The Wolf Den #904 - You Aren't Actually Contrarian
You're just retail...
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In This Issue:
You Aren't Actually Contrarian
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
The 3rd Question
Did Elizabeth Warren Flip Sides?
COIN—Everything You Need To Know
Bitcoin Breaks $1 Trillion Market Cap | Altcoins Surge | Mark Yusko
You Aren't Actually Contrarian
Contrarianism is more than just a buzzword; it's a deeply intricate concept often introduced early to those venturing into market dynamics. Consider the array of individuals in your life attempting to buck the trend: your day-trading dentist, your gold-accumulating barber, or your nerdy uncle swapping altcoins—all aiming for contrarian glory. Yet, their endeavors, while commendable, may fall short of true contrarianism. It's not the size of their bets or their day jobs that count, but rather how their strategies diverge from the masses they aim to outsmart.
Granted, in comparison to those entirely disengaged from managing their finances, these individuals do exhibit a form of contrarian behavior. However, when viewed within the vast panorama of market participants, their actions might not be as revolutionary as they, or we, or even the so-called market gurus, would hope.
True contrarianism is inherently scarce; it's a status attainable by only a select few within any investment community. This realization might seem stark, but understanding your exact position within the market's hierarchy is the first step towards genuine contrarian thought.
Think of it this way: We, the informed and independently minded retail investors, are nothing more than the herd to your local money manager, which is the herd to Wall Street, which is the herd to BlackRock, which is the herd to the Illuminati and Nancy Pelosi - okay maybe I went a bit too far
Achieving contrarian success at the pinnacle of this hierarchy is a daunting task, limited not just by the lack of insider knowledge or the absence of substantial capital, but also by the exclusivity of high-level financial networks.
Yet, there's an alternative approach, albeit challenging.
Being contrarian, regardless of where you stand on the financial ladder, involves crafting a strategy that deviates from the norm at every level. For the retail investor, this entails developing an investment philosophy that not only diverges from the lay non-investor but also contradicts mainstream financial advisories, challenges Wall Street consensus, and competes with giants like BlackRock.
The foundation of any contrarian strategy rests on the universal trait of human instinct. While eliminating this instinct is unfeasible, minimizing its influence is crucial for crafting a distinct contrarian approach. This leads to a simple yet effective formula for contrarianism:
Contrarian = Assets + Time + Risk/Position Size + Correctness
This formula encompasses selecting underappreciated assets, adjusting risk and position size wisely, aiming for market-proven correctness, and leveraging time as a critical ally. Though simplifying a complex issue, this methodology offers a pragmatic starting point for investors seeking a contrarian edge.
In the realm of cryptocurrency, one strategy stands out: embracing Bitcoin, securing it for the long haul, calibrating risk appropriately, and patiently awaiting market validation, preferably with your Bitcoin in cold storage.
This approach remains potent until the advent of hyperbitcoinization. Regardless of your familiarity with the term, its effectiveness is undisputed.
As we navigate the tumultuous crypto market, it's essential to acknowledge both the unpredictability of short-term trends and the enduring irrationality of markets. Adhering to our contrarian equation, focusing on controllable elements, ensures a grounded strategy amidst market volatility.
Enjoy your weekend, and here's to staying contrarian. Wolf out.
Bitcoin Thoughts And Analysis
All I can say about Bitcoin today is… don’t overthink it. I’m not going to share a bunch of lines on a chart today while we have massive ETF inflows. If there’s a reason to turn bearish on a chart, I will take a look. For now, buy dips as they come and enjoy the ride.
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.
Matic remains one of my largest positions, which I have traded around for the past few years. It may be time to add to the holdings once again. This is a WEEKLY chart, so we want to see a close above the descending resistance. A few weeks ago we saw two wicks through this line, which we want to avoid here.
As you can see, price has also cleared both the 50 MA and 200 MA resistances as well.
With a close above resistance, I am looking for a slow move to around $1.56.
A “safer” entry would be above the 97 cent resistance.
Legacy Markets
Stock markets experienced broad gains in a risk-on atmosphere, with the S&P 500 reaching a new all-time high and the Nikkei 225 approaching a record level. This optimistic mood was fueled by strong earnings and a bullish revenue forecast from Applied Materials Inc., indicating increased investments in semiconductor production. Upcoming US producer price data is anticipated with heightened interest following recent CPI figures that influenced market expectations for Federal Reserve rate cuts in 2024.
Despite concerns over persistent inflation, Q4 earnings have supported equity markets amidst rate volatility. Mining stocks in Europe, spurred by expectations of rising Chinese demand for metals, contributed to the Stoxx 600 index's fourth consecutive week of gains. Meanwhile, Treasury yields rose slightly, with markets anticipating a Fed rate cut by June. The pound recovered from an early drop after UK retail sales exceeded expectations, suggesting the Bank of England might maintain higher interest rates. Oil prices remained near a three-month high, supported by a positive market sentiment and compliance with OPEC+ supply cuts, despite a cautious demand outlook from the IEA.
Key Events This Week:
US housing starts, PPI, University of Michigan consumer sentiment, Friday
San Francisco Fed President Mary Daly speaks, Friday
Fed Vice Chair for Supervision Michael Barr speaks, Friday
ECB executive board member Isabel Schnabel speaks, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 rose 0.5% as of 9:43 a.m. London time
S&P 500 futures rose 0.2%
Nasdaq 100 futures rose 0.5%
Futures on the Dow Jones Industrial Average fell 0.1%
The MSCI Asia Pacific Index rose 1%
The MSCI Emerging Markets Index rose 0.8%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0767
The Japanese yen fell 0.2% to 150.27 per dollar
The offshore yuan was little changed at 7.2199 per dollar
The British pound fell 0.1% to $1.2587
Cryptocurrencies
Bitcoin rose 1% to $51,885.98
Ether rose 0.6% to $2,812.78
Bonds
The yield on 10-year Treasuries advanced three basis points to 4.26%
Germany’s 10-year yield advanced two basis points to 2.38%
Britain’s 10-year yield advanced three basis points to 4.08%
Commodities
Brent crude fell 0.9% to $82.13 a barrel
Spot gold was little changed
The 3rd Question
Spoiler alert! If you haven’t already filed taxes, this is what the 1040 U.S. Individual Income Tax Return looks like. After asking for your basic information and filing status, the third question the IRS asks is about your history with digital assets. This comes before income, dependents, deductions and everything else.
The government may act like they don’t care about your crypto, but when it comes to them taking their fair share, they care. Don’t overthink your taxes; invest in professional services and pay your dues in full. The last thing anybody wants is Uncle Sam taking more than he already does.
Did Elizabeth Warren Flip Sides?
I am going to tread lightly on this news because it seems to be a troll and I’m not naive enough to accept that Elizabeth Warren is one of us. Apparently, Senator Warren’s office submitted a request to commemorate Satoshi Nakamoto by raising a flag above the Capitol on the 15th anniversary of Bitcoin’s creation. Crazy, right? But there’s context to how this works. All it takes is a small donation from a constituent for a flag to fly over the U.S. Capitol. The flag is then sent to the donor as a thanks. This means that either Elizabeth Warren did in fact sign off on the flyover or one of her staff did.
This was the text on the certificate, “For the 15th anniversary of Bitcoin, the first truly inclusive financial system that is providing new economic freedoms to populations previously ignored by both public and private institutions. Americans are forever grateful.” Sure, this sounds great and would be an amazing turn of events, but until I see Elizabeth Warren fighting on behalf of Bitcoin in the Senate, I won't be calling her a supporter; the case is closed. Also, isn't it strange that Bitcoin Magazine of all sources doesn’t question the integrity of this or mention how flag flyovers work? Don’t trust what you see online.
COIN - Everything You Need To Know!
This update is divided into two sections. The first part addresses the fear, uncertainty, and doubt (FUD) often spread about Cathie Wood, while the second part delves into the earnings report.
Time and again, we see headlines from major publishers announcing that ARK Invest is offloading its shares in Coinbase (COIN), presenting a narrative that, while factually correct, skews the broader context. These stories seldom convey that, despite the sales, Coinbase remains ARK Invest’s largest holding, representing 7.73% of their portfolio, with Tesla trailing at 5.91%. This disparity is not just a detail; it's a testament to Cathie Wood’s confidence in Coinbase. Naturally, Cathie Wood would trim holdings in Coinbase—it's standard practice for managing a portfolio, especially when it's the largest position that might require rebalancing. The real indicator of Cathie Wood’s stance on Coinbase will be if we see significant sales in proportion to ARK’s overall portfolio. Until such a shift occurs, it's clear that Cathie Wood maintains a bullish outlook on COIN.
In other COIN news, COIN crushed earnings. Wall Street got it wrong again.
Total transaction revenue for Coinbase jumped 64%.
Q4 Transactions: $529.3M vs. $417.2M est.
Stablecoin revenue jumped nearly 18%.
Q4 Trading Volume: $154B vs. $143B est.
Earnings per share came in at $1.04 vs. - $0.01 est.
Revenue of $954M beating expectations of $818.9M
Also worth mentioning is the FASB update. Instead of me explaining it, I'll let Coinbase do the talking. This update will greatly benefit Coinbase in the next earnings report.
There's much more to the COIN picture, but I'll stop here for now and possibly revisit next week. Wall Street is still behind on COIN, and when they finally catch on, there will be another wave of FOMO. Plan accordingly.
Bitcoin Breaks $1 Trillion Market Cap | Altcoins Surge | Mark Yusko
My special guests today is Mark Yusko, who is coming to break down the crypto pump.
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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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