The Wolf Den #941 - Get Off Zero

Just do it.

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In This Issue:

1. Get Off Zero

2. Bitcoin Thoughts And Analysis

3. Legacy Markets

4. Why ETH Is Not A Security

5. Bitcoin ETFs Are About To Boom In China

6. Solana Network Faces Massive Congestion

7. Stablecoin Growth Deserves More Attention

8. Massive Pump | What Is Driving The Price Of Bitcoin | Macro Monday

Get Off Zero

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There's a definitive best approach to learning about Bitcoin, and it begins with taking this single step—get off zero.

To put it another way, who would take our message seriously if they lacked any financial motivation to do so? Do you personally know anyone who understands and believes in Bitcoin but has no exposure to the asset?

Here's an alternative perspective to consider, one that might illuminate how others feel when we preach Bitcoin, crypto, and blockchain, especially if they lack knowledge or exposure:

What if I told you that quantum absurdifusion entanglement cryptography is the next BIG thing because it is an avant-garde cryptographic paradigm that harnesses the esoteric phenomena of quantum entanglement to establish ultra-secure communication channels?

What I just said may have sounded nonsensical, but let's be honest—that's probably how we come across to beginners when they're learning about Bitcoin for the first time. Even if you do an exceptional job of explaining why central banks are failing us, the pitfalls of fiat currencies, the rapid escalation of global debt, and the potential solutions offered by Bitcoin and crypto, it's likely to go in one ear and out the other for someone hearing about it for the first time.

If we are lucky, maybe a couple of points will stick.

If we are being honest with ourselves, a plumber from Minden, Nebraska, a captain from Spanish Wells in the Bahamas, and a seamstress from Kampot, Cambodia, probably aren't going to be interested in Bitcoin. And why should they be, when their primary concerns are their food, health, bills, and their kids’ educations?

Of course, we grasp how improving the monetary system can pave the way for a better world, positively impacting our fictional plumber, captain, and seamstress, but not everyone will immediately jump on board the moment we explain it to them, particularly those who don't have any financial stake in the asset. 

If we aim to help others see what we see, we can't rely solely on lengthy explanations of why Bitcoin is superior. It’s also going to take us encouraging them to take a leap of faith. In some cases, we will need to hold their hand and jump with them.

If you're in a position to give Bitcoin as a gift, do it! Just don't use it as a substitute for a thoughtful gesture, making them resent Bitcoin even more; rather, consider it a much-improved alternative to cash or a gift card.

If you can send someone a book, consider sending them a copy of "The Bullish Case for Bitcoin" by Vijay Boyapati or "Hard Money You Can’t F*ck With" by Jason A. Williams.

I understand these types of approaches might seem a bit annoying and pushy, but is it really worse than losing 25% of your purchasing power in dollars since January 2020? This is a moral imperative.

Bitcoin isn't a gimmick about intangible concepts; it's a real movement focused on protecting our hard-earned dollars from being silently stolen without our consent.

To those who have fully embraced Bitcoin and understand its significance, but hesitate to educate others due to the potential repercussions, I, as a public figure, deeply empathize with your concern. The key to avoiding this dilemma is to steer clear of predicting and speculating on Bitcoin's price targets and instead focus on why Bitcoin is the life raft.

As tempting as it may be, discussing price should be the last resorted, even avoided entirely. It’s not a shortcut worth taking. Furthermore, encouragement to get off zero should be the final mention of buying, with the emphasis shifting solely to education from that point on. Allow others to form their own conclusions about Bitcoin's trajectory because, ultimately, that's the one thing none of us know.

A little bit of Bitcoin is the best motivator to buy a lot of Bitcoin—it’s a powerful addiction that takes over quickly after a couple of tries.

With the right attitude and approach, we can all play a small part in helping the world get off zero.

Bitcoin Thoughts And Analysis

DAILY CHART

This is simple… for now. We have a breakout from the bull pennant and a retest of the descending resistance as support. We will see what unfolds, but this is exceptionally bullish with a target well into the $80,000s.

Legacy Markets

• Stocks Are Steady With Traders on Inflation Watch: Markets Wrap

The market sentiment remains cautious with traders holding back from significant investments in anticipation of the upcoming U.S. inflation data. This data is crucial for shaping expectations about the Federal Reserve's interest rate decisions. European mining stocks saw gains thanks to a surge in iron ore prices, while overall trading volumes were low, reflecting a wait-and-see approach from investors. U.S. futures stayed steady, reflecting a similar mood of anticipation.

Interest is high regarding the Federal Reserve's potential response to economic indicators, with some expecting up to three rate cuts this year, though the market consensus leans towards two. The key debate centers on the Fed's readiness to lower rates should signs of economic weakness emerge, with some analysts confident in the Fed's willingness to support the economy if necessary.

In global news, oil prices are hovering near a five-month peak amid ongoing tensions in the Middle East and concerns over supply. The U.S. consumer price index data is expected to show a slight easing in inflation, but core inflation is predicted to remain above the Fed's target, indicating persistent inflationary pressures.

In the stock market, companies like BP and Renault saw shares rise due to positive performance and analyst upgrades, respectively. Gold maintains its upward trajectory, and copper prices are near a 15-month peak, signaling tightening supply and a rebound in global manufacturing.

Key events this week:

• China aggregate financing, money supply, new yuan loans, Tuesday

• Japan PPI, Wednesday

• Canada rate decision, Wednesday

• US CPI, Fed minutes, Wednesday

• Chicago Fed President Austan Goolsbee speaks, Wednesday

• China PPI, CPI, Thursday

• Eurozone ECB rate decision, Thursday

• US initial jobless claims, PPI, Thursday

• New York Fed President John Williams speaks, Thursday

• Boston Fed President Susan Collins speaks, Thursday

• China trade, Friday

• US University of Michigan consumer sentiment, Friday

• Citigroup, JPMorgan and Wells Fargo due to report results, Friday.

• San Francisco Fed President Mary Daly speaks, Friday

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 0.2% as of 9:27 a.m. London time

• S&P 500 futures were unchanged

• Nasdaq 100 futures were little changed

• Futures on the Dow Jones Industrial Average were little changed

• The MSCI Asia Pacific Index rose 0.7%

• The MSCI Emerging Markets Index rose 0.5%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0856

• The Japanese yen was little changed at 151.90 per dollar

• The offshore yuan was little changed at 7.2449 per dollar

• The British pound was little changed at $1.2651

Cryptocurrencies

• Bitcoin fell 2.3% to $70,070.2

• Ether fell 2.2% to $3,608.24

Bonds

• The yield on 10-year Treasuries declined two basis points to 4.40%

• Germany’s 10-year yield declined three basis points to 2.41%

• Britain’s 10-year yield declined four basis points to 4.05%

Commodities

• Brent crude rose 0.5% to $90.83 a barrel

• Spot gold rose 0.7% to $2,356.08 an ounce

Why ETH Is Not A Security

• Staking or not, ETH is no security

Blockworks published a compelling piece discussing why Ethereum and its consensus mechanism should not be considered a security. It would not do justice to their argument to summarize it briefly, so I'll share a few key points and provide a link to the article for those interested in reading more.

“With this concept of ‘investment contract’ in mind, Ethereum’s transition to proof-of-stake clearly did not turn ETH itself into an investment contract. Holding ETH does not, on its own, entitle the holder to staking rewards, and so the transition to proof-of-stake did not give rise to an investment contract.

Even when stakers work with other parties like node operators and exchanges to stake their ETH, stakers’ profit expectations come from network and market conditions that are independent of the efforts of these third parties. The economic reality is that these third parties are more like administrative or technical service providers than promoters or managers of an investment scheme.

The fact that ETH can be staked does not mean it is a security, and staking ETH to earn staking rewards does not necessarily give rise to a securities offering.”

Bitcoin ETFs Are About To Boom In China

• China's Largest Funds Apply For Spot Bitcoin ETF in Hong Kong.

Two major Chinese financial giants, Harvest Fund and Southern Fund, have submitted applications via their Hong Kong arms to issue spot Bitcoin ETFs. Pending approval, the funds respectively boast $230 billion and $280 billion in AUM, which puts them amongst the largest funds in the country. Insiders predict approval will come in Q2, which will be significant in showing China that Bitcoin is a once-in-a-lifetime opportunity. It's remarkable to consider that before Wall Street's involvement in crypto, one of the biggest fears for U.S. investors was that other countries would seize the Bitcoin opportunity and leave the U.S. behind. This concern now seems to have faded from conversation.

Solana Network Faces Massive Congestion

• Solana developers rally to combat network congestion.

One of the main reasons for Solana's congestion is the heavy activity related to bots flooding the network. According to Dune Analytics, multiple aspects of the chain have more bots than humans, and over 70% of some transactions are failing. It's challenging to determine if Solana's congestion is causing an exodus to Ethereum, thus leading to the price rise, but investors are likely caught off guard by the chain, which is built for high throughput blockchain, not handling the load. It's worth noting that similar congestion has occurred with both Bitcoin and Ethereum before, on numerous occasions. Below are some enlightening charts from Dune—red is failed transactions and orange is bots.

Stablecoin Growth Deserves More Attention

• Stablecoin Growth Is More Important Cue for Crypto Bull Market Than Bitcoin ETF Inflows: Analyst

In the past 30 days, stablecoin growth among USDT and USDC grew by more than $10 billion, which was twice the inflows of all the ETFs but received a fraction of the attention. According to a report from the founder of 10x Research, "We suggest paying less attention to the bitcoin ETF flows. Stablecoin issuers are the new sheriff in town, driving this market higher. The minting from stablecoins is twice as large and might be long-only exposure, contrary to the ETFs."

The reason why the 10x Research’s founder is saying this is because some amount of the ETF flows represents a savvy market trade of harvesting a yield from elevated futures funding rates with a carry trade. In summary, the carry trade is an arbitrage opportunity in which well-funded and savvy investors buy spot BTC or shares of one of the spot-based ETFs and sell an equal size of BTC futures to maintain a neutral position and pocket the price difference as a yield.

Massive Pump | What Is Driving The Price Of Bitcoin | Macro Monday

Join Dave Weisberger, Mike McGlone, James Lavish, and today's special co-host, Noelle Acheson, as we break down what's happening in macro and crypto!

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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.