The Wolf Den #883 - Not All Ships Sail - Will Vanguard Sink?
Time to jump ship?
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In This Issue:
Not All Ships Sail - Will Vanguard Sink?
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
CoinMarketCap Has A New Feature
Grayscale and BlackRock Lead The Race
Gary and Lizzy Tell All
Bull Run Ahead: Bitcoin ETFs Hit $4.5 Billion On The First Day
Not All Ships Sail - Will Vanguard Sink?
Pathetic are the ships that linger idly at the dock, unprepared for the capricious challenges of the open sea. These are the vessels that gradually become encrusted with algae, barnacles, and mussels, their hulls suffering from neglect and lack of maintenance. They remain moored, venturing out only when conditions are flawless and the waters mirror-smooth. These boats fear even the slightest damage, shuddering at the thought of minor dents or scratches.
Should I ever own a boat, no amount of Bitcoin could persuade me to christen it 'Vanguard' - unless, of course, I am at the helm of the vessel shown below.
In all seriousness, while I understand Vanguard's decision to steer clear of the spot Bitcoin ETF, I can't help but think it might be a missed opportunity in the long run.
I won't attempt to speak for all asset managers who have echoed Vanguard's stance, but it's worth noting that Vanguard, as the world's second-largest asset manager, has proven its investment strategies to be effective.
Founded on principles of conservative, long-term investing, Vanguard stands out among its peers. Many asset managers may claim similar values, but few adhere to them as consistently as Vanguard does. The company's unwavering commitment to this philosophy is evident. John Bogle, Vanguard's founder, built his wealth with a strong focus on risk aversion, notably leading the charge in the index mutual fund sector.
For a wide array of investors, Vanguard's strategy is a sensible choice. It's safe, welcoming for novices, savers, and the ultra-wealthy alike, and boasts a track record of reliability. I wouldn't dare suggest that Vanguard doesn't act in the best interest of its clients. Nevertheless, I believe that Vanguard is showing signs of reluctance to adapt to the evolving landscape of finance.
Let me elaborate...
BlackRock and similar crypto-forward asset managers aren't venturing into the space just to release a Bitcoin ETF and then, when opportune, an Ethereum ETF. Their objectives are much broader in scope. Reflect on this quote from a recent interview with Larry Fink, as reported by Bloomberg. The significance of his words is amplified, particularly considering he's not an original crypto enthusiast.
“If we can ETF a Bitcoin, imagine what we can do with all financial instruments. We believe we are just halfway there in the ETF revolution. Everything is going to be ETF’d. We believe the next step going forward is the tokenization of all financial assets. We can rid ourselves of all issues around illicit activity about bonds, stocks, and digital currencies. We can customize strategies through tokenization that fits every individual. Instantaneous settlement. It’s a technological transformation for financial assets. A change in voting. The dominant form of products moving forward will be ETFs.”
The founder of the world's largest money manager couldn't have put it more precisely. However, in stark contrast, the world's second-largest asset manager seems to be at the other end of the spectrum. While Vanguard’s top brass haven't publicly discussed Bitcoin ETFs, I suspect that in private, they feel quite self-assured about dodging the trading frenzy around this 'volatile' and ‘speculative’ asset.
But this stance might eventually prove detrimental.
We're likely to see one of two scenarios unfold: either Vanguard and similar skeptics will gradually become irrelevant, or they will have to acquiesce to the inexorable rise of Bitcoin, digital currencies, and tokenization. While I respect Vanguard's cautious approach, avoiding the burgeoning realm of finance may not be a viable strategy in the long term.
Consistently anchoring a ship at the dock only diminishes its sea-worthiness as time passes.
Perhaps Vanguard is waiting for Bitcoin to exhibit significantly less volatility before stepping in. Yet, by then, other crypto-forward institutions would have already capitalized on substantial gains. The stability Vanguard seeks won't likely be found at Bitcoin prices of $50,000, $100,000, or even $250,000. The desired stability will probably emerge at a much higher valuation, favoring those who braved the uncertain seas from the outset.
While I wish Vanguard well, I won't be joining their ranks. I advise my friends, family, and followers similarly. The landscape of finance is transforming, and I’m eager to join a vessel that values and savors both the journey and the destination - a ship that truly ventures forth.
And until Vanguard comes to the light side, I continue to push #BoycottVanguard, which I managed to make a trending hashtag on X. With that said, we’re gearing up for an exhilarating week. Bon voyage, friends!
Bitcoin Thoughts And Analysis
Not the move that ETF bulls were looking for, but also not surprising with GBTC now unlocked and putting selling pressure on the market.
Technicals at the moment indicate that more downside is likely.
The weekly candle closed as a shooting star, a candle with a long wick up and red body. This is often the signal of a weakening or ending uptrend. This also happened to have a wick up into the golden pocket, between the 61.8% and 65% retracement levels, a key resistance on the chart.
I have no idea what will happen - nobody does. The chart indicates that bears are back in control for the moment.
We need to see more downside to confirm the bearish candle from last week, or else the shooting star is not that meaningful.
This week will be fun to watch.
Bitcoin close a candle below the daily 50 MA for the first time since last September, when price was in the mid $20ks. This is not ideal. Today's candle is retesting it as resistance, so we REALLY want to see bulls push it back above and make this a deviation.
Not much else to see here. Obviously Bitcoin looks week, with altcoins stealing the show.
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.
A few weeks ago, I shared key weekly levels on a number of tokens that I have been watching. Some of the newer tokens continue to show strength, uninhibited by traders that have been underwater for years and are looking to sell.
As you can see, Aptos finally broke and closed above the key resistance at $9.44, after failing with wicks above for many weeks. Conservative traders will wait for a retest of that level, knowing it may never come.
The next target is $13.09. If that hits, we reevaluate.
I have been beating the drum on this, so I won't waste much of your time.
We have confirmed bullish divergence with RSI coming out of oversold on the weekly chart. Further RSI has broken descending resistance, which almost always leads to price lagging and doing the same soon after.
You can see that price was rejected EXACTLY at descending resistance, for now.
Everthing we were watching for on this pair has happened, as ETH steals the show.
Legacy Markets
European stocks experienced a slight decline as traders evaluated the potential direction of monetary policy, particularly in light of upcoming speeches at the World Economic Forum in Davos. The Stoxx Europe 600 index fell by 0.2%, reflecting a slow start to the year after its 13% rise in 2023. This dip followed news that Germany's economy contracted for the first time since the pandemic, affecting sectors like basic resources and carmakers.
The European Central Bank (ECB) is expected to cut interest rates four times this year as inflation decreases more rapidly than anticipated. However, ECB Chief Economist Philip Lane warned that early rate cuts could be counterproductive, a sentiment that might be further elaborated on by ECB Governing Council member Robert Holzmann in his speech at Davos.
In the stock market, Dassault Aviation SA saw a significant drop after reporting a decrease in jet orders for 2023. The food delivery sector, including companies like Just Eat Takeaway.com N.V. and HelloFresh SE, also faced declines following negative analyst recommendations.
U.S. equity-index futures remained unchanged, with stock and Treasury markets closed for a public holiday. The dollar gained after an unexpected drop in U.S. producer prices, reinforcing predictions of Federal Reserve rate cuts in the coming months.
In Asia, the MSCI Asia Pacific share index rose, boosted by election results in Taiwan. Meanwhile, China's CSI 300 Index fluctuated amid mixed signals about potential policy changes from the People's Bank of China.
This week, investors will also focus on inflation data from Germany and the UK, various political leaders' speeches at the WEF, and a speech by Federal Reserve Governor Christopher Waller, which could provide insights into the Fed's rate strategy.
In commodities, oil prices dropped, balancing the risk of Middle East tensions escalating against weaker market fundamentals.
Some key events in markets this week:
World Economic Forum in Davos begins, with this year’s theme “Rebuilding Trust,” Monday
Iowa Republican caucuses, the first nominating contests for the 2024 US presidential election, Monday
Japan PPI, Tuesday
Germany CPI, ZEW survey expectations, Tuesday
UK unemployment, Tuesday
US Empire Manufacturing, Tuesday
Goldman Sachs Group Inc., Morgan Stanley to report earnings, Tuesday
Federal Reserve Governor Christopher Waller speaks, Tuesday
China GDP, property prices, retail sales and industrial production, Wednesday
Eurozone CPI, Wednesday
UK CPI, Wednesday
US retail sales, industrial production, business inventories, Wednesday
Federal Reserve issues Beige Book survey, Wednesday
European Central Bank President Christine Lagarde speaks at Davos, Wednesday
New York Fed President John Williams speaks, Wednesday
Australia unemployment, Thursday
Japan industrial production, Thursday
European Central Bank publishes account of December policy meeting, Thursday
US housing starts, initial jobless claims, Thursday
Atlanta Fed President Raphael Bostic speaks, Thursday
Japan CPI, Friday
US existing home sales, University of Michigan consumer sentiment, Friday
US Congress faces deadline to pass spending agreement before part of federal government shuts down, Friday
San Francisco Fed President Mary Daly speaks, Friday
Here are some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.2% as of 10:28 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average fell 0.1%
The MSCI Asia Pacific Index was little changed
The MSCI Emerging Markets Index was little changed
Currencies
The Bloomberg Dollar Spot Index rose 0.2%
The euro fell 0.1% to $1.0936
The Japanese yen fell 0.6% to 145.73 per dollar
The offshore yuan was little changed at 7.1908 per dollar
The British pound fell 0.3% to $1.2717
Cryptocurrencies
Bitcoin rose 0.2% to $42,610.51
Ether was little changed at $2,524.9
Bonds
The yield on 10-year Treasuries was little changed at 3.94%
Germany’s 10-year yield advanced two basis points to 2.21%
Britain’s 10-year yield was little changed at 3.80%
Commodities
Brent crude fell 0.7% to $77.77 a barrel
Spot gold rose 0.2% to $2,052.90 an ounce
CoinMarketCap Has A New Feature
I stumbled upon this free tool on CoinMarketCap that tracks ETFs. Similar to the free Blockworks' tool, it seems to be a work in progress but provides some interesting alpha. Each of the 56 listed ETFs can be clicked on for more information, leading directly to the issuer. It will be exciting to watch the development and data aggregation of these tools, providing the public with a better understanding of these products.
Grayscale and BlackRock Lead The Race
The Spot Bitcoin ETF's volume didn't see a significant decline on Friday, amounting to $3.1 billion compared to the $4.6 billion on its opening day. BlackRock led the way with $564 million traded, while Fidelity secured 3rd place with a volume of $431 million. Grayscale, holding the top spot, recorded $2.29 billion on day one and $1.83 billion on day two.
Beyond volume, Bitwise outperformed rivals with the highest inflows, totaling $238 million, followed closely by Fidelity with $227 million. On a different note, Grayscale is likely the primary culprit for our recent selloff. Investors leaving GBTC, whether for profit or lower fees as the premium is closed and better (ETF) options exist, could be attributed to this shift.
While it's inaccurate to solely blame Grayscale, as some market participants may have been selling the news, we can put some of the blame on Grayscale. Nevertheless, investors exiting their GBTC positions is a positive development for the space, especially considering the fact that many were trapped for a long time at a steep discount. The risk of contagion is currently minimal, and I hope Trad-Fi doesn't find a way to reintroduce that threat.
Gary and Lizzy Tell All
After the approval of the Bitcoin ETF, a couple of incompetent regulators and politicians have compiled a heaping pile of bad takes for our enjoyment. Let’s not waste any time and start with good ole Gary.
Interviewer: You have still suggested to be cautious about it, I am trying to understand the message you are telling to investors.
Gary: Bitcoin itself we didn't approve or endorse. The ETF allows investors to invest in the underlying non-security commodity called Bitcoin. Investors should be aware that the underlying asset is a highly speculative volatile asset and amongst its use cases for illicit activity, money laundering, sanctions, ransomware, and the like.
Interviewer: Since 2017, what's been used to launder money? 20,000 is the unit for a dollar, and 33 is the unit for Bitcoin.
Absolute body slam.
Interviewer: People are now talking about an Ethereum ETF and the like. Is that something you would take on proactively? Is that something ultimately that would be similar to Graysclae going to court? Does the court decision around Bitcoin act as a precedent for other cryptocurrencies?
Gary Gensler: I look at what we did this week as it is cabined to one non-security commodity called Bitcoin like we have had gold spot ETFs and silver ETFs, this is cabined to that one non-security commodity token.
Now, we'll hand over the mic to our good friend Lizzy who won the community note award.
One final point to mention: currently, the ETH ETF may seem distant, much like Bitcoin did back in late September when it was approved approximately 3 months later. Even if the ETH ETF appears far off, it's important to note that circumstances can change rapidly. I wouldn’t rule out an ETH ETF in 2024, even if the outlook became a little bleaker.
Bull Run Ahead: Bitcoin ETFs Hit $4.5 Billion On The First Day
Friday Five is THE show about the main news in crypto. Join me and Nathaniel Whittemore as we delve into the main topics that moved the markets.
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