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In This Issue:
Lose, Learn, Win
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
What’s The Deal With NFTs
The First Two Months Are In The Books
Trump Is Coming Around To Bitcoin
Infinite Money Glitch?
Bitcoin Hits $72,000 | Crypto Bull Run | Macro Monday
Lose, Learn, Win
In the crypto space, there's a prevailing notion that in your first investment cycle you lose, in your second you learn, and in your third you win.
This idea is based on the typical experiences and learning curve of investors in the crypto space over multiple market cycles. Here's a breakdown of each phase:
First Investment Cycle (Lose): Many new investors enter the crypto space during the upper heights of a bull market and are attracted to the potential for high returns. However, without experience or a deep understanding of the market, they are highly susceptible to making uninformed decisions and usually fall prey to hype and FOMO, leading to long drawn-out losses when the market corrects.
Second Investment Cycle (Learn): After experiencing losses and market volatility in their first cycle, investors that stick around often take the time to educate themselves about the fundamentals of cryptocurrencies, blockchain technology, and investment strategies. They learn from their mistakes and gain a better understanding of market dynamics. This is usually the phase where investors seriously begin their dollar cost averaging journey.
Third Investment Cycle (Win): Armed with knowledge and experience from the previous cycles, investors are better equipped to navigate the market. They may adopt more strategic approaches, such as risk management, diversification, and long-term investing. Investors begin to recognize the various phases of the market as patterns that resemble the past. For those who make it this far, it’s almost difficult not to achieve profitable outcomes.
Generally speaking, I like this framework because of its simplicity and accuracy, but it doesn’t have to be true for you if you haven't been through three cycles or if you are approaching things differently. Truth be told, not everyone will become rich after one, two, or any number of cycles and not everyone will lose on their first go around.
Furthermore, there's no shame in initially dismissing Bitcoin and then changing your stance. In the beginning stages, participants are often just starting to consider the value proposition of Bitcoin and probably need more time.
We don’t have much insight into the early thoughts of some of the popular Bitcoiners, but if you look hard enough, some are out there.
What if Michael Saylor spent a little more time on Bitcoin back when it first popped up on his radar? Dismissing it is the easy way out, which is probably where most of us started from.
“Everybody's Against Bitcoin Before They Are For It.” - Michael Saylor
Another great example is Larry Fink, Wall Street’s biggest bitcoiner, who used to place himself in the “Jamie Dimon Camp.”
If the most brilliant minds struggle to grasp Bitcoin's complexities initially, it's likely that the average investor (us) will need ample time to understand it’s true place in the world. This learning curve is perfectly normal and shouldn't be a cause for concern.
Here’s another quote from Michael Saylor that I like.
“Bitcoin is like fire or electricity. When we point to people who have burned themselves or shocked themselves because they misused fire or electricity, that does not mean that fire or electricity aren't useful. Bitcoin is an empowerment for the entire human race. People will, from time to time, misuse it, and when they do, their companies will suffer.”
Lose, learn, win.
My advice is plain and simple: now that you have internalized what I have said, forget it all and work towards making the most of your current goal or strategy. If diamond handing it is the goal, put the systems in place now to do that effectively. If life-changing wealth is the goal, pace your expectations and be willing to take chips off the table. If doubling up is the goal, then walk away from the game with your chin held high and don’t look back.
Hard decisions lie ahead, so continue to put in the work even if everything is going exactly as planned. On my end, I promise to continue doing my best to share advice I find helpful and relevant that gives all of us the highest probability of success.
One final thought before I go: Bitcoin has never reached an all-time high before the halving, ever. We are venturing through uncharted territory, so expect the unexpected.
Cheers to 70k - 80k is next!
Bitcoin Thoughts And Analysis
If there was ever any doubt, yesterday closed the first daily candle above the previous all time high of $69,000. Price is officially in discovery, with blue skies ahead. This is almost every trader's favorite situation, because there is no historical resistance.
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.
Just your regular reminder that there is no meaningful high time frame resistance between the current price and the all time high. In the past, Ethereum has always lagged and made a high when Bitcoin stabilizes. This time does not need to be the same - but it does appear likely.
Legacy Markets
Ahead of crucial US inflation data, US equity futures and European stocks saw gains, indicating traders are bracing for potential volatility following the consumer price index (CPI) report. This anticipation suggests a higher level of concern for market movements post-CPI than for the upcoming Federal Reserve interest rate decision. The consensus leans towards a June rate cut by the Fed, reflecting expectations of decreasing inflation.
S&P 500 and Nasdaq 100 futures edged up by 0.2% and 0.5%, respectively, with US Treasury yields holding steady and the dollar index remaining unchanged. European equities, led by basic resources and banks, advanced by 0.5%.
Economists predict that while the headline CPI might increase, the core CPI, which excludes volatile food and energy prices, is expected to slow slightly. A monthly core rate below 0.4% would be viewed favorably, suggesting disinflation. However, clarity on disinflation sufficient to prompt a Fed rate cut may not emerge until May at the earliest.
In currency markets, the yen weakened against the dollar for the first time in six days, following remarks by the Bank of Japan's Governor indicating a potential end to negative interest rates, influenced by domestic consumption patterns and upcoming wage data. This has led to a rise in Japan's 10-year bond yield to a three-month high.
Commodity markets saw oil prices inch higher in anticipation of an OPEC report and US inventory data, while gold pulled back from recent highs. Bitcoin remained strong, holding just above $72,000 after reaching new heights.
Corporate news included Acadia Pharmaceuticals' shares dropping due to disappointing trial results for schizophrenia treatment, Oracle beating third-quarter expectations with high demand for its AI infrastructure, and Porsche AG forecasting weaker returns amid new model launches and sales challenges.
Key events this week:
UK Financial Policy Committee quarterly meeting, attended by Bank of England Governor Andrew Bailey, Tuesday
EU finance ministers meet in Brussels, Tuesday
ECB Governing Council Member Robert Holzmann, Tuesday
US CPI, Tuesday
Eurozone industrial production, Wednesday
ECB Governing Council member Yannis Stournaras speaks, Wednesday
Volkswagen, Adidas earnings, Wednesday
US PPI, retail sales, initial jobless claims, business inventories, Thursday
China property prices, Friday
Japan’s largest union federation announces results of annual wage negotiations, just ahead of Bank of Japan policy meeting, Friday
Bank of England issues inflation survey, Friday
US industrial production, University of Michigan consumer sentiment, Empire Manufacturing, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.2% as of 7:37 a.m. New York time
Nasdaq 100 futures rose 0.5%
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 rose 0.5%
The MSCI World index rose 0.1%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0935
The British pound fell 0.2% to $1.2794
The Japanese yen fell 0.3% to 147.36 per dollar
Cryptocurrencies
Bitcoin rose 0.1% to $72,193.66
Ether was little changed at $4,034.82
Bonds
The yield on 10-year Treasuries declined one basis point to 4.09%
Germany’s 10-year yield declined one basis point to 2.29%
Britain’s 10-year yield declined six basis points to 3.91%
Commodities
West Texas Intermediate crude was little changed
Spot gold fell 0.5% to $2,172.92 an ounce
What’s The Deal With NFTs?
Lately, the discourse around NFTs has been rather lackluster, mainly focusing on their role as digital collectibles. Do you recall the vibrant discussions in early 2021 when NFTs were more than just symbols of status for holders? I’ll refresh your memory by listing some of the use cases that were once hot topics but are now notably absent from current conversations.
Gaming: NFTs were expected to revolutionize gaming by enabling true ownership of in-game assets, potentially creating new economies. However, no AAA game has yet fully incorporated NFTs.
Tokenization of Physical Assets: There was an idea to tokenize physical assets like real estate, art, or luxury goods to easily transfer and verify ownership. Despite major brand attempts, this concept largely failed so far.
Identity and Authentication: NFTs were seen as a way to verify identity and authenticate products, such as luxury goods, to reduce counterfeiting.
Decentralized Finance: NFTs were envisioned to collateralize assets in DeFi, allowing users to use NFTs as collateral for borrowing or liquidity provision. While easier to execute, this use case remains niche.
Ticketing and Events: NFTs could be used for creating verifiable tickets for events, concerts, and sports games to reduce fraud. However, implementation challenges persist.
Art and Music: The art and music industries explored tokenizing their work through NFTs, but this concept didn't gain significant traction.
Celebrity and Brand Engagement: Many celebrities and brands engaged with NFTs, either by creating their own or endorsing projects, leading to increased mainstream attention. However, the approach is usually a scam.
NFTs and blockchain technology are more than capable of devising solutions to implement these use cases; however, it will take time. It also doesn’t help that Bitcoin remains the dominant force in this space, diverting attention away from DeFi. While ordinals are a novel innovation, they lack the infrastructure Ethereum possesses to effectively implement the ideas above. Currently, there isn't enough interest in NFTs to develop these ideas further. While I believe they will eventually come to fruition, I think they are still a long way off, even from our current cycle. Don't take this as a hit piece, some collections are still going to do very well this cycle, this is just a perspective from an outsider looking in.
The First Two Months Are In The Books
Two months ago, there were concerns that ETFs would struggle, compete with each other in a negative way, and the selling pressure from GBTC could dampen our enthusiasm. The reality has exceeded even the most optimistic expectations. The Nine are absorbing GBTC's sales with ease, and IBIT is now half the size of GBTC, which launched back in 2015. Barring any unexpected developments, IBIT will likely surpass GBTC this year in AUM and the outflows from GBTC will dwindle to nothing. Even despite the large amounts being sold, 1.6 billion last week, discussion around that narrative has been entirely overshadowed. For context, last week saw $33 billion in volume and $2.24 billion in inflows. Hopefully, we have an even better week!
Trump Is Coming Around To Bitcoin
The audio quality in the interview isn't great, but I managed to collect some quotes. It appears that the commentary is gradually turning more positive. Even if his motives are for garnering votes, it seems that a Trump presidency would be more beneficial for crypto compared to the current situation under Biden.
“I would not allow countries to go off the dollar because when we lose that standard, that will be like losing a revolutionary war, that will be a hit to our country just like losing a war, and we can’t let that happen. If you think of it, it’s a new form of currency. I want one currency, I want the dollar I don’t want people leaving the dollar. I feel that way, but I will tell you it has taken on a life. There has been a lot of use of Bitcoin and I’m not sure if I would want to take that away. I noticed that so many of them (the limited edition shoes) were paid for with the new currency….I couldn’t believe the amount.”
Infinite Money Glitch?
In case you were wondering, there is no such thing as an infinite money glitch, even in the case of MicroStrategy. Michael Saylor has figured out an optimal way to maximize the amount of Bitcoin he can acquire, but there is still risk involved, of which I am sure he is aware. Claiming MicroStrategy can't lose is the same type of sentiment that led to the 2022 crash. The 12,000 BTC Saylor just purchased were bought at an average price of $68,477—gotta love watching Saylor confidently buying highs.
Bitcoin Hits $72,000 | Crypto Bull Run | 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.