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In This Issue:
Focus On Your Strengths
Bitcoin Thoughts And Analysis
Legacy Markets
Everything You Need To Know About Crypto IRAs
Binance Pulls The Plug On Leverage Tokens
Ethena
Bitcoin Will Make New All Time High Soon! | Macro Monday
Focus On Your Strengths
There is no such thing as a right or wrong way to approach the market. If there’s a single thing I want you to take home from my +900 newsletters, it's this: if you have found something that works, keep doing it. It doesn’t matter how ridiculous or illogical it may seem - ‘if it ain't broke, don't try to fix it.’
Success comes in all shapes and sizes. There have been times when I was hyper-focused on trading small to medium-cap altcoins, longed meme coins, attempted arbitrage trades, and put my faith in the hands of a young Russian genius because it seemed to make sense at the time.
It's easy to veer off the path of normalcy in crypto. When I do stray, I remind myself of my strengths to get myself back on track. For me, these are fundamental and technical analysis, and sentiment.
They are basic and standard, but they work. Simple is better.
So, while the market embarks on its own adventure, I thought today would be a good opportunity to slow down, meditate, and reflect on my (and your) strengths before things become hectic. Because they most certainly will.
To guide you, I have chosen to delve into my three strengths and pull back some of the layers to better understand how they developed. The better you know yourself, the easier it will be to stay on the track that best suits your abilities.
I didn't directly answer these questions line by line, but they guided me on this meditation. Try honing in on one or seeing where the group takes you. If you discover something about yourself, consider it time well spent!
What drives your trading or investing habits?
What comes naturally to you, and what seems difficult?
How do your past experiences shape your current thoughts?
What role does intuition play in your decision-making process?
My answer…
Chemistry wasn't a challenging subject for me; it came naturally. I've always been drawn to logical thinking and have a genuine enjoyment for science. Memorizing the elements and their atomic structures was a breeze, as it felt like piecing together a complex puzzle that just made sense. This ease with chemistry likely influenced my attraction to technical analysis in the financial world. Technical analysis, or TA, is akin to observing a chemical reaction in real time. Much like predicting the outcome of adding a new element to a compound, TA involves predicting market movements based on historical price data and patterns. Both require a logical approach and a knack for understanding how different elements (or market factors) interact with each other.
While I didn't pursue a career as a chemist, I stayed put in the field of science and earned a bachelor's degree in archaeology as a backup to my music career. Archaeology, akin to fundamental analysis, demands a meticulous approach to uncovering hidden truths. Just as archaeologists dig through layers of soil, endure harsh weather conditions, and sift through artifacts to reveal glimpses of the past, so too does fundamental analysis require careful examination in financial markets and crypto. It can be exhausting to search, but once you start to see the pieces come together, the endeavor becomes extremely rewarding. I think this is often what Saylor and Scaramucci mean when they say, ‘do the homework.’
Fortunately, my passion for music opened doors for me, leading to a successful 20-year career as a DJ. DJing isn't just about creating music; it's also about understanding the crowd's energy and mood. Performing for an audience meant keenly observing the crowd's reactions to different tracks, mixing in tunes that resonated with their energy, and keeping them engaged. This ability to read and respond to their desires was instrumental in my DJing success and has been directly transferable to reading the sentiment of the market. While there's not an exact science to sentiment, there also isn't an exact science to understanding markets, which might explain why this approach works.
I hope this insight into my life provides a starting place to discover your own personal insight. Start on a blank canvas and let your thoughts take you somewhere. I do it every day here and it helps tremendously. Best of luck.
Before I conclude, I'd like to share a couple of brief thoughts on Ethereum. Firstly, it seems that the rotation into ETH is finally underway, and surprisingly, not many people are talking about it yet, which is a positive sign. Additionally, Ethereum has several weighty narratives supporting its momentum, such as the potential for a spot ETF, restaking, Dencun, renewed interest in NFTs and gaming, Coinbase's increased focus, and other factors like Ethena, which has a dedicated section below.
As an ETH holder myself, these developments are exciting, but I'm also tempering my expectations, particularly regarding the potential ETF approval in May. A delay seems likely and would probably result in a temporary setback for altcoins, including Ethereum. However, in the long term, an approved spot ETH ETF is highly likely for the sole reason that BlackRock doesn't lose. ETH has required patience and will probably demand more in the future. Regardless, conversations around Ethereum are becoming more interesting again, so congrats to those holding onto their positions.
You deserve it.
Bitcoin Thoughts And Analysis
Bitcoin is still… $52,000. There’s nothing to see on the charts at the moment that is new, and I am not surprised that it was a big stagnant over the weekend and holiday. Right now, ETF flows are in the driver seat, and we will start to see them again today.
Legacy Markets
European stocks and U.S. equity futures saw a decline as concerns about China's economic outlook continued to influence global markets, even amidst some positive corporate news and earnings highlights. The Stoxx Europe 600 index experienced a drop, ending a four-day streak of gains, while European bonds saw an increase, indicated by a decrease in Germany's 10-year yield.
In the commodities market, a fall in iron ore prices led to a downturn for major mining companies like Anglo American Plc and Rio Tinto Plc. On the corporate front, Sandoz Group AG faced a significant drop after a downgrade from Morgan Stanley, citing near-term uncertainties. However, there were some bright spots, such as Air Liquide SA and Barclays Plc, which saw their shares rise on the back of strong financial performances and strategic announcements.
U.S. markets were preparing to reopen after a public holiday, with a keen eye on the upcoming earnings report from Nvidia Corp., which is anticipated to shed light on the strength of the global economy, particularly in the realm of artificial intelligence.
Asian markets were not spared from the downturn, impacted by a cut in China’s mortgage reference rate that did little to assuage concerns about the country's economic health. Despite these challenges, BHP Group reported healthy demand from China, although its profits fell short of estimates.
The global financial landscape remains watchful of several key events, including Nvidia's earnings, minutes from the Federal Reserve's January meeting, and upcoming Eurozone inflation data. Meanwhile, gold prices steadied, and U.S. oil prices edged higher amid ongoing geopolitical tensions affecting vital trade routes.
Some of the key events this week:
European Central Bank publishes euro-area indicator of negotiated wage rates, Tuesday
Rio Tinto Plc earnings, Wednesday
Eurozone consumer confidence, Wednesday
Nvidia Corp earnings, Wednesday
Federal Reserve Jan. meeting minutes, Wednesday
Atlanta Fed President Raphael Bostic speaks, Wednesday
Eurozone CPI, PMI, Thursday
European Central Bank issues account of Jan. 25 meeting, Thursday
Fed Governor Lisa Cook, Minneapolis Fed President Neel Kashkar speak, Thursday
China property prices, Friday
European Central Bank executive board member Isabel Schnabel speaks, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 was little changed as of 9:18 a.m. London time
S&P 500 futures fell 0.2%
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average fell 0.2%
The MSCI Asia Pacific Index was little changed
The MSCI Emerging Markets Index rose 0.1%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0784
The Japanese yen fell 0.1% to 150.30 per dollar
The offshore yuan was little changed at 7.2075 per dollar
The British pound was little changed at $1.2603
Cryptocurrencies
Bitcoin fell 0.5% to $51,641.32
Ether fell 2.3% to $2,900.15
Bonds
The yield on 10-year Treasuries was little changed at 4.28%
Germany’s 10-year yield declined three basis points to 2.38%
Britain’s 10-year yield declined three basis points to 4.07%
Commodities
Brent crude fell 0.3% to $83.32 a barrel
Spot gold rose 0.3% to $2,023.63 an ounce
Everything You Need To Know About Crypto IRAs
In case you weren’t aware, iTrust Capital is a sponsor of this newsletter. I genuinely appreciate their platform and want to be fully transparent that the company did not ask me to write this section; it was entirely done of my own free will. I dedicated a section to iTrust Capital because I wanted to highlight their 'Learn' tab, visible at the top of the screenshot, which offers a lot of helpful information about the details of different IRAs and how they function.
Also, FYI: “The new IRA contribution limit for those under 50 years of age is set at $7,000, which is a $500 increase from the $6,500 allowed in 2023.” Of course, inflation and dollar debasement are the culprits behind this new rule, but the advantage is that you can squeeze more crypto in if. I can’t stress enough how advantageous it is to use these vehicles over the long haul. Despite not starting an IRA in my early 20s, I gladly enjoy the benefits as a boomer. Also, “you aren’t required to start taking withdrawals until the age of 72.”
Binance Pulls The Plug On Leverage Tokens
I've noticed some misleading information circulating regarding Binance's decision on leverage tokens, so please refer to this summary directly taken from the primary source. By April 3rd this year, all of Binance’s Leveraged Tokens, BLVTs, will be fully suspended, delisted, and cease trading, including BNBUP, BNBDOWN, ETHUP, ETHDOWN, BTCUP, and BTCDOWN. This news has nothing to do with the fact that Binance still supports perpetual futures and options on hundreds of coins. While there wasn't an explanation of why the move was made, Binance did provide this article explaining the risks of these tokens. It could be a combination of cutting costs and reducing risk or something entirely different.
Ethena
I suddenly heard Ethena mentioned about 100x yesterday on twitter, so I decided to take a quick look. From the official Ethena Doc’s, here is a brief four-paragraph overview:
“Ethena is a synthetic dollar protocol built on Ethereum that will provide a crypto-native solution for money not reliant on traditional banking system infrastructure, alongside a globally accessible dollar denominated savings instrument - the 'Internet Bond'.
Ethena's synthetic dollar, USDe, will provide the first censorship resistant, scalable and stable crypto-native solution for money achieved by delta-hedging staked Ethereum collateral. USDe will be fully backed transparently onchain and free to compose throughout DeFi.
USDe peg stability is ensured through the use of delta hedging derivatives positions against protocol-held collateral alongside a mint and redeem arbitrage mechanism.
The 'Internet Bond' will combine yield derived from staked Ethereum as well as the funding & basis spread from perpetual and futures' markets, to create the first onchain crypto-native 'bond' that can function as a dollar-denominated savings instrument for users in permitted jurisdictions.”
Okay, that might have been confusing, or perhaps you didn't make it all the way through, which is understandable given the complexity. To be completely honest, I don’t fully grasp Ethena, and there aren’t enough resources that explain it in different ways, so I'm going to have to revisit this topic at a later point. On first glance, many have pointed out that it sounds like TerraLuna, although I am not sure that is a fair comparison. Some significant names are involved, such as Arthur Hayes, DragonFly, and OKX, so I may need to seek out someone with more expertise to understand this better before discussing it further. Even their own head of research wrote a thread about the risks.
I promise to keep an eye on Ethena and just wanted to put it on your radar.
Bitcoin Will Make New All Time High Soon! | Macro Monday
Join Dave Weisberger, Mike McGlone, and James Lavish as we break down what's happening in macro and crypto!
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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.
Your emails land in my inbox daily and they're always a good read. I think I've been taking them for granted a little so wanted to share the love.
Thanks Scott.