The Wolf Den #874 - All Systems Go
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In This Issue:
All Systems Go
Bitcoin Breaking Out!
Legacy Markets
How Inflows Impact Price
SBF Won’t Have A Second Trial
Watch Out For This Scam In 2024
All Systems Go
Mission control, all stations report ready.
‘All systems go’ originates from the field of aerospace and space exploration, spoken during the countdown phase before a rocket launch. When mission control or launch operators declare ‘all systems go,’ it signifies that all components and systems are in proper working order, and the conditions are favorable for proceeding with the launch.
Reaching the stage of 'all systems go' is no small feat. The launch of a single shuttle carrying a crew of around four individuals into space demands a substantial financial investment (billions), the coordination of thousands of support personnel - including top-notch engineers, contractors, administrators, and safety personnel - and, of course, an extensive amount of time (years).
If the preparation process isn't challenging enough, several factors can complicate the launch, potentially causing delays or even leading to a cancellation. Issues such as adverse weather conditions, technical challenges, fueling complications, astronaut health concerns, and external political decisions can all contribute to the intricacies and uncertainties surrounding a launch.
Once the shuttle launches, the focus immediately shifts to maintaining communication, navigating through the atmosphere, transitioning into space, reaching the intended destination, executing the mission, adhering to the schedule, and concluding with a safe return. There's scarcely a moment to catch one's breath throughout this intricate and demanding process.
Space is fascinating, but let’s now shift our focus to our space.
In the blink of an eye, our industry could get the green light to launch ETFs. And that’s not all. We are not gearing up for just one vehicle; we might be preparing to launch 14. Fortunately for us, the stakes aren't life and death, and nobody has to leave Earth, (except Bitcoin) but there are only going to be a handful of monumental moments in the history of our space. This is one of them.
In the past few days alone, VanEck unveiled its inaugural Bitcoin ad, HashDex followed suit with its second, Coinbase declared, “We have extensively prepared for ETF approval,” Invesco announced a 6-month fee waiver, Bitwise revealed a $200 million seed, BlackRock designated JPMorgan and Jane Street as authorized participants, Reuters reported that the SEC might notify issuers as soon as today or tomorrow that they are clear to launch, and Galaxy CEO Mike Novogratz tweeted “Big Things Coming.”
In terms of distance, we are this close |—|.
As the days approach, increasing speculation surrounds whether the approval or launch will trigger a ‘sell the news’ event, but my strategy remains consistent: maintain a neutral stance in the short term. My long-term optimism remains steadfast, anticipating that the ETF will propel Bitcoin forward with significant force.
Let’s fly a little further with the space analogy.
During Apollo 11's first moon landing, surprising events unfolded, such as program alarms during the lunar module descent, lower-than-expected fuel levels, a four-hour moonwalk delay, difficulties planting the flag, and a distinctive odor from moon dust noted by the astronauts. Despite these challenges, the mission was successfully navigated.
My instinct tells me Bitcoin’s ETF journey in 2024 will be similar.
There's no assurance that all 14 applicants will secure approval, let alone achieve success years down the road. Additionally, predicting the inflows remains uncertain until the actual day arrives. This uncertainty adds excitement, especially since the road to approval has been long anticipated, yet the nature of the inflows remains less understood. Speaking of inflows, there's a dedicated segment below on this topic, which may offer insights different from what you might expect.
Assuming you made it to this point, my advice to each one of you is to stay patient. Some investors have dedicated over a decade to reaching this moment, while others may have joined just recently. Nevertheless, we are all here, poised for the launch, and the only task at hand is to sit tight, hold on, and let the chips fall. Bitcoin is poised for an exceptional year, not just in terms of price, but more importantly as the greatest asset on the planet.
Wishing you all a fantastic New Year. Thank you sincerely for reading. I couldn't be more grateful.
Bitcoin Breaking Out!
Breaking out of the bull pennant after nearly a month of consolidation. I have been discussing this pennant for quite a while, so it is nice to see a break to the upside.
The target based on the measured move from the length of the flag is roughly $54,000. Targets rarely hit, anything can happen. But that's what the chart says.
Bitcoin is trading like there’s big news coming - maybe an ETF approval?
Legacy Markets
U.S. Treasuries began the year cautiously as traders reduced their expectations for Federal Reserve interest rate cuts in 2024. Meanwhile, oil prices surged by over 2% due to increasing tensions in the Red Sea, particularly after Iran dispatched a warship following the U.S. Navy's action against three Houthi boats.
Stock markets showed mixed responses: U.S. futures edged lower, Europe's Stoxx 600 index rose slightly by 0.2%, and Asian stocks retreated in the wake of disappointing Chinese economic data. Apple Inc.'s shares fell in U.S. premarket trading after Barclays Plc downgraded the stock, citing expected soft demand for the latest iPhone.
Cryptocurrency-related stocks experienced a rally as Bitcoin's value climbed above $45,000, its highest in almost two years. This rise is attributed to growing anticipation of the U.S. approving a Bitcoin-focused exchange-traded fund.
In Asia, sentiment was affected by Chinese President Xi Jinping's rare admission of domestic challenges faced in 2023. Additionally, ASML Holding NV reportedly halted some equipment shipments to China at the request of the U.S. government, adding pressure to Chinese markets.
The Japanese yen weakened against other major currencies amidst thin trading and concerns following an earthquake in Japan. Despite China's ongoing economic challenges, a Bloomberg survey indicates that nearly a third of respondents plan to increase their investments in China over the next 12 months, seeing the current slump as a potential buying opportunity.
Key events this week:
Eurozone S&P Global Eurozone Manufacturing PMI, Tuesday
UK S&P Global UK Manufacturing PMI, Tuesday
Germany unemployment, Wednesday
US FOMC minutes, ISM Manufacturing, job openings, light vehicle sales, Wednesday
Richmond Fed President Tom Barkin — an FOMC voter in 2024 — speaks, Wednesday
China Caixin services PMI, Thursday
Eurozone S&P Global Eurozone Services PMI, Thursday
US initial jobless claims, ADP employment, Thursday
Eurozone CPI, PPI, Friday
US nonfarm payrolls/unemployment, factory orders, ISM services index, Friday
Richmond Fed President Tom Barkin — an FOMC voter in 2024 — speaks, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.2% as of 10:51 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index fell 0.6%
The MSCI Emerging Markets Index fell 0.7%
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.3% to $1.1009
The Japanese yen fell 0.5% to 141.62 per dollar
The offshore yuan fell 0.2% to 7.1401 per dollar
The British pound fell 0.2% to $1.2702
Cryptocurrencies
Bitcoin rose 4.3% to $45,514.76
Ether rose 2.5% to $2,397.1
Bonds
The yield on 10-year Treasuries advanced five basis points to 3.93%
Germany’s 10-year yield advanced five basis points to 2.08%
Britain’s 10-year yield advanced 10 basis points to 3.63%
Commodities
Brent crude rose 2.4% to $78.89 a barrel
Spot gold rose 0.6% to $2,075.78 an ounce
How Inflows Impact Price
Surprisingly, the way institutional inflows will influence the price of Bitcoin and its market cap remains an enigma. I stumbled upon a Tweet that perfectly encapsulates this mystery, providing insights that might surpass my own explanation.
The Market Cap of Bitcoin is at $823b, with Bitcoin price at $42k.
Important: An inflow of $10b doesn’t mean an increase of $10b in market cap.
Every time that there is more buying pressure than sell pressure, the price of each Bitcoin increases and to calculate the market cap it is multiplied by the amount of Bitcoin mined. That is why a A inflow of money on Bitcoin it corresponds B increase on Bitcoin market cap.
B = A*X
The multiplier (X) is not always the same and not easy to predict.
Many people, including
@BritishHodl have highlighted the multiplier market from BofA, where they quote a 1:118 multiplier (X=118).
Link of the article related to it:
Another example, when the fake news of Blackrock Bitcoin Spot ETF being approved, the price of Bitcoin spiked in minutes from $27.4k to $29.9k, with a market cap increase of $50b. There is no way to have had $50b inflow in few minutes and people were talking about $500m inflow. That bring the multiplier X to 100:
$50b = $500m
We are not sure about the multiplier effect and from my side a good approach would be to consider its range around one hundred (it could be 65, 84, 120, 145).
Assuming X=100, in case there is an inflow of $100b in 2024 (A), the market cap will increase by $10T:
$10T = $100b * 100
It means that Bitcoin price would increase by circa $500k.
It is a not that likely scenario, but $100b inflow the first years of Bitcoin spot ETF active in the US Stock Market is not that unrealistic.
SBF Won’t Have A Second Trial
Following SBF's initial trial, where he was found guilty on all seven criminal charges, including conspiracy, wire, and securities fraud, a second trial was scheduled to delve into additional evidence and broaden the case. This expanded trial includes charges such as conspiracy to make unlawful campaign contributions, conspiracy to bribe foreign officials, and two other conspiracy counts. In an unexpected (or maybe expected) turn of events, the second trial has been dropped, including the charges.
While I don't doubt that SBF will face a significant prison sentence whether or not the second trial proceeds, I remain skeptical that the public will ever gain a comprehensive understanding of SBF’s connections with regulators and politicians. The decision to forego the trial was justified by the claim that “the same evidence would be recycled” and emphasized “the strong public interest in a prompt resolution.” I don't see anyone in the public okay with this decision, but whatever, at least we can bury SBF and FTX in March for good.
Watch Out For This Scam In 2024
According to the web3 security firm De.Fi, a substantial $2 billion was lost in 2023, with a significant portion of these losses attributed to phishing scams. This unsuspecting scam tactic is intricately executed through various methods, including SIM swaps, fraudulent airdrops, counterfeit Google and Twitter ads, and the proliferation of spam in social media comments and mentions. Shockingly, despite a 50% decline in industry vulnerability, a total of 324,000 crypto users fell victim to this scam. While the industry is progressing towards enhanced safety, the current landscape underscores the importance of remaining vigilant. Every click matters, and it is imperative to triple-check every financial decision in the space until a point is reached where it is considered safe. Personally, I don’t think we will be there in 2024.
Bitcoiners Prepare: 2024 Will Be Crypto’s MOST BULLISH Year | How 2023 Set The Stage
This was the last show of 2023, probably one of the most interesting years for crypto. After a very bad start of the year we are ending it with a bull run and I am expecting 2024 to be a very big year for crypto. But first let's take a look at 2023 and recall the biggest and most important events.
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Happy 2024!! Let’s fucking go! 🚀