The Wolf Den #928 - #ETHGATE

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In This Issue:

1. #ETHGATE

2. Bitcoin Thoughts And Analysis

3. Altcoin Charts

4. Legacy Markets

5. Base Braces For High Demand

6. Robinhood Introduces A Crypto Wallet

7. The Lights Turned On And The Music Turned Off

8. Here Is Why Bitcoin & Crypto Prices Are Falling (When You Should Buy The Dip)

#ETHGATE

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Someone grab the plug, rip it out, wait 30 seconds, and then plug us back in.

The discourse in crypto right now is a chaotic monstrosity of bad takes, bad faith, and misplaced giga Chad confidence.

Two days ago, investors were elated when they learned that BlackRock was using the Ethereum blockchain to introduce a tokenized asset fund. Yesterday, Ethereum investors were pissed to see CoinDesk reporting that the Ethereum Foundation, “received a voluntary inquiry from a state authority that included a requirement for confidentiality” and Fortune reporting that, “The SEC is waging an energetic legal campaign to classify Ethereum, the second-most popular cryptocurrency, as a security.”

Today, price is up and none of it seems to matter.

First on the list is CoinDesk.

CoinDesk released an article yesterday, “Ethereum Foundation Under Investigation by 'State Authority',” which appears to have been exaggerated based on available information within the article. The details are scant, but a GitHub comment from February 26 sheds some light: “we have received a voluntary inquiry from a state authority that included a requirement for confidentiality.” 

First of all, such inquiries are common for crypto protocols and often pertain to minor issues. Additionally, the SEC at this moment is deciding on approval or denial of an ETH ETF (unless their mind is already made up), suggesting this could be part of their fact-finding process. 

Given that the agency’s request was described as 'voluntary' and an 'inquiry,' I am inclined to believe that the current panic is overblown. Before I go any further, allow me to say this: ff the SEC couldn't defeat Grayscale or Ripple, it's unlikely they'll prevail against the Ethereum Foundation.

We thought that we had swallowed our daily dose of FUD for the day…

About an hour after we started to pick apart the CoinDesk story, Fortune released an article titled, “SEC probing crypto companies in Ethereum investigation as hopes for ETF dim,” which opened with the following paragraph.

“The Securities and Exchange Commission is waging an energetic legal campaign to classify Ethereum, the second-most popular cryptocurrency, as a security, according to U.S. companies that have received subpoenas related to an investigation. The news delivers a further blow to the crypto industry’s hopes the agency will approve applications by BlackRock and others for an Ethereum ETF following the SEC’s approval of a series of Bitcoin ETFs in January.”

It appears that there are discussions and speculation within influential circles regarding the SEC's intentions. There are two main theories: (a) the SEC is attempting to sow seeds of uncertainty around ETH to delay its approval in May, or (b) the SEC may be considering classifying some aspect of ETH, POS, or the Ethereum presale as a security.

What exactly could the SEC need from the Ethereum Foundation? Most of what we know about Ethereum is public, except perhaps some details regarding the ICO, which began in July 2014 (for crying out loud).

The next point I want to make - and I am not a securities expert or lawyer, so DYOR - is that the 'instrument' and the 'sale' of the instrument are two separate things that may or may not be securities. Remember the Ripple case? XRP was deemed not a security, BUT it was considered a security when sold to institutional investors.

Furthermore, this was almost 10 years ago, and the clock is ticking. ChatGPT, my go-to-lawyer said this, “The statute of limitations regarding the sale of a security refers to the time limit within which legal action can be taken against someone for selling a security in violation of securities laws. In the United States, the statute of limitations for such violations is typically 10 years. This means that after 10 years have passed since the sale of the security, a lawsuit cannot be filed based on that violation.”

At this point, I'm not even going to delve into the fact that a U.S. judge has classified ETH as a commodity, with the CFTC and CME also recognizing it as such. We're already aware of this.

Let's zoom out for a moment. If you're involved in any part of the crypto industry, you should be cheering for Ethereum's triumph. This was similarly true in the XRP case, as a crypto victory meant a setback for the SEC and sets crucial precedents. The significance is even greater for Ethereum, as the entire DeFi ecosystem relies on its success - a situation that was not present in the Ripple case.

If Ethereum were to lose, we could kiss Solana goodbye, meme coins, and practically all of DeFi. The good news is that an attack on the Ethereum Foundation - assuming it is happening, which I doubt - is also an attack on BlackRock, Fidelity, Grayscale, ARK, Invesco/Galaxy, VanEck, Valkyrie, Bitwise, Coinbase, Compound, Uniswap, Aave, OpenSea, Tether, MetaMask, ConsenSys, the Chamber of Digital Commerce, the CME, the CFTC, Microsoft, IBM, Amazon, Vivek Ramaswamy, Jelena McWilliams, Hester Peirce, and Brian Brooks.

I am sure I am missing your favorite organizations, companies, and individuals, but you get the idea.

Also, the SEC's approval of ETH Futures ETFs for trading on regulated security exchanges explicitly recognizes ETH as a non-security, placing it beyond the SEC's jurisdiction. This approval came after the transition from proof of work (POW) to proof of stake (POS). For the SEC to attempt an attack, it would have to backtrack on this decision.

Grayscale, Ripple, and the ongoing Coinbase/Binance lawsuits are major developments, but if the SEC has its eyes set on Ethereum, I would consider that the final boss. Coinbase and Ethereum ripping the SEC a new one would be the best-case scenario for the industry.

I just can’t help but think that Lizzy Warren is whispering sweet nothings into Gensler's ear, promising to do ‘naughty things’ if he takes one more bullet for the fiat cartel and goes after Ethereum.

Anyways, if the dip is over, here are the approximations for how low Bitcoin and Ethereum dropped: -18% and -25% respectively. This pullback, while significant, is considered healthy and much needed. I have no plans to act on this FUD, especially considering some of the dirty tricks that the SEC pulled before the Bitcoin ETF approval. They were acting both “arbitrary and capricious.”

When an animal is backed into a corner, it's going to lash out. In our case, the SEC is that animal. And in response to that, everyone is going to panic when the animal strikes. We are better than the SEC and will prove it again if we need to.

It would be hilarious if the bottom for ETH was found during #ETHGATE. The market appears to simply not give a f**k.

Welcome to the bull, where bad news is good news.

Bitcoin Thoughts And Analysis

4-HOUR CHART

I continue to say it, but will mention it again.

For me, bullish divergence with oversold RSI is the most consistent technical signal that I have ever seen for predicting a solid bottom or bounce.

Does this mean THE bottom is in? No. But did it tell us that the market was ready to bounce? Yes.

I have been showing these for years in the newsletter and on twitter before I even had one. The hit rate is astounding, although still far from perfect.

We do have hidden bearish divergence now, and we still never even made it to oversold on time frames above the 4 hour. So I am less confident about what comes next.

I will feel far more comfortable back above $69,000, the previous all time high. I have shown weekly charts that indicate why - that was resistanec on the past 3 weekly candles.

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.

I did an altcoin stream with WICK yesterday, focused on Trading Alpha. There are some solid ideas there!

Legacy Markets

• Asian Stocks to Gain on Fed, Gold at Record High: Markets Wrap

Global stocks reached all-time highs, led by tech and commodity sectors in Europe, bolstered by optimism for lower future interest rates. The Stoxx 600 and S&P 500 showed gains, with Micron Technology Inc. seeing a significant pre-market increase. This surge came after the Federal Reserve maintained its forecast for rate cuts, despite inflation concerns, signaling possible easing later in the year.

The Swiss franc saw a decline following an unexpected rate cut by the Swiss National Bank, surprising many economists. This move reflects a broader trend of central banks potentially easing monetary policy, as indicated by Federal Reserve Chair Jerome Powell's comments on future rate cuts.

Gold price soared above $2,200 an ounce, marking a significant milestone. Meanwhile, the Bank of England is expected to maintain high interest rates to combat inflation, reflecting a cautious approach amidst economic recovery signs.

Market optimism is also visible in futures on the S&P 500 and Nasdaq, driven by gains in major tech stocks and small-cap companies, which thrive during economic expansion. The Swiss National Bank's rate cut, the first for a major currency post-pandemic, signals a potential shift in global monetary policy towards easing, according to financial experts.

Corporate highlights include Barclays Plc planning job cuts in its investment bank, Japan Airlines' significant aircraft order to expand internationally, BMW AG's positive outlook driven by high-end EVs, and Nationwide Building Society's acquisition of Virgin Money UK Plc, reshaping the UK banking sector.

Key events this week:

• Bank of England rate decision, Thursday

• US Conference Board leading index, existing home sales, initial jobless claims, Thursday

• Nike, FedEx earnings, Thursday

• Japan CPI, Friday

• Germany IFO business climate, Friday

• Atlanta Fed President Raphael Bostic speaks, Friday

• ECB’s Robert Holzmann and Philip Lane speak, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 rose 0.6% as of 9:40 a.m. London time

• S&P 500 futures rose 0.4%

• Nasdaq 100 futures rose 0.7%

• Futures on the Dow Jones Industrial Average rose 0.2%

• The MSCI Asia Pacific Index rose 2%

• The MSCI Emerging Markets Index rose 1.7%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro fell 0.2% to $1.0903

• The Japanese yen was little changed at 151.15 per dollar

• The offshore yuan was little changed at 7.2124 per dollar

• The British pound was little changed at $1.2776

Cryptocurrencies

• Bitcoin fell 0.3% to $66,886.29

• Ether rose 2.2% to $3,539.53

Bonds

• The yield on 10-year Treasuries declined four basis points to 4.23%

• Germany’s 10-year yield declined three basis points to 2.40%

• Britain’s 10-year yield declined four basis points to 3.98%

Commodities

• Brent crude was little changed

• Spot gold rose 0.8% to $2,203.17 an ounce

Base Braces For High Demand

• Due to high network traffic on the Base network…

This could be the early warning sign that the great meme rotation is shifting towards BASE. While I'll abstain from participating, as a COIN holder, this could be advantageous in attracting retail investors. Currently, Base stands as the third-largest layer-2 network on Ethereum, boasting over $713 million in total value locked (TVL), a figure that could skyrocket if a full migration takes place.

In related news, Coinbase International is recording all-time highs in trading volumes, which is poised to play a significant role in the forthcoming earnings report. With the S&P 500 at all-time highs and the crypto market in a bull phase, COIN is set for more remarkable movements, provided the momentum in both the legacy and crypto markets continues. Should the price fail to rally, anticipate volatility around the Q1 earnings report in late April or early May.

“Did we say $4 billion? How about $6 billion in 24-hour notional trading volume?” —Coinbase the next day.

I'm tucking this thought down here for now, as I'm still pondering it, but I can envision COIN reaching $1,000. Just a thought, not financial advice.

Robinhood Introduces A Crypto Wallet

• Robinhood rolls out crypto wallet to Android users globally

Android users around the world now have access to Robinhood's new crypto wallet, tailored for widespread use. While its significance might not be as apparent in the U.S., where iOS is more prevalent, Android boasts a commanding 70% share of the global mobile OS market. This move is crucial for encouraging worldwide crypto adoption. The wallet is accessible globally, with exceptions in a few countries where Robinhood does not operate, including Belarus, Cuba, Iran, Myanmar, North Korea, Russia, Sudan, Syria, Ukraine, and Venezuela. At its launch, the wallet supports an extensive array of cryptocurrencies, such as Bitcoin, Ethereum, Dogecoin, Polygon, Arbitrum, Optimism, and Base. It also offers token swaps for users on Ethereum, Polygon, and Arbitrum.

The Lights Turned On And The Music Turned Off

• Solana Memecoins Drop Across the Board: Is the Party Over?

It was fun while it lasted, but it looks like the party is over. The market is moving very fast, so please don't shoot the messenger if these figures have since changed. I collected this information for the boomer investors who don't spend all day staring at Solana memes. In short, only the strongest memes survive and by "survive," I mean they may only lose 95% in a bear market instead of 99.99%.

• Book of Meme, despite only starting to trade last week, is down 60% from its all-time high of $0.02805.

• WIF dropped by 16.0%, over the week, down 37% from its all-time high of $3.53, trading at $2.2.

• BONK, on the other hand, dropped 24.0% over the last seven days.

• Slerf (SLERF) dropped 8.79% in the last 24 hours.

Here Is Why Bitcoin & Crypto Prices Are Falling (When You Should Buy The Dip)

What's going on with Bitcoin ETFs? Are Bitcoin ETFs the sole reason for this market fall? What's happening with the demand and what should you expect? I am joined by the two main Bitcoin ETF brains: Eric Balchunas and James Seyffart, Bloomberg's Senior ETF Analyst and ETF Research Analyst, respectively.

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TheWolfOfAllStreets.io - The most comprehensive collection of everything I have going on. Plus over 100 blogs and other exclusive content.

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.