The Wolf Den #929 - What Would You Say To An Overnight Millionaire?
They won’t listen…
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In This Issue:
What Would You Say To An Overnight Millionaire?
Bitcoin Thoughts And Analysis
Legacy Markets
BUIDL
Coinbase Launches Derivatives For Three New Assets
Paul Grewal Explains Why ETH Is Not A Security
Bitcoin Rebound: These Signals Indicate The Bottom Is In | Here Is What Next For Bitcoin & Altcoins
What Would You Say To An Overnight Millionaire?
Picture this.
Imagine you're a prudent investor, known for your deliberate and conservative approach to the crypto market. You've always prioritized stability and long-term growth, allocating a significant portion of your portfolio to Bitcoin while cautiously dabbling in a few select altcoins. You steer clear of the high-risk allure of meme coins and the complex web of DeFi, focusing instead on the broader market cycles rather than the short-term volatility.
One morning, amid your routine analysis of market trends, you receive a call from a friend. This friend, a newcomer to the cryptocurrency world, is practically breathless with excitement. Through his rushed and jumbled words, you piece together an astonishing story: overnight, he's turned a modest investment of four thousand dollars into a staggering $4 million thanks to a meme coin. Despite this life-changing profit, he's adamant about not selling, convinced the upward trajectory will continue. Even during your brief conversation, his portfolio grows by an additional $100,000, a sum greater than his annual income, yet he remains unfazed by the thought of cashing out.
Your initial instinct might be to offer a barrage of advice: liquidate everything now, convert a portion to Bitcoin, clear any outstanding debts, take a step back from trading for a while, set aside a significant amount for tax obligations, and secure the future with investments in retirement and educational funds for the kids.
But then, a realization hits you.
Your friend is not going to listen. So you say “I am happy for you! Good luck.”
In the grip of such an intense rush of euphoria and greed, fueled by an unbelievable 1000x gain, would any advice truly resonate? The emotional high, the dopamine surge, and the newfound god-like feeling of invincibility would likely render your words ineffective, swept away in the torrent of his exhilaration.
Knowing how unlikely it is for your advice to penetrate this bubble of euphoria, you can't help but reflect on the broader implications. The scenario unfolding before you is a rare spectacle, one that most investors can only dream of. Yet, the underlying truth is stark and somewhat grim. The likelihood of this tale ending on a high note is minimal. The longer your friend clings to his newfound fortune without taking prudent steps, the more distorted his perception of crypto, trading, and market dynamics will become. This bias towards extreme risk, fueled by an unprecedented windfall, sets the stage for potentially reckless behavior and a disregard for the principles that underpin sound investment strategies.
Wealth that materializes overnight, much like lottery wins, inheritances, or legal settlements, often carries with it a heavy burden. While it represents the pinnacle of success for many traders and investors, the journey from rags to riches and, frequently, back to rags, is a well-trodden path. The seasoned professionals, entrepreneurs, and business magnates who amass considerable fortunes do so over time, through relentless effort, calculated risk, and a fair share of setbacks.
The true curse of hitting the jackpot in the market is not the wealth itself but the isolation it creates from the fundamental experiences that shape savvy investors. The only antidote, harsh as it may seem, is a return to the starting line - a reset brought about by the very loss of these gains. This journey back to square one, where every investor begins, is a painful but necessary process for genuine growth and understanding.
When someone makes easy money, they tend to just be borrowing it temporarily before passing it on to the next guy.
As you ponder the fate of your friend, you realize that his story serves as a cautionary tale, not just for him but for all participants in the market. The lessons of patience, loss, and resilience are invaluable, shaping a mindset that values the process over instant gratification. These experiences carve out the path to true, sustained success in the unpredictable world of investing.
So, as you wish your friend well, knowing the slim chances of your advice taking root, you're reminded of the complex dance between fortune and wisdom. The crypto market, with all its highs and lows, offers more than just financial gains; it offers lessons in humility, discipline, and the enduring value of patience.
Enjoy your weekend, and remember, the true worth of this journey lies in the lessons we learn and the wisdom we gain. Wolf out.
Bitcoin Thoughts And Analysis
Bitcoin has not done much since putting in a low and nice bounce. We are really waiting to see what kind of candle is printed on the weekly and how price behaves on the weekend.
For now, not expecting much.
Legacy Markets
Stock markets are on track for their best performance of the year, driven by a series of central bank decisions that suggest a shift towards more accommodating monetary policies. The MSCI global stock index and the S&P 500 both saw over 2% increases this week, with European stocks also showing significant gains. This optimism follows central banks', including the Federal Reserve's, hints at possible easing measures, such as interest rate cuts, to support economic growth. The Fed's recent meeting raised hopes for a soft landing of the US economy, further fueled by unexpected policy loosening from the Swiss National Bank and a dovish tilt from the Bank of England. This collective central bank stance has revived investor interest, boosting equities and government bonds, despite concerns over a potential recession which now seem to be receding. Additionally, the dollar strengthened, reaching its best week in two months, even as expectations for Fed rate cuts grow. This has been attributed to weaknesses in other currencies, such as the Japanese yen and the Chinese yuan, and speculation that other central banks might reduce their policy rates sooner than the Fed.
Key events this week:
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 was little changed as of 9:22 a.m. London time
S&P 500 futures rose 0.1%
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average were little changed
The MSCI Asia Pacific Index fell 0.4%
The MSCI Emerging Markets Index fell 0.8%
Currencies
The Bloomberg Dollar Spot Index rose 0.3%
The euro fell 0.3% to $1.0823
The Japanese yen rose 0.1% to 151.45 per dollar
The offshore yuan fell 0.6% to 7.2658 per dollar
The British pound fell 0.5% to $1.2596
Cryptocurrencies
Bitcoin rose 0.9% to $66,025.99
Ether was little changed at $3,486.01
Bonds
The yield on 10-year Treasuries declined three basis points to 4.24%
Germany’s 10-year yield declined four basis points to 2.37%
Britain’s 10-year yield declined five basis points to 3.95%
Commodities
Brent crude was little changed
Spot gold fell 0.6% to $2,167.92 an ounce
BUIDL
In a series of announcements, it's been revealed that the BUIDL token is securely backed by cash, U.S. Treasury bills, and repurchase agreements, setting it apart by offering daily yields to its holders directly through the Ethereum blockchain. This feature positions BUIDL similarly to other stablecoins that provide yields akin to money market funds, but with a notable twist: BUIDL is engineered with a yield offering from the outset, with a commitment to sustain this feature, all while being fully operational on-chain.
Adding an extra layer of interest to this development is BlackRock's investment in Securitize, marking BUIDL as their first foray into what seems to be a broader strategy, as hinted at in their communications. Supported by Coinbase's critical infrastructure, BUIDL aims to serve as a keystone in the broader landscape of tokenized assets, aligning with BlackRock's vision for asset tokenization.
This move by BlackRock, along with similar strategies by other traditional investment firms, suggests a future where all investing activities could unfold within the blockchain's transparent and efficient framework. Selecting Ethereum, yet again, would underscore BlackRock's clear preference for this platform, a decision that seems increasingly likely.
The potential for major equities, bonds, REITs, index funds, and more transitioning onto the blockchain could have profound implications for Ethereum, Coinbase, and the layer 2 solutions designed to handle increased transaction volumes. Though this transition may take time to fully realize, the direction BlackRock is heading appears to firmly support this integration.
The blending of traditional financial markets with the innovative world of cryptocurrency stands to revolutionize how we think about and engage with the world of investing.
Coinbase Launches Derivatives For Three New Assets
In the midst of numerous Ethereum updates yesterday, a noteworthy development from Coinbase slipped under the radar. The exchange sent three letters to the CFTC, proposing the introduction of monthly cash-settled futures contracts for Dogecoin, Litecoin, and Bitcoin Cash. Currently, the range of products offered by Coinbase Derivatives is quite limited. It's intriguing that platforms native to the crypto space continue to select coins like Bitcoin Cash, Litecoin, and Ethereum Classic for new ventures. This could be due to an expectation of lower activity on these assets, making them convenient choices for experimentation. The reasoning, however, remains unclear.
Paul Grewal Explains Why ETH Is Not A Security
If you're wondering whether Ethereum could be classified as a security, Coinbase's Chief Legal Officer, Paul Grewal, has made a strong case against it. He's presented a comprehensive set of legal and regulatory precedents which firmly suggest the SEC's stance might be misplaced. Moreover, it's worth noting that out of the five SEC commissioners, at least two are expected to disagree should any action be proposed.
The SEC has taken this position for years.
Ex. A. Senior SEC officials have said ETH is not a security, see e.g. SEC Director of Corporation Finance Hinman’s statement
Ex. B. Before he was SEC Chair, Gary Gensler himself testified before Congress that ETH is not a security, see his testimony
Ex. C. And even very recently, the SEC’s trial lawyers continue to compare ETH to BTC, see
The CFTC and federal courts have consistently confirmed that ETH is a commodity.
Ex. D. ETH futures contracts started trading on CFTC-regulated futures exchanges in 2021.
Ex. E. The Howey test doesn’t determine ETH’s status, and as we have explained in depth in other proceedings, digital assets like ETH that do not involve an ongoing contractual obligation related to a business enterprise are not “investment contracts” or otherwise “securities.”
Ex. F. Even if we were to apply Howey, ETH utterly fails that test, and nothing about the merge changes that conclusion.
The SEC has no good reason to deny the ETH ETP applications. And we hope they won’t try to invent one by questioning the long established regulatory status of ETH, which the SEC has repeatedly endorsed. That’s not how the law works. And Americans deserve better.
Bitcoin Rebound: These Signals Indicate The Bottom Is In | Here Is What Next For Bitcoin & Altcoins
I am joined by Andrew Parish and Tillman Holloway, co-founders of Arch Public, who are going to break down the latest in crypto and provide their vision of what wise investors should do now to profit from these market conditions.
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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.
Great article on the meaning of wealth and fast $. Keep it up Fat City