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In This Issue:
What Comes After Winning?
Bitcoin Thoughts And Analysis
Altcoin Charts
Legacy Markets
Could Bitcoin Be The End Of Gold?
Hashdex Files For A Dual Ethereum And Bitcoin ETF
Base Passes Binance Chain
The Fear & Greed Index Is Broken
Here Is Why Bitcoin & Crypto Are Bleeding & What Will Be The Next Catalyst
What Comes After Winning?
Here’s a question I field from time to time—it’s one of my favorites.
Hi Scott, I am a decent investor, and I've followed a strategy that has served me well over the years. Recently, my investments have seen significant gains, and I find myself questioning if I should alter my approach. I fear making the wrong decision that could jeopardize the progress I've made. I’m now in a balancing act between protecting my profits and continuing to grow my portfolio. Any advice?
The first thing I say is that I am not a financial advisor and that I can only offer my opinion…
The question boils down to this: When you start making money investing, should you change your strategy or stick with what has been working?
First off, if you're in this position, take a moment to pat yourself on the back. You've earned it, even if you believe luck played a role. This is a good problem to have, one that many aspire to achieve once in their career.
What’s unique about this position is that everyone finds themselves in it at a different time, but typically, it occurs around the million-dollar mark or shortly after. At least, that is what I have gathered most often from those who pose this question to me.
The first key detail to address is whether luck played a significant role in your success. If the answer is a clear 'yes'—for example, holding leveraged NVDA positions for years, striking it big with a memecoin, or perfectly timing a massive short at a market peak—then the initial step is acknowledging and accepting that luck was indeed a major factor. Simple enough. This isn’t always as obvious as it seems.
That said, most individuals in this position didn't reach this conundrum solely due to luck, as our original question implies. If luck was the determining factor, what’s coming next should be obvious: it’s time to dial back the risk and hold onto what you have. A lottery winner has no need to keep playing; winning is your cue to stop.
My instinctual response to this question, without overthinking it, is that I strongly believe investors should refrain from making significant changes to their game plan, regardless of the size of their portfolio.
One way to simplify my perspective on this is to view it through the lens of a poker player. Whether you're a fish playing in a friendly 10-cent-20-cent home game or a seasoned player in a private high-stakes $50-$100 game, your guiding strategy shouldn't vary too much. Good poker gameplay requires players at all levels to follow certain basic principles and sound lines of decision-making.
For instance, when you’re pot-committed with a strong hand and the call is expected to be profitable in the long run, it's prudent to make that call, even if the current hand doesn’t seem likely to be the winner. Likewise, while it might seem tempting to call or limp with premium hands pre-flop in poker, this strategy is proven to be unsuccessful over the long run.
Strong poker players and seasoned investors alike shouldn’t deviate from their core strategy for the sole reason that the stakes are raised.
It's important to note that while this analogy has its merits, it falls short in one key aspect: the skill level of poker players increases dramatically as the stakes rise. However, this is not a concern for investors, as they can maintain the same strategy regardless of the stakes. This underscores the importance of investors not making major changes just because they reach an arbitrary portfolio threshold.
Returning to the topic of investing—although I could talk about poker all day—our concerned investor must carefully consider the balance between the potential returns of taking risks and the security of meeting their basic needs. There's no shame in shifting to a highly conservative approach after a significant win to lock in stability and security for yourself and others. Additionally, the reason this question arose in the first place is likely tied to obligations outside of investing that are weighing heavily on the individual’s mind.
Ultimately, the primary goal of investing is to secure financial well-being for yourself and your family.
Now, what about the investor who didn't arrive here by chance and doesn’t have pressing needs to meet life's basic necessities? For this individual, my advice remains the same: stick to your original plan like glue.
As long as you aren't placing yourself back into significant risk, why deviate from what you know?
As long as there are no fundamental changes in the conviction that got you here in the first place, why fix your strategy if it isn't broken?
What you do need to ensure is that you don’t view your position with the expectation that it will only continue to grow at all times. If your portfolio had higher highs and higher lows to reach the point where you feel threatened by its size, wouldn't it still continue to establish higher lows?
Your net worth should be seen as an asset in its own right, rather than merely a benchmark or personal record that must always increase over time.
I want to emphasize this point again because I believe it's incredibly powerful and often overlooked: Consider your net worth as a distinct asset in its own right. Just as you are comfortable holding an asset through its highs and lows because you believe in its underlying value, afford your net worth the same flexibility and forgiveness. Issues arise when investors impose expectations on their net worth that they wouldn't place on any single asset in their portfolio.
That is 1-of-1 alpha.
In most cases, when I'm asked this question, I encourage individuals to be brave and keep moving forward with the skills that landed them in this position. Of course, there are caveats and exceptions, but I follow this strategy myself, almost precisely, which is why I am comfortable preaching it.
I assure you; nothing changes about this game as you progress. We all share the same excitement when Bitcoin rises and the same disappointments when it falls. Don’t let the numbers on your screen upend you. You can do this; the best is yet to come.
Bitcoin Thoughts And Analysis
Bitcoin was building towards my favorite signal on the 4-hour chart - bullish divergence with RSI coming out of oversold. As you can see below, it was confirmed (there were failed bullish divergences in the middle of this, as they often build).
Take a quick look at the recent top around $72,000. What did we have? Bearish divergence with overbought RSI.
The world is seemingly expecting a trip to $60,000 now that $67,000 support is broken, much like we anticipated a move to the range highs at $74,000.
Wouldn’t it be fun to have Bitcoin put in a local bottom here?
The chop continues either way.
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.
After writing the newsletter yesterday, I took some time to look at a few more altcoin charts, and realized that quite a few tokens were looking somewhat ripe for a bounce. Hard to know if they have bottomed, but there are quite a few coins that are at support, oversold or both. NEAR is a great example.
Here is the chart today.
If you are looking to “catch knives,” then setups like this are a good place to start.
Legacy Markets
European stocks faced challenges in sustaining momentum from a recent US tech-driven rally. The Stoxx 600 slipped by 0.1%, with basic resources and travel sectors showing gains. Despite a holiday in the US, futures for the S&P 500 and Nasdaq 100 edged higher, supported by a surge in Nvidia Corp., which became the world’s most valuable company at over $3 trillion. Global stocks have largely ignored political tensions in France and the possibility of the Federal Reserve delaying rate cuts until December, instead focusing on resilient economic growth. UK inflation dropped to the Bank of England's 2% target for the first time in three years, suggesting a supportive environment for global equities. However, government bond yields in Europe edged higher, with particular attention on France's upcoming parliamentary elections and potential EU reprimands for breaking deficit rules. British 10-year bond yields rose slightly due to persistent high service inflation, while the pound strengthened against the dollar.
Key events this week:
US Juneteenth holiday, Wednesday
China loan prime rates, Thursday
Eurozone consumer confidence, Thursday
UK BOE rate decision, Thursday
US housing starts, initial jobless claims, Thursday
Eurozone S&P Global Manufacturing PMI, S&P Global Services PMI, Friday
US existing home sales, Conf. Board leading index, Friday
Fed’s Thomas Barkin speaks, Friday
Some of the main moves in markets:
Stocks
The Stoxx Europe 600 fell 0.2% as of 9:54 a.m. London time
S&P 500 futures were little changed
Nasdaq 100 futures rose 0.2%
Futures on the Dow Jones Industrial Average fell 0.1%
The MSCI Asia Pacific Index rose 1.1%
The MSCI Emerging Markets Index rose 1.3%
Currencies
The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0739
The Japanese yen was little changed at 157.77 per dollar
The offshore yuan was little changed at 7.2764 per dollar
The British pound rose 0.2% to $1.2732
Cryptocurrencies
Bitcoin rose 0.4% to $65,154.51
Ether rose 2% to $3,530.89
Bonds
The yield on 10-year Treasuries was little changed at 4.22%
Germany’s 10-year yield was little changed at 2.40%
Britain’s 10-year yield advanced three basis points to 4.08%
Commodities
Brent crude fell 0.3% to $85.10 a barrel
Spot gold rose 0.1% to $2,332.63 an ounce
Could Bitcoin Be The End Of Gold?
I was listening to a Robert Breedlove podcast yesterday, and an intriguing segment on gold caught my attention. It presented a perspective I'd never heard before, and it contrasts significantly with what I wrote about yesterday.
Though the idea is unconventional, I believe it's necessary to share it in the spirit of fair reporting and growth. Full credit goes to Robert Breedlove for this concept. His podcast, “What Is Money,” is undoubtedly one of the best productions in this field.
“The first thing I want to mention is a tweet I wrote about this idea of turning base metals into gold. It's important to know that we can already create artificial gold in a lab today. However, we cannot produce gold at a cost below its market price. If we ever reach a point where we can produce gold more cheaply in a lab than it sells for on the open market, it would essentially destroy gold's utility as money. This is because its scarcity would be compromised, and it would no longer store value or purchasing power over time.
This is purely hypothetical, but I think Bitcoin could create the conditions where this is possible. The tweet I wrote says the following:
Gold can already be artificially produced but not yet at a cost below its market price. One of the many mind-blowing aspects of Bitcoin is that it functions as a global bounty program for bringing more cost-effective energy sources into production. How ironic will it be if Bitcoin drives the cost of energy so low that lab-grown gold can be produced below its market price, thereby compromising gold's utility as reliably scarce money and thus destroying its store of value functionality.”
Hashdex Files For A Dual Ethereum And Bitcoin ETF
Hashdex is the undisputed leader in pioneering diversification within the crypto ETF space. They launched the world’s first crypto index ETF and the largest crypto ETF in Brazil. Did you know that in Brazil, crypto index ETFs surpass single-asset products in popularity? Hashdex believes this trend will eventually replicate itself in Europe and the US for several reasons.
In their latest report, Hashdex outlined four key advantages of diversified products:
Risk Mitigation: Essential in the volatile crypto market.
Transparency: Indices adhere to rigorous selection criteria.
Standardization: A common benchmark attracts a broader base of investors.
Time-tested: Diversification strengthens portfolios over the long term.
Now, for the big news... Hashdex has filed for the first dual Bitcoin and Ethereum ETF with the SEC, with the final decision expected around the first week of March 2025. This move represents the next logical step in the ETF space, making more sense than attempting to push through a memecoin like Doge or an asset like Solana, which the SEC has currently classified as a security in multiple lawsuits.
This filing is a win-win for both Bitcoin and Ethereum. Each will benefit from investors who are initially drawn to the product for one asset and, as a result, gain exposure to the other. The product's biggest selling point is its appeal to conservative investors who may not know much about Bitcoin or Ethereum but seek balanced exposure to both assets.
The weighting will be based on marketcaps, pretty neat.
Base Passes Binance Chain
Trading on Base, Coinbase’s Layer 2 network, is rapidly increasing, making it the second-most active network in terms of DEX users this month. According to Dune Analytics, Base's DEX users surged by 53% in the last 24 hours to a record 267,000, surpassing Binance Chain's 154,000 active DEX users.
What’s interesting about this overthrow is that Uniswap accounts for 64% of the DEX users on Base, which recorded 1.3 million daily active users in the past week, capturing 20% of the total market share. So far, over 650,000 tokens have been created on the network in 2024. Memecoins will bring in the masses and solid tech will help them stay.
Solana remains the most popular chain for new DEX traders, capturing 48% of new users in the past seven days and leading in DEX trading volume with $3.35 billion. Also notable is that Base reached $7 billion in TVL in June, becoming the second-largest Layer 2 platform after Arbitrum.
Base is just one of many tailwinds for Coinbase stock. Not financial advice, but once the market breaks back to the upside, I don’t see how the price doesn’t easily shoot over $300.
The Fear & Greed Index Is Broken
There was a time when the Fear & Greed Index was reliable. You could simply ignore the price, buy when the index showed 'fear,' hold until it showed 'greed,' and profit. Now, the metric appears broken across all platforms. When I tweeted about this, Binance’s "Crypto Fear & Greed Index" read 74, CoinStats’ "Fear and Greed Index" read 74, and Cointree's index also read 74. This tells me that all these indexes are following the original, flawed algorithm.
Here Is Why Bitcoin & Crypto Are Bleeding & What Will Be The Next Catalyst
While Bitcoin and broad crypto market are stagnating, let's focus of what can become the next driver for the crypto industry. Joshua Frank, Co-Founder and CEO of The Tie is joining me today to discuss it.
My friend from The Arch Public, Andrew Parish is joining in the second part of the stream to provide an update on the $10K algorithmic portfolio.
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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.