with all the issues around the Israeli war and global terrorism. There are more people running to a flight to quality whether that is in treasuries, gold, or crypto. I believe crypto will play that type of role as a flight to quality.”
Bitcoin Spot ETF Approved, Then Proven Fake News! Global Markets Brace For Volatility | Macro Monday
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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.