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In This Issue:
Bumps in the Road
Bitcoin Thoughts And Analysis
Altcoin Charts - Weekly Levels
Legacy Markets
Checkout This ETF Tracker
Is Circle Going Public?
Be Like Cathie Wood
Buy All Crypto Now! The Bitcoin ETF Will Spark A Massive Rally
Bumps in the Road
I deliberated on the title of this newsletter, torn between two perspectives. On one hand, the Bitcoin ETF broke through pre-existing trading volume records. On the other, TradFi’s anti-Bitcoin sentiment reared its ugly head for all to see.
‘Bumps in the Road’ felt like a solid middle ground.
When all we wanted to do was kick up our feet and watch the money fall from the sky into ETFs, Vanguard, followed by Citi, BoA, Merrill, Edward Jones, and UBS, decided the ETF wasn't right for them. According to Vanguard, “Bitcoin doesn’t align with our investment philosophies.”
That’s a fresh pile of Cointucky horse shit if you ask me.
One article from the Block on the matter reported, “high volatility runs counter to our goal of helping investors generate positive real returns over the long term.”
*Steaming hot*
Vanguard also opted to eliminate the buy feature for GBTC, restricting transactions to sell orders only. If you find this troubling, here's a simple solution: consider closing your Vanguard account and transitioning to Fidelity. Fidelity is a forward-thinking traditional finance company that comprehends the trajectory of the future of finance and does not engage in manipulating the price of Bitcoin.
You may notice that #BoycottVanguard is trending on X. I started that. This saga pisses me off.
To be 100% honest, I did NOT anticipate this curveball, but at the same time, I'm not the least bit surprised. I've consistently emphasized that unforeseen bumps in the road are a natural part of the process. Recall a few intros back when I drew an analogy to the Apollo 11 moon landing. Even with years of meticulous preparation, the astronauts and mission control team encountered several unforeseen setbacks and challenges.
Smooth sailing is an illusion.
Oh, and did I mention that Vanguard still permits users to trade BITO? The inferior ProShares Bitcoin Strategy futures ETF. And leveraged ETFs? And GBTC that was trading at a 50% discount to NAV?What a joke. Just imagine how the day could have unfolded if all these platforms allowed the trading of spot Bitcoin ETFs without the FUD.
On that note, the 11 ETFs clocked in $4.6B in day-one trading volume, half of which GBTC accounted for. Below is the ranked order by volume, winners to losers:
1. Grayscale 2. iShares BlackRock 3. Fidelity 4. ARK 21Shares 5. Bitwise 6. Franklin 7. Invesco Galaxy 8. Vaneck 9. Valkyrie 10. WisdomTree 11. Hashdex.
I was hoping to see VanEck's HODL ETF ranked higher on this list, solely due to its catchy name, but beggars can't be choosers. I am also an early investor in Valkyrie. It's important to note that these numbers reflect volume, NOT inflows. Once we have a clearer picture of inflows, I'll share that information here; I don't want to jump the gun.
Let’s briefly look at some historical records for context.
State Street Corporation introduced SPDR Gold Shares (GLD) on November 18, 2004. It amassed $114,920,000 in assets under management at its launch, reaching $1 billion within its initial three trading days.
ProShares unveiled the ProShares Bitcoin Strategy ETF (BITO) on October 19, 2021, experiencing $570 million in inflows on the first day and surpassing $1 billion in assets on the following day.
We can thank Grayscale for having $29B in AUM to help us smash through pre-existing records.
Below is the best we know on inflows so far.
Also noteworthy is that all the Bitcoin proxies, such as MSTR, COIN, RIOT, and MARA, experienced significant declines on the day. While it's challenging to definitively conclude that money flowed from these proxies to the ETF, given the downturn in the legacy market, there seems to be a correlation to some extent.
Lastly, how about Coinbase doing $7B in BTC transfers OTC today?
I wouldn't suggest that this metric directly correlates to anything beyond Coinbase's profitability and the exceptionally high interest in Bitcoin. Let's not overthink it; as the dust settles, things are likely to trend in one direction.
It's been an incredibly hectic week, so I'm looking forward to things calming down a bit next week and the newsletter regaining a more composed feel. I'm excited about delving into the inflow details with all of you and analyzing how this ETF influences the market. When Bitcoin becomes less eventful, we all know what comes next.
There may be bumps in the road, but at least we have a road, and it's headed in the right direction. Wishing you all a great weekend with green candles and I look forward to reconnecting soon.
Bitcoin Thoughts And Analysis
This is interesting. In every halving cycle, Bitcoin retraced back up to the 61.8% Fibonacci level of the entire move down. The "Golden Pocket" is the area between 61.8% and 65% retracement, and is a common place for a move up or down to stall. This also coincides with a key resistance on the weekly chart, on Binance at $48,189.
This is happening MUCH later in the halving cycle than before, so it cannot really be compared. But we have always gotten a big reaction and retracement.
Is this the top of the move for now? We will see.
The day was volatile, as you can see from the candles with the long wicks up and down. Price pushed up to around $49,000 and down as far as $45,500. We had similar price action on the fake news, although that was faster and more violent.
As I continue to say, the longer term effects of the ETF are not priced in, and trading around the actual news event is entirely avoidable.
Ethereum continues to rise against BTC and altcoins are looking generally better. The degenerate crypto traders have moved on for now. They have rotated.
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.
After 11 straight days of pain for altcoins, Bitcoin Dominance is falling off of a cliff.
When Bitcoin Dominance is up, it means that volume is flowing from alts and into Bitcoin. We have the opposite situation now. This is largely because of ETH, the second largest asset by marketcap.
And usually volume starts to eventually flow from ETH down the chain... alt season.
Legacy Markets
Market movements were subdued at the end of a volatile week marked by higher-than-expected U.S. inflation data and increasing geopolitical tensions. U.S. stock futures saw a slight decline, with the S&P 500 Index expected to end the week with a modest gain. Treasuries and the dollar remained stable, while the Cboe Volatility Index stayed low.
Oil prices were the exception, with West Texas Intermediate crude jumping 4% following U.S.-led airstrikes against Houthi rebels in Yemen. This surge in oil prices reflects the growing geopolitical uncertainties in the Middle East, Ecuador, and Poland, complicating the otherwise optimistic market outlook for 2024.
Despite the rapid inflation data, market expectations that central banks will stop hiking rates and may ease policies in 2024 remain. European Central Bank President Christine Lagarde indicated that interest rates would start to decline once their 2% inflation goal is within sight.
The increase in crude oil prices positively impacted commodity-linked currencies like the Canadian dollar and Norwegian krone. Europe’s Stoxx 600 Index also rose, boosted by energy companies.
The earnings season is set to begin, with major U.S. banks like JPMorgan Chase & Co., Bank of America Corp., Citigroup Inc., and Wells Fargo & Co. reporting their fourth-quarter results.
In cryptocurrency news, stocks fell in premarket trading following the launch of the first U.S. exchange-traded funds for Bitcoin, which saw $4.6 billion in shares traded on its first day.
Key events this week:
UK industrial production, Friday
US PPI, Friday
Some of the biggest US banks report fourth-quarter results, Friday
Minneapolis Fed President Neel Kashkari speaks, Friday
ECB chief economist Philip Lane speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures fell 0.1% as of 6:12 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 rose 0.8%
The MSCI World index rose 0.2%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro fell 0.1% to $1.0958
The British pound was little changed at $1.2752
The Japanese yen was little changed at 145.17 per dollar
Cryptocurrencies
Bitcoin fell 0.3% to $46,022.53
Ether rose 0.9% to $2,628.23
Bonds
The yield on 10-year Treasuries advanced two basis points to 3.98%
Germany’s 10-year yield declined four basis points to 2.20%
Britain’s 10-year yield declined four basis points to 3.80%
Commodities
West Texas Intermediate crude rose 4.3% to $75.09 a barrel
Spot gold rose 0.8% to $2,045.01 an ounce
Checkout This Free ETF Tracker
While the tool may not provide real-time updates for all metrics currently, it remains an excellent free resource that is expected to improve over time. Blockworks has acknowledged their ongoing efforts to enhance the tool, and I discovered a tab dedicated to an Ethereum ETF tracker in development on the page.
Is Circle Going Public?
Reuters leaked the following news: “Circle Internet Financial, the company behind stablecoin USDC, said on Thursday that it had confidentially filed for a U.S. initial public offering as part of plans to become a publicly-traded company.” Reuters continued, “The IPO is expected to take place after the Securities and Exchange Commission completes its review process, subject to market and other conditions, the company said.”
While rumors have been debunked in the past, the likelihood of Circle going public, cannot be dismissed. Jeremy Allaire has expressed the company's intention to go public, with a previous attempt in 2022 through a SPAC that ultimately failed. During that attempt, the company was valued at approximately $9 billion. It's important to note that the company's current valuation may not necessarily surpass that figure, considering that at the time, Circle had $56 billion USDC in circulation, which has since decreased to $25 billion.
Be Like Cathie Wood
Interviewer: Can you give us an idea of how much of your net worth is in Bitcoin?
Cathie Wood: Of my financial net worth, all of it is in innovation. My degree of confidence and depth of research give me the courage to be more aggressive in this realm either in our kind of funds and private funds or crypto, primarily Bitcoin. This is going to be a very rough guess, but my guess is that excluding ARK, the company, and real estate, of the financial net worth, it is at least 25% (in Bitcoin).
My takeaway: Cathie Wood is the prime example of ‘playing to your strengths’ and ‘putting your money where your mouth is.’ She is going to win BIG.
Buy All Crypto Now! The Bitcoin ETF Will Spark A Massive Rally
Join Mark Yusko, Morgan Creek Capital, and Hunter Horsley, Co-Founder and CEO of Bitwise, as we discuss what the Bitcoin ETF approval means for crypto and why the market will pump very aggressively.
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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.