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In This Issue:
Arguments - You Win Some, You Lose Some
Is USDC Mounting A Comeback?
CBDC Anti-Surveillance State Act
Coinbase is Becoming More User Friendly
The DevvE Testnet is Almost Here
Arguments - You Win Some, You Lose Some
Some arguments can’t be won.
Those who are happily married understand what I'm talking about. Additionally, anyone who has been stopped by a TSA agent or found themselves on a lengthy call with a customer service representative can relate.
In some cases, winning means acknowledging that a complete victory is unattainable and instead working towards a compromise that satisfies all parties involved. In the financial industry, this principle appears to be widely misunderstood.
It might sound crazy, but there are indeed investors, often highly successful ones, who carefully consider both sides, make decisions, and are willing to change their minds when confronted with new evidence. Surprising, isn't it?
The challenge in recognizing these investors and gleaning insights from them is that their voices are often drowned out amidst a deafening noise created by diehard bulls and bears, who staunchly defend their positions until the bitter end.
Convincing others to believe what you do is a futile endeavor; instead, listening, sharing knowledge, and shaking hands is truly the most noble outcome.
Anyways, let's look at some of the common arguments seen in the broader market that don’t have a resolution. If you find yourself stuck on one of these sides (regardless of right or wrong) with a coworker, friend, or family member, good luck.
Market Sentiment at All-Time Highs:
Bulls: The trend is your friend.
Bears: Time to sell and take profits.
Market Sentiment on Dips:
Bulls: BTFD!
Bears: See, I told you, this is only the beginning.
The Fed and QE
Bulls: Don’t fight the Fed
Bears: Debt doesn’t solve debt
AI
Bulls: AI is revolutionary.
Bears: AI is a bubble.
The Economy is Growing
Bulls: A growing economy fuels market prosperity.
Bears: The economy ≠ the stock market
The Economy is Slowing
Bulls: A temporary setback is an opportunity.
Bears: A slowing economy is a precursor to a market decline.
Let's now pivot our focus to crypto. Here, I'll structure things a bit differently. Acknowledging my bias towards crypto, which many of you may share, I'll outline bull, bear, and neutral arguments.
This approach invites thoughtful consideration of what resonates most with your own logic and reason. While not all perspectives guarantee profitability, many can still succeed when executed with care. Enjoy.
Bull Crypto Arguments:
The Tech is Revolutionary: Blockchain technology will disrupt many industries.
Increasing Adoption: Adoption is moving in only one direction.
Limited Supply: Viable cryptocurrencies have a capped or limited supply.
Financial Inclusion: The unbanked and underbanked are now included.
Hedge Against Inflation: Fiat currencies are destructive and value-sucking.
Bear Crypto Arguments:
The Tech is a Fad: New doesn’t mean beneficial. Who’s using blockchain?
Adoption is Fabricated: Money laundering is not indicative of real adoption.
The Supply isn’t Limited: Who’s preventing the creation of more of any asset?
Financial Exclusion: Crypto is an experiment benefiting the wealthy.
Fiat Currencies: Fiat already functions, and the USD is stronger than ever.
Neutral Crypto Arguments:
Tech Requires Time: Breakthroughs don’t occur overnight.
Adoption Needs Monitoring: Real-world impact requires ongoing scrutiny.
Supply Limitation Dynamics: The concept of 'supply' is nuanced and varies.
Financial Inclusion Progress: Strides have been made, but it’s an ongoing effort.
Crypto is an Alternative Investment: Uncorrelated and idiosyncratic assets provide risk diversification.
Those following my newsletter probably have a good idea of where I stand on these, but frankly, my opinion doesn’t matter too much. As I said above, any combination of opinions can work, some are just going to work better together and yield better results. Do keep in mind though that most opinions are going to end up doing more harm than good, that’s just how markets work.
Personally, I still think now is the best time to sit tight, turn off your brain, and do as little as possible until there's a major change in the market—and I'll probably still hold the same opinion then. The bull market isn't up only; it's mostly up with some occasional, albeit temporary, downturns mixed in.
Many of you have worked really hard to get here, so why throw it all away thinking you can outtrade a train on full throttle?
Bitcoin breaks all-time highs and then continues to rise; we have no reason to believe otherwise.
Keep it simple, avoid silly arguments, and let the profits prove you right.
* Bitcoin is flying! Charts will be back next week
Is USDC Mounting a Comeback?
Since December 1, Circle's USDC has surged in market capitalization by 14.3%, soaring from $24.4 billion to $28.5 billion, outpacing Tether's USDT, which gained 9% from $89 billion to $98 billion. If Circle continues to outperform Tether proportionally, it will eventually catch up. However, Tether's hefty lead allows the asset to buy time from USDC's creeping advance, even on smaller gains.
For simplicity, let's assume USDC has a $30 billion market cap and USDT has $100 billion. Over three months, if USDC appreciates by 10% and USDT by 8%, USDC would reach $33 billion while USDT would stand at $108 billion. The original difference between the assets was 3.33x, and the new difference is now 3.27x, a minuscule difference.
USDC will need to make major strides to catch up to its rival. Additionally, we could reasonably expect gains to slow as the asset's market cap grows larger. USDC, with its smaller market cap, should theoretically be clocking in larger gains. Circle has good reason to take on more risk. Either way, stablecoins are the most important innovation in crypto, bar none.
CBDC Anti-Surveillance State Act
It's promising to see Senators taking steps to potentially ban the introduction of CBDCs in the country, yet proposing legislation is a far cry from passing it. Currently, Democrats control the Senate, where the legislation is being proposed, while Republicans control the House.
Another challenge is President Joe Biden's 2022 executive order supporting the research and development of CBDCs. Given our current political landscape, fostering crypto and preventing CBDCs will likely be challenging. However, with a presidential election looming, it's worth noting that Bitcoin has historically been indifferent to political shifts. DeFi may be more vulnerable depending on the political climate, but our industry has grown substantial enough to defend its interests effectively.
Even if the political landscape becomes decidedly anti-crypto in the U.S., it wouldn't be cause for panic. While it might lead to a longer and tougher road, the support from strong interest groups suggests that concessions won't come easily. Overall, the political outlook seems relatively stable.
Coinbase Is Becoming More User Friendly
In the past, any asset sent to an exchange that wasn’t supported was considered lost without hope of recovery. Exchanges soon realized that despite their efforts to help customers ensure assets were sent to the correct places, mistakes would still occur. ERC-20 was the first chain to receive a recovery protocol on Coinbase, which alleviated a lot of frustration but didn't completely resolve the issue. Now, Coinbase has expanded its recovery service to include BNB Smart Chain and Polygon, which were previously unrecoverable. While this may not seem significant to someone who has never made this mistake, it is crucial for the masses who might lose their funds permanently and not return.
“Our industry-first solution provides a simple, safe, and secure way for customers to recover almost 3,000 unsupported ERC-20 tokens that were mistakenly sent to Coinbase addresses via BNB Smart Chain and 800 sent via Polygon. Unlike other asset recovery solutions that may charge up to 15% for asset recovery and require a customer service agent to send you the funds manually, we do not charge a recovery fee for recoveries estimated to be worth under $100. For recoveries estimated to be worth over $100, we charge a small recovery fee (5%) to cover development and maintenance costs for the service.”
The DevvE Testnet Is Almost Here
In case you missed it, DevvE is one of the current sponsors of this newsletter, making it possible for it to remain free. As for the public testnet, the news is brand new, so please be patient until more information releases, which I will feature at the top of the newsletter. Lastly, please DYOR before participating, as your country of residence and jurisdiction matter when interacting with tokens and platforms.
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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.