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In This Issue:
The Truth About Selling
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
KuCoin Criminally Charged
Hong Kong Goes Cash Create
Coinbase Moves Onchain
A Different Take On ETH ETFs
The Flood Has Barely Started
Here's Why You Should NEVER Sell Your Bitcoin
The Truth About Selling
During bull markets, retail investors of all levels struggle mightily with taking profit. This stems from a pervasive sentiment in the crypto community - that investing in cryptocurrency is a lifetime commitment, akin to swearing a blood oath to the market gods. Selling is heresy.
The influences of this mentality are not hard to find.
Exhibit A: “I’m going to be buying the top forever. Bitcoin is the exit strategy. It’s the most powerful asset… What it is right now, it’s competing against the S&P index, it’s competing against Real Estate $100 trillion-plus asset class as a store of value. We believe that more capital will leave those asset classes for a safe haven in bitcoin. Bitcoin is technically superior to those asset classes. And that being the case, there’s just no reason to sell the winner to buy the losers.”
Exhibit B: “YEAH, YEAH, WE’RE NOT SELLING, F**K ELON, F***K Elon.”
Upon reflection, you might guess who voiced these bold opinions. Though their remarks seem extreme, they reflect a not-so-rare sentiment. If you align with this view, that's your prerogative—I won't try to sway you. Yet, it's rational for the majority, at least 90% of us, to contemplate selling.
I can almost hear the outcry on social media: "How could you suggest such a thing? Isn't that against the spirit of Bitcoin? Are you advocating for the traditional financial system? It sounds like you prefer banks. Do you want people to stay poor?"
Pushing this idea further, ask yourself: if you had the cash instead of crypto, would you buy your current holdings again? Ignoring tax implications for simplicity, if your answer is yes, then perhaps no action is needed. But if no, it's the perfect moment for a strategic review, maybe even to consider taking profits.
I'm a crypto enthusiast too, but using it for major payments like mortgages, student loans, or car loans isn't quite feasible yet. While specialized platforms exist, they often introduce complexity and inefficiency compared to traditional currency. For me, crypto needs to prove its worth beyond a statement of defiance, which otherwise leads to unnecessary hardship.
Financial stability, capable of withstanding market volatility, should prompt us to at least think about selling or securing profits. The belief in Bitcoin's perpetual rise, defying the historical 4-year cycle, is optimistic but highly speculative. Recalling the slow institutional adoption since 2017, and now entering 2024, tempers such expectations.
Adhering strictly to never selling ensures you won't reduce your Bitcoin holdings, but this rigid stance can have significant downsides. Idealistically, we'd accumulate Bitcoin until fiat fails, but that's unrealistic for those with immediate financial responsibilities.
Opting out of fiat, only to re-enter and exchange Bitcoin back into it, isn't a total loss. It signifies a temporary transfer of your Bitcoin, awaiting its return to you. This interaction slightly disrupts the flawed financial system, a minor victory.
The crypto industry's longevity hinges on its ability to navigate through cycles of adoption by both newcomers and veterans. This dance with fiat is necessary. Bitcoin's evolution into a major asset requires global acceptance, a journey marked by continuous negotiation.
Avoid condemning those who sell; few permanently turn away from Bitcoin. Most return, contributing to the natural capital flow essential for Bitcoin's growth to rival gold.
This isn't financial advice, but unless you're more assured in your investment's ability to sustain you than in realizing profits, perhaps holding is your course. Still, I believe the ideal time to sell is in the distant future, a concern for another day.
Bitcoin Thoughts And Analysis
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.
There’s nothing to see on higher time frames, as Bitcoin is currently trading above key resistance at $69,000. Zooming in for fun, we can see the inverse head and shoulders and the fact that Bitcoin appears to be consolidating in a wedge for another move up. This is irrelevant unless we actually get a break out, but sideways and slowly dropping price action on diminishing volume after a move up is bullish consolidation.
This is as simple as it gets. SUI just cracked the all time high (I do not count the first candle on the chart with the long wick up), set in the middle of February. Indicators look good, the 50 MA is support and curling up. The 200 MA is also heading up, both signals of a bull market. A close above $1.974 would be extremely bullish - a blue sky breakout into price discovery. Bulls want to avoid a daily candle closing with a wick above this level and a close below.
As you can see, we have a rounding pattern since the first all time high was sent - a cup. If we now form a bull flag at resistance, we would have a cup and handle - just an idea if we see price rejected here at the highs.
I am keeping a close eye on this.
Legacy Markets
European stocks slightly declined as investors anticipated new euro zone data, while the yen recovered from a 34-year low against the dollar amid speculation of intervention by Japanese authorities. The Stoxx 600 Index in Europe dropped slightly by 0.1%, awaiting consumer and economic confidence data. Meanwhile, Hennes & Mauritz's shares surged by up to 14% after reporting higher-than-expected profits due to cost reductions, and Adyen NV enjoyed a boost from a broker upgrade.
The stock market has seen robust performance at the beginning of the year, with key indexes like the S&P 500 aiming for its fifth consecutive month of gains. However, market movements have been subdued this week, with eyes on the upcoming release of the Federal Reserve's preferred inflation measure.
The yen's decline halted as speculation grew about possible intervention following a report that Japanese officials might meet to discuss options after the Bank of Japan's interest rate hike did little to alter its downward trajectory.
In other developments, U.S. Treasuries stabilized after a significant sale of five-year notes, the dollar slightly strengthened against major currencies, and shares in China and Hong Kong fell, largely due to losses in technology firms and Alibaba's decision to postpone the listing of its logistics arm. In the U.S., Merck & Co Inc. shares rose following the approval of its Winrevair drug, while Trump Media & Technology's shares looked to continue their gains after going public. Oil prices dropped after a report indicated a large increase in U.S. inventories, and gold prices remained close to record highs.
Key events this week:
Bank of England issues financial policy committee minutes, Wednesday
Eurozone economic confidence, consumer confidence, Wednesday
Fed Governor Christopher Waller speaks, Wednesday
UK GDP revision, Thursday
US University of Michigan consumer sentiment, initial jobless claims, GDP, Thursday
Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
US personal income and spending, PCE deflator, Friday
Good Friday. Exchanges closed in US and many other countries in observance of holiday. US federal government is open.
San Francisco Fed President Mary Daly speaks, Friday
Fed Chair Jerome Powell speaks, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.1% as of 9:36 a.m. London time
S&P 500 futures rose 0.3%
Nasdaq 100 futures rose 0.3%
Futures on the Dow Jones Industrial Average rose 0.3%
The MSCI Asia Pacific Index was little changed
The MSCI Emerging Markets Index fell 0.4%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0835
The Japanese yen rose 0.2% to 151.25 per dollar
The offshore yuan was little changed at 7.2523 per dollar
The British pound was little changed at $1.2629
Cryptocurrencies
Bitcoin was little changed at $69,853.85
Ether fell 0.3% to $3,564.7
Bonds
The yield on 10-year Treasuries was little changed at 4.24%
Germany’s 10-year yield declined one basis point to 2.34%
Britain’s 10-year yield was little changed at 3.97%
Commodities
Brent crude fell 1.1% to $85.29 a barrel
Spot gold rose 0.1% to $2,181.46 an ounce
KuCoin Criminally Charged
The Department of Justice (DOJ) has levied criminal charges against the popular cryptocurrency exchange KuCoin, along with its founders Chun Gan and Ke Tang. These charges, announced by the U.S. Attorney's Office for the Southern District of New York, accuse KuCoin of violating the Bank Secrecy Act by operating without the necessary licensing for a money-transmitting business. The allegations detail KuCoin's deliberate omission of a robust anti-money laundering program, failure to authenticate customer identities, and neglect in reporting suspicious activities. Despite understanding their legal obligations, it's alleged that KuCoin facilitated the transfer of over $5 billion in suspicious and criminal funds, accepting and distributing vast sums without due diligence.
When comparing the legal predicaments of KuCoin to those of Binance and Coinbase, it's crucial to recognize the unique nature of each case, implying varied potential outcomes. Coinbase, for instance, may emerge largely unscathed, whereas Binance faces allegations of manipulating trading volumes, misusing customer funds, inadequately preventing U.S. customer access, and deceiving investors regarding its monitoring practices. The distinct nature of the alleged violations suggests that repercussions will vary, highlighting the specific legal challenges each company faces.
This situation underscores two significant points. Firstly, it's regrettable that exchanges are encountering such legal hurdles, yet these incidents are vital for regulatory bodies to enforce compliance and maintain the integrity of financial markets. Secondly, the fact that Gan and Tang are currently not in custody adds a layer of complexity to the enforcement actions being pursued against KuCoin. These developments signal a critical moment for the cryptocurrency industry as it navigates through regulatory and legal challenges, reinforcing the importance of adherence to established financial laws and regulations.
One final note before I conclude: credit to Jake Chervinsky for highlighting an important detail in the CFTC KuCoin Complaint. The CFTC is unequivocally expressing its position to the public and the SEC regarding the status of Ethereum.
Also, there’s never been a better time to remove your crypto from an exchange.
Hong Kong Goes Cash Create
The ETF market in Hong Kong and across Asia is impressive. At the start of 2023, Hong Kong's ETF market had assets worth about $48.9 billion, making it the fourth largest in Asia, excluding Japan. The entire Asia-Pacific ETF sector is expected to grow from $1.17 trillion in 2024 to $1.61 trillion by 2029.
Hong Kong's Bitcoin ETF is particularly interesting because it uses an in-kind model, which is more efficient than the cash-only redemption model used in the U.S. This approach has several benefits, such as minimizing the impact on Bitcoin's price, reducing costs, improving tax efficiency, enhancing liquidity, and speeding up the creation process.
While the U.S. often leads the conversation on Bitcoin, the increasing interest in Bitcoin in Asia, as shown by Hong Kong's initiative, is an important development that shouldn't be ignored.
Coinbase Plans To Move Onchain
Coinbase International is experiencing record-breaking daily trading volumes, particularly on its Base platform. Moreover, the company has announced intentions to move assets on Base, a move that further enhances their commitment to transparency and the overall customer experience. This development is yet another factor contributing to the positive outlook on Ethereum, the blockchain foundation for Base.
A Different Take On ETH ETFs
Grayscale's chief legal officer, Craig Salm, wrote a thread on how he believes the "perceived lack of SEC engagement" should be interpreted. Personally, I remain cautiously optimistic about the approval of the ETH ETF, estimating a 33% chance for approval in May, influenced by factors such as the high number of tries it took for Bitcoin, concerns over #ETHGate, Gary Gensler's hatred toward crypto, and expert opinions indicating a low probability. However, I am nearly certain that it will eventually be approved. Craig highlights that the ETH ETF should not differ significantly from Bitcoin ETFs, except for the underlying asset, maybe there really is just less for the SEC to say.
In the final months leading up to Bitcoin ETF approval, @Grayscale and others received positive and constructive engagement from the SEC. Thoughtful conversations were had, discussing creation/redemption procedures, cash v. in-kind, APs, LPs, custody, etc.
All these issues were figured out and are identical when comparing spot Bitcoin to Ethereum ETFs. The only difference is rather than the ETF holding bitcoin, it holds ether. So, in many ways, the SEC has already engaged, and issuers simply have less to engage on this time.
Perhaps I will feel differently as we get closer to the final approve/deny dates in late May 2024, but at this point, I don’t think the perceived lack of engagement from regulators should be indicative of one outcome or another.
Further, I 100% agree with what others like @iampaulgrewal and @BrianQuintenz have said about why spot Ethereum ETFs should be approved: consistency with ETH futures ETFs, regulation of ETH futures as commodity futures (vs. security futures), high correlation between futures and spot.
Investors want and deserve access to Ethereum in the form of a spot Ethereum ETF, and Grayscale believes the case is just as strong as it was for spot Bitcoin ETFs. We look forward to engaging with the Commission on these important products.
The Flood has Barely Started
Two more funds have been granted approval to buy Bitcoin, which is still only peanuts in the grand scheme of things. The outside world still has no clue about the untapped potential Bitcoin has when Wall Street fully opens up its doors to Bitcoin. Starting next week, institutional investment managers will file their 13F forms with the SEC, meaning we'll start to get a look at who's been buying the Bitcoin ETFs. This could easily supercharge another wave of FOMO.
Here's Why You Should NEVER Sell Your Bitcoin
I am joined by Sunny Lu, the CEO of VeChain, as we are discussing the latest in crypto, VeChain updates and why you should never sell your Bitcoin!
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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.