The Wolf Den #975 - It's Okay To Change Your Mind
Strong opinions, loosely held.
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In This Issue:
It’s Okay To Chang Your Mind
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Donald Trump Doubles Down On Crypto Support
FTX Sells Off Final SOL Tranche
Be Careful With Memecoins
I Will Die With My Bitcoins | Scott Walker
It’s Okay To Change Your Mind
Much of the alpha in this newsletter can be distilled into a single word: conviction. However, conviction doesn't mean being inflexible or resistant to change. The ability to discern when to hold firm and when to adapt based on new evidence is a crucial skill. This balance helps us avoid holding onto losing investments indefinitely and allows us to patiently wait for the right opportunities to achieve gains.
My OG readers know that I firmly stand by the saying, "strong opinions, loosely held." While "loosely held" might seem to undermine the concept of conviction, it actually emphasizes the importance of flexibility. True conviction isn't about stubbornly clinging to beliefs; it's about being confident in your stance while remaining open to new information and being willing to adjust your views accordingly. The nuance of this statement lies in recognizing that conviction is found in the 'strength' of your beliefs, while 'flexibility' is embodied in how firmly you hold onto those beliefs.
Conviction is essential in our industry because no other asset class subjects its investors to as much scrutiny and negativity. Although it has lightened up somewhat over the years, the magnitude of FUD in crypto remains unparalleled.
If you praise Bitcoin too much, you're hated by everyone else.
If you praise Ethereum too much, you're accused of undermining Bitcoin.
If you praise both Bitcoin and Ethereum, you're playing both sides.
If you praise everything, you know nothing.
If you praise nothing, you're the opposition.
No matter what you've contributed to the space or how kind and humble you are, the more you stand for something, the larger the crowd against you grows. Don't label me a pessimist - I often write about the positives in this space. I'm simply pointing out what I observe.
In light of this discussion, I want to pivot to crypto and highlight some recent statements by Michael Saylor as a case study on conviction, opinions, and flexibility. Public figures naturally attract criticism, but that's not the goal of this newsletter. I proudly support and appreciate Michael Saylor and his contributions to the space.
What I want you to do is:
A) Observe the nuances in his language and shifts in his position, as these will have lasting impacts on the industry.
B) Attempt to emulate his conviction and flexibility.
Four Weeks Ago:
“Ethereum is not going to be approved. Sometime this summer, it will be very clear to everyone that Ethereum is deemed a crypto asset security, not a commodity. After that, you’re going to see that Ethereum, BNB, Solana, Ripple, Cardano—everything down the stack—is just a crypto asset security, unregistered. None of them will ever be wrapped by a spot ETF. None of them will be accepted by Wall Street. None of them will be accepted by mainstream institutional investors as crypto assets. This (Bitcoin) is the one universal consensus-accepted institutional-grade crypto asset in the world. There won’t be another one.”
A Few Days Ago:
“Two weeks before, the world looked like Bitcoin was going to be the only asset securitized and offered as a spot ETF by the Wall Street establishment. It was going to spread as the one legitimate crypto asset. I think right now the best expectation is that the crypto asset class will be legitimized and supported by both parties. There's an industry; crypto is an asset class. There's an entire range of use cases: 24/7 digital trading, digital art, NFTs, tokens, decentralized functionality, DeFi. There are a lot of things that will be considered in a more open light, and Bitcoin will be the leader of the crypto asset class.”
“Is this good for Bitcoin or not? Yeah, I think it's good for Bitcoin. In fact, it may be better for Bitcoin because we are politically much more powerful, supported by the entire crypto industry. They obviously have a lot of political power, a lot of users, and they serve as another line of defense for Bitcoin. Instead of someone saying, ‘Well, there's one crypto asset, maybe I'll allocate 1% of my money to it,’ I think mainstream investors might say, ‘Oh, there's a crypto asset class now, and maybe we'll allocate 5% or 10% to the crypto asset class.’”
Did Michael Saylor's opinion change? Did he elaborate on his original idea? Was he previously mistaken and is now correct? These questions are largely irrelevant.
What matters:
A) Ethereum is the only other cryptocurrency (aside from Bitcoin) to receive a stamp of approval.
B) In light of new evidence, Saylor has recognized the truth and correctly adjusted his opinion.
C) You should study and practice conviction + flexibility.
Michael Saylor may never buy Ethereum or mention it again, and that's perfectly fine. It could also turn out that MicroStrategy acquires some level of exposure to Ethereum and completely shocks the world. Who knows? My speculation is that within the next 6 to 12 months, a company will emulate MicroStrategy's approach and embrace Ethereum, much like MicroStrategy did with Bitcoin. This is already happening in Canada, with my friend David Tawil on a small scale.
My conviction is that there is currently no greener grass in our industry than Ethereum. The advantage of a surprise ETF approval is that it compels everyone to reassess their mental models and quickly consider a position in an asset that has severely underperformed and been greatly underappreciated.
I'll conclude the Ethereum tangent here. My aim with this newsletter was to demonstrate that if Michael Saylor can adjust his point of view, so can you. Conviction isn't compromised with new facts; it's reinforced, aligning more closely with the truth. People forget - Saylor was also dismissive of Bitcoin in the early days.
Powerful outcomes arise when conviction meets truth—it's the common goal we all share.
Now that my rant is over, I’ll say this: The week is already showing some promise pricewise. Let's see if Bitcoin can establish $73,000 as support and if Ethereum can steadily approach its all-time high. I suspect Ethereum might surpass its all-time high sooner rather than later, particularly if inflows unexpectedly increase.
Bitcoin Thoughts And Analysis
Bitcoin continues to chop sideways in the upper half of the range, as expected. We also got the retest of $67,000 as support that I was looking for. For now, ETH and altcoins are likely to steal the show as BTC consolidates.
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.
The trade on this is a bit later, as Trading Alpha gave the signal days ago. You can see that we had a breakout and retest of descending blue resistance as support, yellow squeeze shading, two green arrows to signal an entry, a break above the track line and sustained grey dots.
To me, this says that any dip is for buying, and that price should target the next key resistance around $3.
I would be wary if I saw the grey dots end or blue dots print. Otherwise, this looks like it is consolidating for the next move up.
This has been one of the most exciting projects thus far this cycle, riding on the “building on Bitcoin” narrative.
*I own this token
Legacy Markets
Stocks traded mixed as markets reopened in Europe and the US, with investors focusing on inflation data and central bank insights for potential interest-rate cuts. US stock futures climbed 0.2%, driven by a 2.4% premarket gain in Apple Inc. due to rebounding China shipments, while Europe's Stoxx 600 dipped 0.2%, trimming its May gain to 3.2%. Earnings strength from tech giants like Nvidia Corp. has helped offset April’s slump, despite cautious US economic data and Federal Reserve commentary cooling market expectations for policy easing this year. In a busy week for data, traders are particularly watching the PCE deflator, the Fed’s preferred gauge of inflation, expected on Friday.
Treasuries showed small movements ahead of short-term auctions, including two-year and five-year notes on Tuesday. Brent crude remained flat despite rising tensions in the Middle East. In the eurozone, consumer inflation expectations decreased in April, according to ECB data, with policymakers set to meet on rates on June 6. France’s Francois Villeroy de Galhau suggested the possibility of rate cuts in both June and July, though some hawkish ECB policymakers oppose consecutive cuts.
As traders returned from the long weekend, they were also alert to potential issues related to the switch to the “T+1” settlement rule for US equities, which shortens the settlement period from two days to one. Concerns include international investors struggling to source dollars on time and global funds moving at different speeds relative to their assets.
Elsewhere, Bitcoin fell as traders monitored transfers by wallets belonging to the failed Mt. Gox exchange, whose administrators have been stepping up efforts to return a $9 billion hoard of the largest digital asset to creditors.
Some key events this week:
IMF holds discussions with Ukrainian authorities to review economic policies as the country seeks to unlock next tranche of $2.2 billion in aid, Monday
Cleveland Fed President Loretta Mester speaks at BOJ event in Tokyo; Minneapolis Fed President Neel Kashkari and ECB Governing Council member Klaas Knot address Barclays-CEPR International Monetary Policy forum, Tuesday
South African election, the most significant since the end of apartheid, Wednesday
Fed releases Beige Book economic survey, Wednesday
South Africa rate decision, US initial jobless claims, GDP, wholesale inventories, Thursday
New York Fed President John Williams speaks at the Economic Club of New York, Thursday
GDP data published for Canada, euro zone, Turkey, Friday
Japan unemployment, Tokyo CPI, industrial production, retail sales, Friday
Some of the main moves in markets:
Stocks
S&P 500 futures rose 0.1% as of 6:31 a.m. New York time
Nasdaq 100 futures rose 0.3%
Futures on the Dow Jones Industrial Average were little changed
The Stoxx Europe 600 fell 0.2%
The MSCI World Index was little changed
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro rose 0.2% to $1.0876
The British pound was little changed at $1.2774
The Japanese yen was little changed at 156.86 per dollar
Cryptocurrencies
Bitcoin fell 1.4% to $68,591.31
Ether rose 0.6% to $3,911.28
Bonds
The yield on 10-year Treasuries was little changed at 4.46%
Germany’s 10-year yield advanced two basis points to 2.57%
Britain’s 10-year yield declined three basis points to 4.23%
Commodities
West Texas Intermediate crude rose 1.6% to $78.97 a barrel
Spot gold fell 0.3% to $2,344.81 an ounce
Donald Trump Doubles Down On Crypto Support
Donald Trump’s tone and attitude toward crypto have undergone a complete 180-degree turn. Back in 2021, former President Trump labeled crypto a “scam” and asserted, “The currency of this world should be the dollar. And I don't think we should have all of the Bitcoins of the world out there. I think they should regulate them very, very high. It takes the edge off of the dollar and the importance of the dollar.”
While not the harshest political stance on crypto, it reflected the consensus attitude of that time. Fast forward to today, and the difference is remarkable: “I will ensure that the future of crypto and the future of Bitcoin will be made in the U.S. and not driven overseas. I will support the right to self-custody for the nation's 50 million crypto holders. I say this with your vote: I will keep Elizabeth Warren and her goons away from your Bitcoin. And I will never allow the creation of a central bank digital currency.”
It’s difficult to determine to what extent Trump truly believes what he is saying and will follow through on his promises versus simply trying to steal votes from RFK Jr. and attract a new voter base. Regardless, Trump also said, “And if you vote for me, on Day One, I will commute the sentence of Ross Ulbricht,” which would serve as a good gauge on day one to see if he will stay true to his crypto promises—time will tell.
Last point, the only thing more bullish than what he is saying now would be if he announced the country would purchase BTC or BTC and ETH for strategic reserves.
FTX Sells Off Final SOL Tranche
Pantera Capital and Figure Markets purchased the last trove of Solana tokens, valued at $2.6 billion, for $102 per token, well below the current market price. As per the purchasing agreement, a four-year vesting schedule for the tokens will be implemented to mitigate potential market impacts.
From what I gathered from various articles reporting the news, creditors were not happy with the decision to sell at a discount: “Sullivan & Cromwell (FTX’s bankruptcy lawyers) has trampled over our property rights. They have liquidated billions of dollars of crypto assets. There’s a token S&C sold at 11 cents; it’s now trading at two dollars. FTX had $10 billion in Solana tokens — they sold it at a 70% discount.”
I find it odd that a vesting agreement was arranged with the sale. I’m not sure if it’s because FTX was still in a vesting period or if the Solana team had a stake in the sale and wanted to ensure the tokens were not released all at once. I can only speculate here. If there was no prior vesting schedule, it wouldn’t make sense for Pantera Capital and Figure Markets to create a new one. Also, the discount of the sale is probably due to the vesting schedule.
Be Careful With Memecoins
This incident is quite puzzling, with doubts arising over whether the video was an AI-generated deep fake or genuine. Regardless, security laws were blatantly breached, and investors should steer clear. The story unfolds as follows: late Sunday, a post on Jenner's X account began promoting the JENNER token, launched on Pump Fun. Given recent celebrity hacks, suspicions were raised, yet the videos continued unabated, leading to a $50 million market cap within 24 hours. The original posts claimed the videos were not deep fakes, and another celebrity even provided additional evidence of their authenticity. If the token isn't currently trading at $0.00, my guess is that it will soon. Exercise extreme caution—not just because memecoins can rug, but any link can be dangerous.
I Will Die With My Bitcoins | Scott Walker
Scott Walker, an investor and serial entrepreneur, and one of the earliest VCs in crypto, discusses what to expect from crypto during this cycle, how early days in crypto VC investments differ from today, what the true killer app of crypto is, and why he will hold his Bitcoin forever.
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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.