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In This Issue:
This Secret Changes Everything
Bitcoin Thoughts And Analysis
Altcoin Charts
Fed Signals Rate Cuts: Risk On
BitWise Has Predictions For 2024
Coinbase Is Now A Global Exchange
Fair Value Is Finally Here
Will Bitcoin Crash With The Stock Market? Jon Najarian
This Secret Changes Everything
There's a well-kept two-part secret in the investment community that everyone should be aware of - compound interest is the cornerstone of investing, and the initial $100,000 marks the most challenging milestone.
Acquiring and mastering these two concepts is sufficient to propel nearly anyone, armed with diligence and a modest income, toward a millionaire's retirement. The best part? It demands surprisingly minimal mental effort and no skill.
Consider an investor embarking on their financial journey at the age of 25, starting with a clean slate and $0 in their investment account. With a steadfast goal of reaching $100,000, this investor commits to saving $1,000 monthly, channeling it into an index fund with a reliable average of 7% APY that’s reinvested.
For my visual learners, this is what I am describing.
If our investor adheres to this strategy, after 79 months or 6.58 years of consistent effort, the investment account will hit $100,000. While this might appear to be a significant duration, the reassuring news is that it represents the lengthiest period our investor will ever need to invest for to earn another $100,000.
I have done the math below so you can see the time it takes to earn each $100,000, all the way to $1m.
79 Months or 6.58 Years to reach $100,000 from $0
54 Months or 4.5 Years to reach $200,000 from $100,000
41 Months or 3.42 Years to reach $300,000 from $200,000
34 Months or 2.83 Years to reach $400,000 from $300,000
28 Months or 2.33 Years to reach $500,000 from $400,000
24 Months or 2 Years to reach $600,000 from $500,000
21 Months or 1.75 Years to reach $700,000 from $600,000
19 Months or 1.58 Years to reach $800,000 from $700,000
17 Months or 1.42 Years to reach $900,000 from $800,000
16 Months or 1.33 Years to reach $1,000,000 from $900,000
At this point, our investor who was 25 years old, is now 55 years old because 363 months (about 30 years) have passed in total. Let’s see what our investor, can accomplish in the next decade, sitting at $1m at the start and still contributing $1,000 at a 7% APY.
In 120 Months or 10 Years, our investor will reach $2,132,948.73 from $1m.
In just one-third of the time it took to reach $1 million from $0, our investor not only earns an additional $1 million but also adds $132,000. Now at the age of 65, our investor, aware of the ticking clock, is granted one final decade with the same parameters.
In 120 Months or 10 Years, our investor will reach $4,361,628.93 from $2.1m, at the age of 75.
You've grasped the essence — compound interest is indeed a potent force. Consider the possibilities if our investor commenced the journey at 20 instead of 25, and, let's say, increased the monthly contribution to $1,100 or $1,200. Although I haven't crunched the numbers, I know it would yield a substantial difference in the later years. Furthermore, the 7% figure is conservative; over the past 30 years, the S&P annual return has been 9.90% (7.22% when adjusted for inflation), underscoring the potential for even greater gains.
Of course, life isn't perfectly smooth, and significant expenses like raising children, buying a house, and health-related costs are integral parts of the journey. However, the achievable reality for most investors is reaching the millionaire milestone. Additionally, a dual income for a limited period can serve as hyper-fuel, though the caveat is that divorce might potentially set you back a decade or so on the clock — a consideration in the risk/reward balance.
Now that you're privy to the secret, my advice to all of you is to divert your attention from the millions and instead concentrate on consistently saving. Strive to augment your contribution whenever possible, get to $100K as fast as possible, and let the market handle the rest.
In other news, the S&P 500 is inches away from an all-time high. Congrats to investors!
Bitcoin Thoughts And Analysis
This is simple. I am watching the weekly levels. If Bitcoin holds a key support, the target is the next resistance. If it loses support, the target is the next support down.
No need to overcomplicate anything right now, especially with the ETF on the horizon.
Altcoin Charts
For those who are new here, I share SETUPS and not SIGNALS. These are ideas that I am watching - if a certain thing happens, then the trade triggers. I am not telling you what to buy or when. I am showing you how I am watching certain charts and what has to happen for me to take a trade.
Key weekly areas of support and resistance. Not a setup, just levels to use moving forward.
Fed Signals Rate Cuts: Risk On
The global stock and bond markets experienced a rally following the Federal Reserve's indication of potential interest rate cuts in the next year, fueling optimism that inflation pressures are subsiding.
In Europe, the Stoxx 600 index saw a notable increase, led by real estate stocks and miners. German and French shares reached new all-time highs. In the U.S., Nasdaq 100 futures rose, suggesting a possible record close for the tech-heavy index, while S&P 500 contracts also edged higher.
This surge in market confidence follows the Fed's shift towards a more relaxed policy, maintaining current rates but projecting future reductions. The Fed's 'dot plot' indicated a more aggressive pace of easing in 2024 than previously expected, with traders betting on even more significant rate cuts.
The focus now shifts to upcoming meetings of the Bank of England and the European Central Bank, with market participants gauging the possibility of a global easing cycle. Expectations include multiple rate cuts by both the ECB and the BOE in 2024.
In the bond market, U.S. Treasuries rallied, with the 10-year yield dropping below 4% for the first time since August. Yields on UK and German government bonds also rose. The dollar fell to a four-month low, while the yen gained over 1%, contrasting with the Bank of Japan's policy direction.
Upcoming U.S. retail sales and jobless claims data will be closely watched for signs of economic resilience amid controlled inflation and steady employment.
In Norway, the Norges Bank raised its key rate unexpectedly to 4.5% and plans to maintain it to combat high inflation. The Swiss National Bank, however, kept its borrowing costs unchanged and softened its stance on future hikes.
On the corporate front, Vivendi SE's shares soared following news of a potential restructuring by Vincent Bolloré. Apple Inc. also saw premarket gains, with its market value nearing that of France's entire stock market.
In commodities, oil prices rebounded from a five-month low, encouraged by declining U.S. inventories and the prospect of rate cuts by the Fed.
Key events this week:
European Central Bank policy meeting followed by news conference with ECB President Christine Lagarde, Thursday
Bank of England policy meeting, Thursday
US initial jobless claims, retail sales, business inventories, Thursday
China 1-yr MLF rate and volume, property prices, retail sales, industrial production, jobless rate, Friday
Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Friday
US industrial production, Empire manufacturing, S&P Global US Manufacturing PMI, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 1.6% as of 10:34 a.m. London time
S&P 500 futures rose 0.3%
Nasdaq 100 futures rose 0.4%
Futures on the Dow Jones Industrial Average rose 0.2%
The MSCI Asia Pacific Index rose 1.6%
The MSCI Emerging Markets Index rose 1.5%
Currencies
The Bloomberg Dollar Spot Index fell 0.4%
The euro rose 0.3% to $1.0908
The Japanese yen rose 0.9% to 141.61 per dollar
The offshore yuan was little changed at 7.1429 per dollar
The British pound rose 0.3% to $1.2660
Cryptocurrencies
Bitcoin fell 0.2% to $42,888.41
Ether rose 0.9% to $2,282.47
Bonds
The yield on 10-year Treasuries declined seven basis points to 3.95%
Germany’s 10-year yield declined 11 basis points to 2.06%
Britain’s 10-year yield declined 13 basis points to 3.70%
Commodities
Brent crude rose 2.1% to $75.81 a barrel
Spot gold rose 0.3% to $2,034.40 an ounce
BitWise Has Predictions For 2024
BitWise, a significant player in the crypto asset management scene, has recently unveiled its 2024 predictions as we approach the New Year. Positioned as one of the contenders for a spot ETF, BitWise also features CIO Matt Hougan, who is a good friend of mine. I'm an avid supporter of BitWise( if you can’t tell). The following are the summarized 10 predictions, and if you're interested in the complete report, you can access it HERE.
“We recently gathered the Bitwise brain trust to gaze into 2024. Our take: We believe we are on the cusp of crypto’s “Mainstream Era”—the moment crypto steps out of the shadows and establishes its place in the real world, for the long term. What specifically are we excited about in 2024? In the following pages, we lay out our top predictions for what we expect in the year ahead.”
Prediction 1: Bitcoin will trade above $80,000, setting a new all-time high.
Prediction 2: Spot bitcoin ETFs will be approved, and collectively will be the most successful ETF launch of all time.
Prediction 3: Coinbase’s revenue will double, beating Wall Street expectations by at least 10x.
Prediction 4: More money will settle using stablecoins than using Visa.
Prediction 5: J.P. Morgan will tokenize a fund and launch it on-chain as Wall Street gears up to tokenize real-world assets.
Prediction 6: Ethereum revenue will more than double to $5 billion as users flock to crypto applications.
Prediction 7: Taylor Swift will launch NFTs to connect with fans in new ways.
Prediction 8: AI assistants will use crypto to pay for things online, affirming crypto as “the native currency of the internet.”
Prediction 9: More than $100 million will be staked in prediction markets as they emerge as a new “killer app” for crypto.
Prediction 10: A major upgrade to the Ethereum blockchain will drive the average transaction cost below $0.01, paving the way for more mainstream uses.
Bonus Prediction: 1 in 4 financial advisors will allocate to crypto in client accounts by the end of 2024.
Coinbase Is Now A Global Exchange
Coinbase dropped major announcements two days in a row — WOW! Yesterday morning, Coinbase announced that the company is bringing spot markets outside of the U.S. for eligible customers. Starting today, December 14, the Coinbase International exchange will list BTC-USDC and ETH-USDC pairs via API access for non-US institutional clients only as the first phase of the launch. Below are some stats Coinbase International has achieved since it launched in May 2023.
Onboarded over 100 institutions, with approximately $10 billion in perpetual futures trading volume in Q3 alone.
Launched perpetual futures to eligible retail users on Coinbase Advanced in October 2023
Listed 15 perpetual contracts that cover more than 70% of the addressable perpetual futures trading market
Increased maximum leverage to 10x for all listed contracts
The noteworthy aspect of this announcement is that it marks the first time I'm beginning to see Coinbase as a global exchange rather than just a U.S. exchange. This shift is poised to be incredible for both the company and the industry at large. Big things will happen in Coinbase’s upcoming quarterly reports. Wall Street is going to be ‘rekt.’
Fair Value Is Finally Here
While accounting rule changes may not be the sexiest topic, the recent FASB rules hold significant importance for companies considering the inclusion of Bitcoin and other digital assets on their balance sheets. Under these new guidelines, businesses will now report the fair value of their digital assets, unlocking the benefits of recognizing unrealized gains and losses. Prior to these rules, companies could incur impairment charges for Bitcoin declines, even if they hadn't sold the asset. The combination of FASB changes and the introduction of ETFs is poised to be a game-changer in this bull cycle – it's as straightforward as that.
“It’s just a phenomenal time of year to get this holiday gift of commonsense accounting,” - Edward McGee, CFO of Grayscale Investments LLC.
“FASB has officially adopted Fair Value Accounting for #Bitcoin for fiscal years beginning after Dec 15, 2024. This upgrade to accounting standards will facilitate the adoption of $BTC as a treasury reserve asset by corporations worldwide.” - Michael Saylor, CEO of MicroStrategy
“You may think this is a small accounting change that doesn’t mean much. It’s actually a big deal. This removes a large obstacle standing in the way of corporations holding Bitcoin on their balance sheet. 2024 will be a landmark year for BTC.” - David Marcus, Former President of PayPal
Will Bitcoin Crash With The Stock Market? Jon Najarian
Investing legend Jon Najarian joins to discuss the macro picture.
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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.