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In This Issue:
What The H-E-Double-Hockey-Stick Is Going On?
The DOP Testnet Is Live!
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Heed This Advice
Ledger Hacked… Again
Yearn Makes A Costly Mistake
The Money Printer Is Back (The Fed Pumps The Market) l Paul Barron
What The H-E-Double Hockey Stick Is Going On?
You want to talk about stress? YOU WANT TO TALK ABOUT STRESS? OKAY.
That right there is the mail. Now let's talk about the mail. Can we talk about the mail please, Mac? I've been dying to talk about the mail with you all day, okay?
Pepe Silvia, this name keeps coming up over and over again. Everyday Pepe’s mail is getting sent back to me.
Pepe Silvia! Pepe Silvia!!!
Thanks to DeFi and all of its chaos, I feel like Charlie from 'It's Always Sunny In Philadelphia,' going absolutely Schizophrenic in Season 4, Episode 10.
Another way of looking at things - DeFi users right feel like trailer park residents, trapped in the midst of an EF5 tornado. That's how bad it is out there.
Here’s what happened.
I wake up yesterday morning, and open my feed? What do I see? 'Ledger Hacked.' All I can think is... excuse my language, but JESUS… EXPLICATIVE CHRIST, here we go again with Ledger giving us another unannounced heart attack.
I begin writing about the hack in real-time, attempting to sift through information and gain a clearer understanding, with the hope that this incident becomes just a news segment and not the intro topic. In the midst of my work, I notice that Yearn.Finance has incurred a $1.4 million loss from its treasury due to a multisig malfunction.
At this point, I'm praying everything will be fine. I'm attempting to convince myself that lightning just happened to strike twice today in DeFi – it's occurred before, and the news will likely blow over, as it always does. Soon enough, everyone will resume blindly bridging assets to farm squash tokens on CumSwap, and we'll collectively pretend that everything is perfect, right?
And then, I noticed that OKX had a small hack as well. Simultaneously, I discovered that you didn't even have to be using Ledger to fall victim to its hack. Merely connecting and broadcasting a transaction on a compromised website put your wallet at risk of being drained. And the list of affected protocols was growing and growing.
What in the ACTUAL F**k is going on?
I start scrolling through CoinTelegraph articles, hoping someone smarter than me cand explain things clearly and reassure me that everything is be fine. Here are some of the sentences I find.
“The error occurred while Yearn was converting its yVault LP-yCurve (lp-yCRVv2) — earned from performance fees on vault harvests — into stablecoins on the decentralized exchange CowSwap.” - The Article Link
“The proxy admin owner upgraded the DEX proxy contract to a new implementation contract and the user began to steal tokens.” - The Article Link
Of course, this doesn't make me feel better, and I'm actually beside myself that these statements are being made so casually, as if it's no big deal. While I understand that CoinTelegraph won't inject personal opinions into a news release, I can't help but wonder if at least the author of these articles is scratching his/her head and questioning what the hell any of us are doing.
Seriously, “CowSwap” and “DEX proxy contracts?” Just your everyday finance terms, right? Days like yesterday make me reconsider – maybe we need Wall Street more than they need us.
Thankfully, some time has passed, and I am starting to catch my breath, but someone has to share some hard truths. I’ll try to add a positive spin on them.
First and foremost, DeFi still has a LONG way to go, and understandably so, as change isn't easy.
Professionalism is imperative if DeFi intends to make substantial progress outside of crypto nerds, and fortunately, some companies are taking this aspect seriously.
Crypto isn't easy, and hacks serve as a reminder that anyone can be a victim, even when they do everything right.
Security must be a top priority for every participant in this space, from institutions to retail traders, encompassing every developer and company in between.
Slowing down, triple-checking transactions, and refraining from sharing the extent of your crypto holdings are among the most underrated security practices.
Given that DeFi still has a long way to go, on the bright side, there's a significant amount of untapped growth yet to be captured.
Yes, I am still bullish on DeFi. But it is nowhere near ready for prime time.
A lot will have to change if we want to get this right, and it starts with the bulleted statements above. Hacks are the primary reason why I mostly steer clear of DeFi, except from my occasional urge to trade low-value shitcoins with a small portion of my portfolio, and even that feels idiotic at this point.
One of these days, DeFi's developers and its users will realize that Pepe Silvia is nothing more than a figment of our imagination, symbolizing our own flaws. Until then, we are nothing more than a Schizophrenic Charlie, desperately digging ourselves into a deeper and deeper hole.
We're fortunate that Wall Street is taking us seriously. If we weren't in a bull market, Ledger probably would have set us back much further. If the hack was not immediately discovered, every wallet and app in DeFi could have been drained. IT is that serious.
Below, you'll find detailed explanations for all the hacks mentioned above. Enjoy.
The DOP Testnet Is Live!
Back in October, I mentioned the DOP Testnet's imminent arrival, and now it is fully live. Before delving into the details of the testnet, let me recap how DOP is relevant to us. Data Ownership Protocol is a partner on #CryptoTownHall and a project I have been supporting long before its integration.
Data Ownership Protocol represents an innovative approach to data ownership facilitated by TOMI, a platform that empowers users to reclaim control and redefine the freedoms they should enjoy.
Now that the DOP testnet is live and available for those residing outside of the United States, participants will receive a portion of 1% of DOP's total supply as Testnet tokens. These tokens come with a 2-year vesting period and can be claimed monthly. While there is a reward, the primary goal of the testnet is to collaborate with developers and the community to fine-tune everything.
Participants in the testnet are eligible to receive tokens in early 2024, and it only takes a couple of minutes with no fees involved. I have no idea what these tokens will be worth, but as you've probably seen recently, airdrops can be lucrative, so it doesn’t hurt to give DOP a try. To stay informed and safe, please read further on Dop.org, and when you are ready to sign up for the testnet, use my link HERE (I do NOT make anything from you using the link).
NOTE - THERE WILL BE NO NEWSLETTER NEXT WEEK! SEE YOU GUYS AFTER CHRISTMAS.
Bitcoin Thoughts And Analysis
There is absolutely nothing new to see today on the Bitcoin chart. ETF or bust!
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.
Here are a few weekly charts, with key levels that I will be using to determine likely support, resistance and targets.
Legacy Markets
Equities have maintained gains following the Federal Reserve's affirmation of a potential shift to more relaxed monetary policy, propelling stock market indices towards record highs. The Stoxx 600 index in Europe increased by 0.4%, reaching its highest level since January 2022 and setting itself up for a fifth consecutive week of gains. Meanwhile, S&P 500 futures rose by 0.3%, with the index itself on track for its seventh consecutive weekly rise.
This positive market trend was ignited by the Fed's recent acknowledgment of the possibility of declaring victory over inflation and transitioning towards rate cuts. However, as the week concludes, traders are bracing for the largest quarterly options and futures expiry of the year on Friday, which could introduce volatility. This event involves a significant $3.1 trillion in notional open interest set to expire or be rolled over.
Contrasting with the Fed's dovish stance, Europe’s central bankers have signaled a reluctance to follow suit. ECB Governing Council member Madis Muller cautioned that market bets on the ECB initiating rate cuts in the first half of the next year might be premature.
The disparity between the resilient U.S. economy adopting a dovish approach and the more struggling European economies maintaining a hawkish stance has raised some concerns among analysts.
In the bond market, Treasuries remained steady, with the yield on the 10-year benchmark staying below 4% for the first time since August. The dollar traded within a tight range against major global currencies.
In commodities, oil is on track to record its first weekly gain in nearly two months, buoyed by the Fed's latest policy outlook. Similarly, gold is also heading towards a weekly advance.
Key events this week:
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 0.4% as of 9:59 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%
The MSCI Emerging Markets Index rose 0.9%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.3% to $1.0961
The Japanese yen was little changed at 141.77 per dollar
The offshore yuan rose 0.2% to 7.1094 per dollar
The British pound was little changed at $1.2775
Cryptocurrencies
Bitcoin fell 0.4% to $42,824.38
Ether fell 1% to $2,276.49
Bonds
The yield on 10-year Treasuries declined one basis point to 3.91%
Germany’s 10-year yield declined eight basis points to 2.04%
Britain’s 10-year yield declined four basis points to 3.74%
Commodities
Brent crude rose 0.3% to $76.84 a barrel
Spot gold rose 0.3% to $2,042.81 an ounce
Heed This Advice
Allistar Milne is a crypto OG, and his advice holds significant weight in the space. I've highlighted some of my favorite tips from him, but if you want to explore all 14, click the link above.
5/ Do not talk about how much you have invested in Bitcoin, etc.. Ensure you are never walking around with your keys. Ideally it should take you >24hrs to be able to move more than a fraction of your stack
6/ Be suspicious of any old 'friends' who suddenly appear when Bitcoin, etc. is hitting the headlines
Be even more suspicious of any strangers contacting you out of the blue
8/ You will not sell the top. If you still have debts or other financial goals like a new home, set a target price where you can sell a % and set yourself up for life ... the future you will thank you and your HODL'ing will become stronger
9/ As the prices go higher, you will become more sensitive to FUD as fear of loss grows. Never trade with emotion. 20-30% corrections are normal.
If you must sell, do so when people are euphoric, not when they are depressed
Ledger Hacked… Again
It's not truly crypto until you wake up to the news that the supposedly 'most trusted' cold wallet in the space has been hacked and is not currently considered secure for use. Before I proceed, I'd like to address a couple of crucial points: A) If you haven't used your Ledger or Ledger Live in the past day or evening, your funds are secure. B) If there's no immediate need to use your Ledger, consider allowing some time for things to settle before rushing to make any updates and checking on your funds.
Reportedly, the incident involved a former Ledger employee who fell prey to a phishing attack, allowing unauthorized access to controls over the Ledger software. Subsequently, the hacker disseminated malicious code impacting versions 1.1.5, 1.1.6, and 1.1.7 - likely the versions your Ledger is currently running. This malicious code affected virtually all DApps on the platform, prompting an instruction to drain funds if a user signed a transaction within the given 2-hour window, as per Ledger's information.
Following the recent hack, Ledger has taken prompt action by disabling the rogue code, reporting the associated address, and collaborating with Tether to freeze the affected USDT funds. The legitimate version, 1.1.8, is currently being distributed and appears to be safe for use. Additionally, Ledger is actively engaging with affected customers, coordinating with law enforcement to address the issue. Fortunately, only approximately $600,000 was compromised, resulting in minimal damage, although the situation could have been much worse. While there have been suggestions to clear the cache on the device, at this moment, it might be advisable to exercise patience and wait for further updates.
The recent Ledger hack isn't the first instance of Ledger grappling with security issues. This raises questions about the trustworthiness of Ledger, prompts considerations on how crypto should be securely stored, and begs the question of whether the industry is prepared for widespread adoption by the masses. In response to these questions, I find myself questioning the reliability of Ledger, contemplating whom I can trust, and concluding that our industry is not adequately prepared. Have we truly reached a stage where certain methods on centralized exchanges are considered safer than traditional cold wallets?
One final note: the hack compromised more than just Ledger. Other apps that interact with Ledger are also at risk, as mentioned earlier. I recommend refraining from using DeFi temporarily until the situation stabilizes, and appropriate measures are clearly defined and implemented.
Yearn Makes A Costly Mistake
Two expensive DeFi mishaps in a single day—just wonderful. Fortunately, in Yearn's case, user funds remained intact, but the incident led to a direct $1.4 million loss from the Yearn Treasury Balance. It appears that Yearn was converting LP tokens into stablecoins on a decentralized exchange when a multisig script malfunctioned, causing the transaction to slip by a 63% drop in the liquidity pool value. Just another day in the world of DeFi, I suppose.
Either DeFi is the future of finance or a complete shitshow; today I can’t help but lean toward the latter.
The Money Printer Is Back (The Fed Pumps The Market) l Paul Barron
Paul Barron joins to discuss the FOMC bombshell and the news of the day.
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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.