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In This Issue:
When Does A Narrative Become Priced In?
Bitcoin Thoughts And Analysis
Legacy Markets
Fake BlackRock Filing Fools Twitter
The CBOE Is About To Make History
GROK Was A Scam? Shocker!
Buy Bitcoin Now Before The Macro Meltdown!
When Does A Narrative Become Priced In?
When does a narrative become priced in?
Just recently, I delved into the timeless adage, 'buy the rumor, sell the news,' examining its pertinence to the Bitcoin ETF. Despite the widespread familiarity with this saying, it serves as a valuable reminder to adopt unconventional strategies while others adhere to conventional wisdom. The reality is that assets, especially in the crypto space, often don't adjust to events as swiftly as we might anticipate, and achieving significant asymmetric gains doesn't always require being exceptionally early.
I hold the belief that an asset undergoes distinct stages of pricing in narratives. It's not an instantaneous reaction when news hits the wire. Generally, when a narrative possesses enough strength to influence the price, there are four waves of money flowing into the asset, each driven by different motives. Today, I aim to delve into these stages to fully unpack the nuances of ‘selling the news.’
Insiders are typically the first to act on a narrative. While 'insiders' could encompass those with non-public information, in this context, I'm referring to early, well-informed investors. In the case of Bitcoin, these are individuals who heeded early advocates like the Winklevoss Twins and Michael Sonnenshein, foreseeing the eventual emergence of a spot ETF. These investors adeptly extrapolate narratives, making informed predictions such as anticipating Wall Street's push for ETF applications.
The second stage is the arrival of the narrative or the lead-up to the event itself. It’s often considered too late to act when the event has already occurred, but this often isn’t true. Take BlackRock’s ETF filing back in June of this year. Over the following days, Bitcoin jumped from $25k to $30k only to retrace the move entirely over the coming months of rejections and sentiment shifts. Even if an investor bought the absolute ‘top’ of that announcement, they would still be up today, which is likely what will happen when the ETF is actually approved.
There is still a second half to the ball game, the actual implementation of the narrative/event, which in the case of the ETF, will go on for years.
The third wave of pricing in an asset involves the actual impact that the narrative or event has on the asset. Shifting gears, let's delve into Ethereum's EIP-1559. This improvement proposal introduced a real-time deflationary impact, leading to a remarkable reduction of -265,033 ETH in supply since the merge. While it's challenging to determine Ethereum's current price if EIP-1559 hadn't occurred, I am unequivocally confident that the price would be lower without this significant development. Using this example, try and think about what stage 3 looks like in terms of the Bitcoin spot ETF. Stage 3 will yield positive effects and we haven't even gotten close to it yet.
Last but certainly not least, the news or fundamental event is fully priced in as the world recognizes its value - this marks the fourth wave. It's the moment when Bitcoin gains global recognition beyond our crypto bubble, acknowledged as a store of value, a hedge against inflation, and a potential replacement for fiat. This is when Bitcoin isn't merely priced in dollars, and the saying - 1 Bitcoin = 1 Bitcoin - isn't just a meme. At this juncture, the spot ETF becomes an afterthought rather than a forethought, and Ethereum serves as the Internet of value. This is the point where the world's growth propels Bitcoin rather than the concept of adoption we talk about today.
Just because a ‘sell the news’ event happened, does not mean it's no longer a good time to buy that particular asset. Bitcoin is a VERY long game.
Bitcoin Thoughts And Analysis
Nothing has changed for me here. Bitcoin is still struggling at resistance and is overbought… we just need to wait and see.
Legacy Markets
Global stocks and bonds are seeing a slight rise as investors anticipate the upcoming US inflation report for October. This report is expected to reveal a decrease in inflation to 3.3%, down from September's 3.7%. Despite this, core inflation, which excludes energy and food costs, is likely to remain the same, indicating a gradual approach to the Federal Reserve's 2% inflation target.
In Europe, the Stoxx 600 index increased modestly, influenced partly by Glencore Plc's acquisition of a majority stake in Teck Resources Ltd.'s coal business. In contrast, Vodafone Group Plc saw a decline due to lower profits in Southern Europe. Meanwhile, Nasdaq 100 futures also experienced growth.
Economists are focusing on signs of persistent inflation despite expectations of a slowdown, suggesting that the Federal Reserve might be nearing the end of its interest rate hikes. Investors are hopeful this could mean a potential year-end rally in equities and other risk assets.
Today, key Federal Reserve officials, including Vice Chair Philip Jefferson and Chicago Fed President Austan Goolsbee, will speak, and Home Depot Inc. is set to report its earnings. Additionally, the US inflation data is closely watched for its potential impact on the Japanese yen, which is nearing a critical low against the dollar.
In other currency news, the UK pound has seen a slight increase due to robust labor market data. Moreover, the Asia Pacific equity index is up slightly, with a meeting between Chinese President Xi Jinping and US President Joe Biden at the APEC summit in San Francisco drawing attention.
Key events this week:
US CPI, Tuesday
Home Depot earnings, Tuesday
Fed Vice Chair Philip Jefferson, SNB President Thomas Jordan and ECB chief economist Philip Lane speak during conference in Zurich, Tuesday-Wednesday
Chicago Fed President Austan Goolsbee speaks, Tuesday
Bank of England chief economist Huw Pill speak during event, Tuesday
China retail sales, industrial production, fixed-asset investment, Wednesday
Japan GDP, industrial production, Wednesday
UK CPI, Wednesday
US retail sales, business inventories, PPI, Empire manufacturing, Wednesday
Target earnings, Wednesday
China new home prices, Thursday
US initial jobless claims, industrial production, Thursday
Walmart earnings, Thursday
US President Joe Biden and Chinese President Xi Jinping expected to speak at APEC leaders summit, Thursday
Cleveland Fed President Loretta Mester, New York Fed President John Williams and Fed vice chair for supervision Michael Barr speak, Thursday
Bank of England deputy governor Dave Ramsden and ECB President Christine Lagarde speak at event, Thursday
US housing starts, Friday
US Congress faces a midnight deadline to pass a federal spending measure, Friday
ECB President Christine Lagarde speaks, Friday
Chicago Fed President Austan Goolsbee, Boston Fed President Susan Collins and San Francisco Fed President Mary Daly speak, Friday
Some of the main moves in markets include:
Stocks
The Stoxx Europe 600 rose 0.2% as of 10:01 a.m. London time
S&P 500 futures rose 0.1%
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index rose 0.3%
The MSCI Emerging Markets Index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro rose 0.2% to $1.0718
The Japanese yen was little changed at 151.69 per dollar
The offshore yuan was little changed at 7.2988 per dollar
The British pound rose 0.2% to $1.2303
Cryptocurrencies
Bitcoin was little changed at $36,486.25
Ether fell 0.7% to $2,046.47
Bonds
The yield on 10-year Treasuries declined two basis points to 4.62%
Germany’s 10-year yield declined one basis point to 2.70%
Britain’s 10-year yield declined one basis point to 4.30%
Commodities
Brent crude fell 0.3% to $82.47 a barrel
Spot gold was little changed
Fake BlackRock Filing Fools Twitter
Well, I'll be damned - I did not anticipate another epic pump fake. Even if, at this point, BlackRock were to file an XRP trust, it would still catch me off guard. I knew this was fake from the instant I heard it, because it is patently absurd.
During the brief period when the news was deemed credible, Crypto Twitter provided a glimpse of genuine reactions. Responses to the fake news ranged from 'Larry Fink is giving a middle finger to Gary' to 'BlackRock is now a crypto shill.’
Regardless of the news being fake, I believe that ETFs are a net positive for the crypto space. Currently, I would prefer to see filings for just Bitcoin and Ethereum to focus attention on these two assets. However, I won't criticize BlackRock if they choose to expand beyond these. Traditional finance needs convenient access to crypto, and ETFs are the ideal product for that purpose. In other news, BlackRock’s Ethereum filing is indeed real, while the XRP one was the result of someone committing fraud.
Lastly, it's crucial to emphasize that the market, rather than major institutions or regulators, should determine the success of assets. I'm not advocating for speculative assets like 'HarryPotterObamaSonic10Inu ETFs,' but legitimate projects deserve legitimate investment vehicles. To XRP holders, I empathize if this news left you uneasy; the crypto market is rife with fake news, and this one, unfortunately, stung.
The CBOE Is About To Make History
In January of the upcoming year, the CBOE is poised to make history by becoming the first U.S.-regulated crypto-native combined exchange and clearinghouse, facilitating both spot and leveraged derivatives trading on a single platform. As per the official news release, “Cboe Digital will initially offer financially settled margined contracts on Bitcoin and Ether and plans to expand its product suite to include physically delivered products at a later date, subject to regulatory approvals.”
This development holds significant significance because UX in the crypto space has been notoriously atrocious. With this approval, navigating the crypto landscape becomes considerably smoother for institutions and major players. Additionally, the initiative is expected to generate new opportunities for increased capital and operational efficiencies. Key contributors to this launch are firms B2C2, BlockFills, CQG, Cumberland DRW, Jump Trading Group, Marex, StoneX Financial, Talos, tastytrade, Trading Technologies, and Wedbush.
“Futures have long served as valuable hedging instruments in the traditional financial markets, and we couldn't be more excited to extend access to this tool further into the digital assets markets and offer margined trading for our customers. We believe derivatives will foster additional liquidity and hedging opportunities in crypto and represent the next critical step in this market's continued growth.”
GROK Token Was A Scam? Shocker!
Over the last week, GROK took the high-speed escalator to a $160M market cap, only to plummet down the broken elevator after it was revealed that the token was created by a scammer. Did we really need to conclusively find out that the DEV had already launched and promoted scams to recognize GROK as a scam? As altcoin season approaches, I anticipate there will be plenty more instances similar to GROK, so be cautious out there.
Buy Bitcoin Now Before The Macro Meltdown!
It's Macro Monday with Dave Weisberger, James Lavish, and Mike McGlone.
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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.