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In This Issue:
Formulate A Plan
Bitcoin Thoughts And Analysis
Legacy Markets
Robinhood Receives A Wells Notice
Bitfinex Denies Hack Incident
ETF Update
Bitcoin Reaches 1 Billion Transactions
$150,000 Bitcoin Reconfirmed | Crypto Bulls Return
Formulate A Plan
I know many investors who would argue that the current bull market in both equities and crypto is effortless, possibly manipulated, or unearned. However, this notion couldn't be further from the truth. Since the crypto bottom in late 2022 and the equity bottom in early 2020, assets have indeed provided remarkable returns. Still, achieving those returns was anything but easy.
There's no need to review every major and minor event on the crypto chart since 2009 because many of us are already well-versed in that history. As for equities, we've all been involved in that game, so the memories are still vivid. Over the past 1.5 decades, we've witnessed it all. Bounces have transformed into reversals, which then led to rallies and multi-year bull markets. Conversely, we've also seen the opposite in its most unpleasant manifestations.
All these individual moments woven together define the investors we've become.
For those of you following a long-term strategy in crypto, buying the right asset is crucial, but the more challenging part of the equation is holding it. This is where most investors falter, in crypto especially.
Let’s consider a hypothetical investor named Bob who recently decided to sell his Bitcoin at $65,000 in order to buy back cheaper based on the recent crackdown from regulators.
As of now, Bob is feeling quite optimistic because Bitcoin is a thousand below his selling point, and regulators aren’t easing up. His confidence in his strategy has grown, along with his conviction in the trade. Now, let’s imagine Bitcoin drops to $55,000. Bob begins to feel euphoric, envisioning how much more he can acquire, even more convinced about his thesis. Bob is starting to believe that his hunch was more accurate than he originally thought. “Perhaps $50,000 isn't the right target; maybe Bitcoin is headed back to the 40s or 30s.”
Price is a powerful influence.
Over the next few weeks, Bitcoin slowly begins to climb back up. Bob thinks, “I can't buy back at $58,000 when I could have bought at $55,000 a couple of days ago.” This scenario repeats itself, with each leg back up, forcing Bob into an increasingly harder decision.
Now, imagine what would have happened if Bob sold and the market didn't drop at all from $65,000, instead slowly climbing toward the $70,000 range. Panic sets in, and Bob is faced with either waiting it out in hopes of a pullback or taking the loss and buying back ASAP. If buying back at a lower price is hard, amplify that difficulty by three for having to buy back at a higher price.
We are Bob. Bob is 99% of traders in this market.
Traders often find themselves in these challenging situations repeatedly because the human brain struggles to comprehend what drives market movements. Market shifts are frequently not triggered by isolated news events, whether good or bad, but by the incremental change in circumstances. Essentially, it's not just about whether the news is good or bad; it's about whether the situation is improving or deteriorating compared to expectations.
While it may appear that bad news is accumulating, creating the impression of markets exponentially deteriorating, the reality is often quite different. For the right asset, repeated bad news results in fewer sellers, increased shock absorption, and ultimately brings the asset closer to its bottom. The bottom is typically farthest away during a bull market and closest during a bear market. However, buyers and sellers rarely seem to be on the correct side of this market dance.
This is true on all time frames, small day-to-day scales and larger year-to-year scales.
Opting not to sell is essentially akin to purchasing an insurance policy against your own poor decision-making. However, it does come with its own set of risks, such as holding onto depreciating assets in a bear market or simply marrying the wrong asset. Yet, if thorough research is conducted and the decision to hold is deliberate, there should be no further cause for concern.
I can't help but notice the SEC's current actions—along with other three-letter agencies attacking the space—issuing Wells Notices left and right. While this may technically be the most negative news we've seen this bull market, the pressure has to give way sooner than later. Quality altcoins are well overdue for an epic run once the chains are removed. Rather than waiting for all the obvious signs to turn bullish, I am adjusting accordingly now.
Aside from that additional thought, the key point I want to emphasize is the necessity of having a well-thought-out strategy for navigating the remainder of this bull market. This strategy should begin with a commitment to avoid frequent trading and should end with establishing predetermined points at which you plan to take profits.
Trying to cash out all your assets in one go is often not the best approach for the majority of investors. However, if you have a specific target in mind and are willing to hold your investments until that target is reached, then you should do everything in your power to stick to that plan.
What matters most is not the specifics of your plan but rather the fact that you have a plan in place that is not driven by misguided emotional reactions to market fluctuations.
Both of these are likely equally true: Bitcoin is heading over $100,000, and this bull market will be difficult. The sooner you acknowledge the complexity of the game, the easier it becomes to navigate. Establish a plan, stick to it, and the rest will fall into place.
Bitcoin Thoughts And Analysis
Nothing to see here - really just sideways chop with a rejection at the track line. No signal at all.
Legacy Markets
Stocks experienced gains buoyed by positive sentiment surrounding bank earnings and the anticipation of potential interest rate cuts by the Federal Reserve. Although S&P futures remained relatively stable, Walt Disney Co. saw a decline in shares after its revenue failed to meet expectations, despite beating profit estimates in its fiscal second quarter. The broader market optimism was tempered by concerns over stretched valuations juxtaposed with signs of economic cooling, prompting some investors to contemplate cashing out. Neel Kashkari and other Federal Reserve officials are expected to provide insight in a week marked by sparse economic data but abundant Fed commentary. The possibility of interest rate cuts, with swaps traders anticipating around 45 basis points of cuts by December, is under scrutiny, especially considering the Fed's decision to maintain its benchmark rate at a more than two-decade high last week. This cautious market sentiment is underscored by concerns over potential impacts on earnings estimates and overall market performance.
Key events this week:
Minneapolis Fed President Neel Kashkari speaks, Tuesday
Toyota earnings, Wednesday
Fed Governor Lisa Cook speaks, Wednesday
Bank of Japan issues summary of opinions from April policy meeting, Thursday
China trade, Thursday
UK BOE rate decision, Thursday
US initial jobless claims, Thursday
UK industrial production, GDP, Friday
ECB publishes account of April policy meeting, Friday
BOE Chief Economist Huw Pill speaks, Friday
US University of Michigan consumer sentiment, Friday
Chicago Fed President Austan Goolsbee speaks, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures were little changed as of 7:58 a.m. New York time
Nasdaq 100 futures fell 0.2%
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 rose 0.6%
The MSCI World index rose 0.1%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0766
The British pound fell 0.1% to $1.2544
The Japanese yen fell 0.4% to 154.53 per dollar
Cryptocurrencies
Bitcoin rose 0.4% to $63,525.27
Ether fell 0.4% to $3,065.91
Bonds
The yield on 10-year Treasuries declined two basis points to 4.47%
Germany’s 10-year yield declined two basis points to 2.44%
Britain’s 10-year yield declined seven basis points to 4.15%
Commodities
West Texas Intermediate crude fell 0.3% to $78.23 a barrel
Spot gold fell 0.5% to $2,312.87 an ounce
Robinhood Receives A Wells Notice
Add another one to the tally. The SEC has now sent Wells Notices to Coinbase, Kraken, Uniswap, Metamask, Consensys and Robinhood as of yesterday morning. Robinhood’s stock took a dip on the news, but at this point, the Wells Notice does not have much meaning because they have become so routine. The SEC can't possibly effectively sue all of these platforms, and Robinhood doesn’t even have any of the altcoins listed in the original court document that labeled 13 cryptocurrencies as securities.
Robinhood delisted ADA, SOL, and MATIC last year when the SEC claimed these assets were securities, and now the platform only has BTC, ETH, DOGE, SHIB, AVAX, LTC, UNI, ETC, LINK, XLM, and AAVE. If you recall, the original 13 assets the SEC came after were SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO, none of which Robinhood has on its platform.
The SEC has resorted to scare tactics. Also, the Wells Notice, in this case, only pertains to Robinhood’s crypto arm, which is a small subset of the platform. My guess is that Robinhood, along with other platforms facing similar scrutiny, will be fine. Robinhood’s Chief Legal Officer stated, “We firmly believe that the assets listed on our platform are not securities, and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law.”
Bitfinex Denies Hack Incident
Rumors began circulating about a week ago that Bitfinex had fallen victim to a large-scale data breach attack orchestrated by FSOCIETY, targeting various platforms. However, it now appears that this was nothing more than a publicity stunt. Bitfinex took these rumors seriously, conducting a thorough analysis of its systems for any signs of a breach. Despite these efforts, no evidence was found to suggest that any customer data had been leaked. According to Bitfinex's findings, it is believed that FSOCIETY was attempting to promote a hacking tool by fabricating these breaches. There was also never a ransom demanded, nor was there any contact from FSOCIETY, the group claiming to have successfully breached Bitfinex. Paolo Ardoino summarized his thoughts with this statement: “TLDR: If they truly hacked Bitfinex, would they really need to sell stuff for $299?”
ETF Updates
The post above is self-explanatory; you should read it. In other ETF news, I have found a Hong Kong ETF Flow tracker, courtesy of Farside Investors, which you can view HERE. The $310 million that Hong Kong has attracted so far may seem insignificant compared to the billions in the U.S. market, but relatively, it’s a remarkable success. According to Eric Balchunas, “The HK ETFs at $310m is equivalent to $50b in the US market.”
Bitcoin Reaches 1 Billion Transactions
Fifteen years after the mining of the genesis block in January 2009, Bitcoin has surpassed 1 billion transactions on its network. Over the course of these 15 years, an average of 178,475 transactions have been processed daily. This milestone serves as strong evidence that Bitcoin is more than capable of serving as a global payment network. The journey toward the next billion transactions begins now.
$150,000 Bitcoin Reconfirmed | Crypto Bulls Return
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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.