The Wolf Den #884 - Behind Enemy Lines
What is the SEC's mission?
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In This Issue:
Behind Enemy Lines
Bitcoin Thoughts And Analysis
Legacy Markets
Timing The Halving
My Eyes Are Bleeding
Boomers Want Boring
Bitcoin Crashes - Buy This Dip? | Was The Bitcoin ETF Launch A Failure? | Macro Monday
Behind Enemy Lines
Imagine the potential outcomes if the SEC had maintained a neutral stance towards crypto over the past decade, instead of adopting an anti-crypto position. I'm not suggesting a pro-crypto SEC, but rather one that stays true to its fundamental mission of impartiality.
So, what exactly is the SEC’s mission in the current landscape? It's time to delve into what could be considered hostile territory and explore this further.
This is the SEC’s ‘mission,’ taken directly from their website.
At the Securities and Exchange Commission (SEC), we work together to make a positive impact on the U.S. economy, our capital markets, and people’s lives.
Since our founding in 1934 at the height of the Great Depression, we have stayed true to our mission of protecting investors, maintaining fair, orderly, and efficient markets, and facilitating capital formation.
Our mission requires tireless commitment and unique expertise from our staff of dedicated public servants who care deeply about protecting the investing public and others who rely on our markets to secure their financial futures.
I’m about to state the obvious, but in what world is the SEC making a positive impact on the U.S. economy and capital markets by stifling crypto?
Let’s look a little further…
As we oversee more than $100 trillion in securities trading on U.S. equity markets annually, it is our job to be responsive and innovative in the face of significant market developments and trends.
Our regulatory governance provides companies and entrepreneurs with a variety of avenues to access the U.S. economy's capital markets to help them create jobs, develop life-changing innovations and technology, and provide financial opportunities for those who invest in them.
While I'm not suggesting that everything the SEC does is detrimental, I do feel that a significant part of their decision-making in the crypto arena is misguided and will likely be judged unfavorably by history.
Had the SEC been able to reshape history to their liking, the landscape would be drastically different: Grayscale would no longer exist, Ripple would be endlessly paying fines, Coinbase would be nothing but a myth, and traditional financial crypto products like futures and spot ETFs would be mercilessly eliminated. In such a scenario, fiat currency would dominate, and crypto would be relegated to mere artifacts hidden away in some obscure corner of the world.
Thankfully, legal constraints have somewhat reined in the SEC, leading me to view the agency as an opponent that needs to be gradually overcome. Gary Gensler's term is set to end on June 5, 2026, although he could potentially stay up to eighteen months longer.
Reflecting on historical tenures, Arthur Levitt, appointed by President Clinton in July 1993 and reappointed in May 1998, is a notable example. He resigned in February 2001 amidst controversy, despite a successful tenure, illustrating the potential longevity of an SEC commissioner.
Today, Levitt has embraced a pro-crypto stance, stating, “Bitcoin is a fascinating new product in the rapidly changing world of financial service. The brainpower behind Bitcoin technology and cryptocurrency is so deep and so challenging that I was attracted to it. The fact that so few people in America understand what Bitcoin is made me interested in the possibility of helping define it.”
The crypto landscape would be remarkably different with a chairman aligning with Levitt's or Commissioner Peirce's views. However, I remain optimistic that despite the SEC's hindrances, they are merely hurdles to be surpassed. Crypto is too potent a force to be entirely thwarted or reversed by the SEC. Like water, crypto will continue to carve its path and shape the future of finance.
It's not all grim within the SEC, and there are individuals striving to strike a balance and uphold the agency's mission. With markets open today, I'm eager to see how the ETFs fare. The long-term implications are bound to be substantial.
Bitcoin Thoughts And Analysis
Bitcoin continues to find strong resistance at the daily 50 MA, a line that it has been trading above since September when price was around $26,000. We often see these small deviations below, with price making a move back above, so I am not giving this too much weight. But we want to see price back above sooner than later if that is going to happen.
Otherwise, we are really sideways at the moment, waiting for more direction.
Legacy Markets
Global stocks fell and the dollar reached a one-month high as central bankers opposed expectations of aggressive interest rate cuts. U.S. futures and the Stoxx Europe 600 index declined, with the latter approaching a five-week low. The MSCI Asia Pacific Index dropped 1.5%, its largest fall in three months. Meanwhile, two-year Treasury yields and the dollar index both rose.
In Europe, banks led the equity declines, influenced by JPMorgan Chase & Co. analysts' views that lending revenue will be limited by peak interest rates. Goldman Sachs Group Inc. and Morgan Stanley are set to announce earnings, with the market anticipating insights into the investment banking sector's slowdown.
European Central Bank (ECB) officials, including Francois Villeroy de Galhau, expressed it's too early to declare victory over inflation. This sentiment is echoed by other ECB members and President Christine Lagarde, suggesting rate cuts are not imminent. The market is closely watching Federal Reserve Governor Christopher Waller's upcoming speech for indications on potential Fed rate cuts, with a reduction in March seen as a possibility.
Consumer expectations for euro-zone inflation have decreased, as shown in the ECB's monthly survey. Despite this, the market's anticipation of rate cuts remains largely unchanged. In the UK, cooling wage growth supports the case for Bank of England rate cuts, leading to a weaker pound and lower gilt yields.
Morgan Stanley and Goldman Sachs Group Inc.'s upcoming earnings reports are likely to reflect the ongoing challenges in investment banking due to high borrowing costs, geopolitical tensions, and recession risks.
In the oil market, prices remained steady. Continued Houthi attacks in the Red Sea are balanced by a weak global economic outlook and the strengthening dollar. Brent crude maintained levels above $78 a barrel, while West Texas Intermediate traded around $73.
Some key events in markets this week:
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
S&P 500 futures fell 0.6% as of 5:52 a.m. New York time
Nasdaq 100 futures fell 0.7%
Futures on the Dow Jones Industrial Average fell 0.5%
The Stoxx Europe 600 fell 0.6%
The MSCI World index fell 0.5%
Currencies
The Bloomberg Dollar Spot Index rose 0.6%
The euro fell 0.6% to $1.0883
The British pound fell 0.8% to $1.2629
The Japanese yen fell 0.7% to 146.71 per dollar
Cryptocurrencies
Bitcoin rose 0.4% to $42,842.26
Ether rose 0.5% to $2,532.29
Bonds
The yield on 10-year Treasuries advanced six basis points to 4.00%
Germany’s 10-year yield declined one basis point to 2.22%
Britain’s 10-year yield declined two basis points to 3.77%
Commodities
West Texas Intermediate crude rose 0.6% to $73.09 a barrel
Spot gold fell 0.8% to $2,040.62 an ounce
Timing The Halving
If you enter 'Bitcoin Halving countdown' into your Google Search, you'll encounter four reputable sources offering varying predictions for the upcoming Bitcoin halving.
NiceHash: 118 days
CoinMarketCap: 95 days
Watcher Guru: 92 days
Bitcoin Block Half: 96 days
The variability in predictions for the Bitcoin halving arises from the inherent complexity of forecasting until we are closer to the event. Although Bitcoin is structured to issue a block reward approximately every ten minutes, real-time network activity can deviate from this target. The difficulty adjusts roughly every two weeks, yet immediately following this adjustment, predicting the next adjustment becomes uncertain. Consequently, blocks may fluctuate in their issuance times, either accelerating or decelerating the halving process.
My Eyes Are Bleeding
Crypto Twitter seems to have overlooked Greenpeace's renewed criticism of Bitcoin, portraying it as a major environmental threat. One can't help but wonder which globe-trotting politician might be influencing Greenpeace's stance, insinuating that Bitcoin is more harmful to the planet than banks, washing machines, or cruise ships. The assertions in their article are outrageous, notably highlighted by the choice of an image featuring a fuel-guzzling pickup truck. For those concerned about the misleading information being disseminated by this organization, the article includes the author's contact details.
“The approval of the Bitcoin ETFs is a watershed moment in the financial services industry’s embrace of polluting Bitcoin. Without substantial and measurable changes to Bitcoin mining industry practices in the near term, this presents serious challenges for our efforts to reduce carbon emissions and avert the worst consequences of the climate crisis. As Bitcoin scales, it is incumbent on BlackRock, Fidelity, and all financial institutions investing in Bitcoin, to play an active role in solving its carbon emissions problem and ensure that the mining industry makes serious efforts to rein in its use of fossil fuels.”
Boomers Want Boring
In their latest advertisement, BlackRock diverges from the typical approach of leveraging movie stars or flashy tactics. Absent are the laser eyes, celebrity endorsements, or high-brow flair. Instead, they focus on methodically highlighting three straightforward advantages of their ETF: "access, convenience, and quality," providing succinct explanations for each. This approach, while lacking in flamboyance, is likely to strike a chord with a more traditional, old-money demographic. In contrast, I recently came across VanEck's newest ad, which has quickly become a personal favorite of mine. I've included the link to it below.
Bitcoin Crashes - Buy This Dip? | Was The Bitcoin ETF Launch A Failure? | Macro Monday
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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.
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