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In This Issue:
Mixed Signals From JPMorgan
Bitcoin Thoughts And Analysis
Legacy Markets
Vivek Ramaswamy Drops
Coinbase Vs. SEC Updates
Franklin Templeton Went Beast Mode
Coinbase Could Crush The SEC TODAY (HUGE For Altcoins) | John Deaton
Mixed Signals From JPMorgan
Everyone's familiar with the adage: "Do as I say, not as I do." It’s a nod to the weight of words over actions, implying that guidance can deviate from personal behavior, inviting us to read between the lines.
In the realm of cryptocurrency, however, this phrase takes a misleading turn for investors. But a simple twist in wording offers a fix. Flip the saying to "Do as I do, not as I say," and the message aligns more closely with the ethos of the crypto world. A prime illustration is the CEO of a major global investment bank.
Jamie Dimon was a guest on CNBC yesterday, facing a pointed question:
“If you are a client at JP Morgan, you can call your broker and say, 'Get me some of this ETF.' What are you telling your brokers to tell them back when they receive that call?”
Jamie Dimon did NOT like this question - his response is below.
Jamie Dimon: This is an important thing. This is the last time I am ever going to talk about this on CNBC, so help me God. Blockchain is real; it’s a technology. We use it, it moves money and data, and it’s efficient; we have been talking about that for 12 years. We waste too many words on that.
Cryptocurrencies, there are two types: there are cryptocurrencies that might actually do something. Think of a cryptocurrency as an embedded smart contract that we can use to buy and sell real estate and move data, and that may have value. Tokenizing things—you do something with.
And then there is one which does nothing, I call it the pet rock. The Bitcoin or something like that. I am not trying to make a joke here. There are use cases: AML, anti-money laundering, fraud, sex trafficking, and tax avoidance—those are real use cases, and you see it being used for 50 to 100 billion dollars a year for that. That is the end-use case. Everything else is people trading amongst themselves.
Now my last statement. The last time I ever talk about Bitcoin. I defend your right to do Bitcoin. I don't want to tell any one of you what to do. My personal advice is don't get involved. I don't want to tell anyone of you what to do; it’s a free country.
Interviewer: What do you make of the BlackRocks of the world? Obviously, Larry Fink has changed his view of this. Do you think he changed his view because he genuinely believes in Bitcoin or because there is a market for it and he wants to be a part of that market?
Jamie Dimon: Number one, I don't care. So please stop talking about this shit. I don't know what he would say about blockchain vs. currencies that do something vs. Bitcoin that does nothing. This is what makes a market; people have opinions. This is the last time I will ever state my opinion.
How do we interpret Mr. Dimon's remarks? Is he uninformed? Ambiguous? Playing both sides? Conspiring with the powerful? Or is he a closet fiat enthusiast? The truth might resonate with both affirmatives and negatives.
Jamie Dimon is undeniably a figure of high intellect. It's no small feat to attain billionaire status in America and helm JPMorgan Chase as chairman and CEO for nearly two decades. However, it's crucial to delineate the brand of genius Mr. Dimon represents – a controversial genius, one whose stance on crypto seems to oscillate between skepticism and strategic indifference.
At one point in the interview, he said, and I quote, “I think there is a good chance when we get to that 21 million Bitcoin, Sahtawshi is going to come on there, laugh hysterically, go quiet, and all the Bitcoin are going to be erased. How the hell do you know it’s going to stop at 21?”
Mr. Dimon is well aware that entering the crypto discourse opens him up to intense scrutiny, realizing it's a topic fraught with complexities and tough questions. He also recognizes Bitcoin's potential to disrupt traditional banking, a sector he's deeply entrenched in, which might explain his reluctance to endorse it. Furthermore, his comments on the use case can be seen as diversionary tactics. Is Mr. Dimon genuinely oblivious to the fact that fiat currencies are more commonly used for illicit activities than Bitcoin? It's unlikely he's unaware.
Despite his public stance, it's fascinating to note the actions of JP Morgan. The bank is an authorized participant for BlackRock’s spot Bitcoin ETF, actively involved in the market-making and handling of ETF shares. This involvement paints a picture quite contrary to Mr. Dimon's rhetoric.
Moreover, JP Morgan's acquisition of 61,488 shares of $MSTR, despite being a relatively small investment for the bank, is telling. Add to this the bank's services allowing wealthy clients to invest in crypto funds and the creation of the JPM Coin, it's evident that there's more to the bank's crypto engagement than meets the eye.
Interestingly, Mr. Dimon doesn't single-handedly dictate JP Morgan's course. The bank, in its pursuit of profit and influence, might well continue to deepen its crypto involvement, even if Mr. Dimon maintains his skeptical front. This divergence isn't uncommon in large corporations where the collective actions might not always align with the leader's public statements.
In light of this, it's prudent not to take the views of high-profile figures like bankers or politicians at face value. Their interests often diverge from those of the general populace, and many would prefer to stifle the growth of crypto if possible. That said, it's encouraging to see a growing number supporting the crypto movement. However, vigilance is key.
It's also worth noting the broader landscape of institutional involvement in crypto, as evidenced by Vanguard's significant stake in MicroStrategy (for passive indexing). This pattern of involvement suggests a more widespread institutional interest in crypto than what might be publicly acknowledged.
While Mr. Dimon's public persona might lean towards traditional finance, the actions of JP Morgan suggest a gradual, albeit reluctant, acceptance of the crypto revolution. It's a complex dance of public statements versus actual investments, reminding us once again that the age-old wisdom should be: "Do as I do, not as I say." Let's stay tuned for the developments in the Coinbase case, keeping in mind that the path forward might be difficult but the momentum of crypto seems unwavering.
Bitcoin Thoughts And Analysis
Bitcoin has confirmed bearish divergence with overbought RSI on the weekly chart. That means that price made a higher high (by about $200), while RSI made a lower high. Not ideal. As I often mention, high time frames often take a very long time for these signals to play out, and we also already have potential hidden bullish divergence that would make it irrelevant. Still, this is a very clear larger time frame top signal for many if we don’t see the hidden bullish divergence and is definitely worth watching. Hidden bullish divergence would be confirmed if price makes a higher low while RSI make a lower low.
There is nothing new to say since yesterday about lower time frames. Bitcoin continues to struggle with overhead MA resistance and to show weakness on multiple time frames. Chop chop for now.
Legacy Markets
Stocks fell and bond yields rose amidst speculation that the Federal Reserve may delay interest rate cuts due to signs of a resilient economy. This shift in sentiment was fueled by stronger-than-expected US retail sales data and cautious tones from central bank officials. Traders adjusted their expectations, reducing bets on a Fed rate cut in the first quarter.
Retail sales showed significant growth in December, marking a robust holiday season and indicating consumer strength. This, coupled with a rise in homebuilder sentiment, suggests a stable economic outlook, potentially averting a recession. Market reactions imply that hopes for a March rate cut are dwindling.
Financial experts at Davos urged caution regarding rate-cut expectations, predicting a slower easing of monetary policy than the market anticipates. While traders still foresee the Fed reversing its aggressive tightening, they expect lesser rate reductions than previously estimated.
The uncertain economic landscape leads to diverse market views and potential quick shifts in consensus, affecting market stability. Investors are advised to balance rate expectations with corporate earnings results, as strong financial performance could sustain inflation, delaying rate cuts, while weaker earnings might prompt monetary easing at the cost of corporate health.
Corporate Highlights:
Operators of Boeing Co.’s 737 Max 9 have completed inspections on an initial batch of 40 planes, a key step to eventually end the grounding of the aircraft ordered by US regulators in the wake of an accident earlier this month.
Apple Inc. has to stop selling its Series 9 and Ultra 2 smartwatches with a blood oxygen feature in the US, suffering another legal setback in its patent dispute with Masimo Corp.
Charles Schwab Corp. reported declines in profit, new assets and deposits as it navigated a tumultuous year of interest rate hikes that dented the firm’s balance sheet.
JetBlue Airways Corp. sank as investors assessed the fallout from its failed pursuit of Spirit Airlines Inc., dragging down carriers across the low-cost end of the market.
Bayer AG laid out plans for sweeping changes including significant job cuts in its managerial ranks, as new Chief Executive Officer Bill Anderson seeks to revive the crisis-rattled company.
Birkenstock Holding Plc’s first earnings report as a public company on Thursday is ripe for volatility as investors gauge whether the negative reaction to its 2023 initial public offering was overdone.
Samsung Electronics Co. is turning to artificial intelligence features to revamp its flagship Galaxy smartphones, betting that the technology can give it an advantage over Apple’s iPhone.
Verizon Communications Inc. is writing down the value of its business services division by $5.8 billion, a sign of the company’s declining enterprise operations.
Dish Network Corp.’s debt exchange ambitions are causing consternation among traders who bought a form of insurance that pays out if the struggling satellite television company defaults, according to people with knowledge of the matter.
Key events this week:
US housing starts, initial jobless claims, Thursday
Republican presidential primary debate in New Hampshire, Thursday
ECB President Christine Lagarde participates in Davos panel discussion, Thursday
ECB publishes account of December policy meeting, Thursday
Atlanta Fed President Raphael Bostic speaks, Thursday
Canada retail sales, Friday
Japan CPI, tertiary index, Friday
US existing home sales, University of Michigan consumer sentiment, Friday
ECB President Christine Lagarde and IMF Managing Director Kristalina Georgieva speak in Davos, Friday
San Francisco Fed President Mary Daly speaks, Friday
Some of the main moves in markets:
Stocks
The S&P 500 fell 0.6% as of 4 p.m. New York time
The Nasdaq 100 fell 0.6%
The Dow Jones Industrial Average fell 0.3%
The MSCI World index fell 0.9%
Currencies
The Bloomberg Dollar Spot Index rose 0.1%
The euro was little changed at $1.0882
The British pound rose 0.4% to $1.2685
The Japanese yen fell 0.7% to 148.19 per dollar
Cryptocurrencies
Bitcoin fell 1.9% to $42,614.01
Ether fell 2.8% to $2,534.5
Bonds
The yield on 10-year Treasuries advanced four basis points to 4.10%
Germany’s 10-year yield advanced six basis points to 2.32%
Britain’s 10-year yield advanced 19 basis points to 3.98%
Commodities
West Texas Intermediate crude rose 0.6% to $72.80 a barrel
Spot gold fell 1.1% to $2,006.04 an ounce
Vivek Ramaswamy Drops
After a strong attempt and a disappointing outcome in Iowa, pro-crypto presidential candidate Vivek Ramaswamy has withdrawn from the race and endorsed Donald Trump. Unlike the other candidates in the running, Vivek is young at just 38 years old and enjoys support from a broad audience in the crypto space. From a crypto perspective, it’s disheartening to see him exit the race, but I doubt it’s the end of Vivek.
Coinbase Vs. SEC Update
After a long day for the SEC in court, Judge Failla did not issue a ruling on Coinbase’s Motion for Judgment. This implies there isn't any definitive news to report. However, her questioning and comments were notably fair, and the SEC came out looking quite silly. Below are some of the quotes I gathered from the judge throughout the day.
[Senator Lummis] She’s not just a random Senator, she’s someone deeply involved in the space. Why is she wrong?
We’ve had a good run. We’ve had 90 years where these securities laws have been able to apply to these markets. But now we have something new.
The Defi people, for example, have what I think is really fine amicus brief, explaining to me what the wallet really is. And what staking really is. And that actually, in some respects makes more sense to me than the Commission's description of it in the complaint.
What is it about crypto that makes it so qualitatively different to the other putative securities the Commission has regulated over time?
Coinbase lawyer: It's not what makes crypto special, it’s the nature of the transactions that the SEC is now designating and calling a security...This is a special kind of transaction, one that doesn't have an ongoing legal relationship between the issuer and the purchaser. And the SEC is offering an interpretation through a campaign of enforcement action that is not just [designating] authority to itself but expanding its jurisdictional perimeter.
I care about how the law develops in the case before me and I care about what it means going forward.
For a more nuanced legal take, I suggest this post MetaLawMan.
Franklin Templeton Went Beast Mode
For a few hours yesterday, Franklin Templeton, the world’s 20th largest asset manager, allowed their Digital Asset Research team to take the mic and run wild on crypto Twitter. The account delved into topics like laser eyes, Ben with a hat, the SOL vision, ETH’s midlife crisis, ordinals on BTC, and much more. During this time, Franklin Templeton looked like a seasoned crypto OG, fearlessly engaging in the trenches of every current hot-button topic. Crypto Twitter loved it, and though the fun eventually came to an end, it provided a glimpse into the chaotic ride this bull run is shaping up to be. Buckle in, it’s going to be a fun year.
Coinbase Could Crush The SEC TODAY (HUGE For Altcoins) | John
Coinbase is heading to court to dispute the SEC's claim that the crypto exchange traded securities without proper registration. The court's decision will significantly influence how other companies in the industry handle their dealings with the SEC. John Deaton, a popular lawyer joins me today to comment on the case.
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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.