Tough day for the US and many parts of the world. Better days to come, let’s hope!
Have you had a chance to read my Substack newsletter recommendations? If not, see the list.
I subscribe to more newsletters but Substack only lets me put 7 on my list! I’ll try to mention other newsletters more often.
For example, Meanwhile in the Markets…, which launched this summer.
They do “macro” as well as anybody, succinctly, in weekly digests on key stories and emerging trends. Definitely worth a read.
In my most recent update, I looked at some of my own emerging trends forming beneath the surface of the crypto market, pointed out some bearish implications of “bullish” news, and squiggled some lines to project how bitcoin’s price might play out over the next few months if it goes similar to previous market bottoms.
If you haven’t watched the update, do it now.
In the coming weeks, I’ll very briefly share my thoughts on the Top 100 altcoins. I told paid subscribers I would do 25 at a time with each new update, but later realized that will make my updates too long. Instead, I’ll go down the list 10 at a time with each new update.
We got some nice pumpage on September 9, largely from traders getting zapped for speculating short when the price went up. We saw the most short positions liquidated since July 2021 (second most, by USD volume). That means there was a lot of forced buying.
That’s not anything you want to read too much into yet and in any event, a 10% move shouldn’t excite or worry you. This is crypto!
Scroll down for some content you may enjoy.
In last week’s poll, I asked “when will the bear market end?”
Here’s the breakdown of answers:
Already did: 8%
November 2022: 25%
Sometime in 2023: 48%
After the next bitcoin halving: 19%
What do I think?
All of the above! Every answer is correct if you want it to be.
Until bitcoin’s price goes below $17,600, the bear market already ended (in the strictest, “dictionary” sense). At the same time, some people say the bear market will last until bitcoin’s price goes above $69,000, its previous all-time high. Most people will call it somewhere in between, whether that’s this November, next November, or any month before and after.
I’ll have another poll next week.
Dan Morehead, CEO of Pantera Capital, didn’t take that poll but he told Bloomberg the bear market is over and we’re on to the next leg of the bitcoin rally.
You can hear it for yourself in this video.
What do I think?
I think it’s exactly what you’d expect a crypto VC to say. To be fair, if not for the murky prospects of the US, European, and Chinese financial markets, it would be tough to argue against him.
Yet, we find ourselves in unprecedented circumstances and uncertain times. No wonder 92% of you expect crypto prices to fall in the coming months and years.
What happens if equities drop another 25% and bitcoin’s price only drops another 15%? That would throw everybody for a loop. Bitcoin’s price would still be higher than it was in June and you’d be doing better than the US stock market.
It’s interesting to think about all the scenarios you can come up with.
On the Margin posted a podcast interview with Dario Perkins, a financial analyst. In the interview, they discussed a new paradigm for assets and central banks—more inflationary, less efficient supply chains and less effective central banking policies.
Have a listen.
Gary Gensler Wants to Regulate Crypto
Bottom line: US laws can’t tell the difference between people who buy crypto tokens to use the project or to dump their tokens on future buyers—but those laws are designed to protect you from only the latter group of people. On top of that, tokens serve as both utility and equity, a concept US laws never considered. Yet, Gary Gensler doesn’t seem to consider any of those nuances.
My take: spot on. US laws are clear but they make no sense for crypto. Until the US has a new legislative and regulatory framework for crypto, all of the innovation will take place somewhere else. Getting regulatory approval takes a lot of time and money. If Gensler gets his way, no new project will list in the US and many existing projects will have to take down their listings—essentially shutting out “retail” investors from buying and selling cryptos through centralized exchanges. Some would argue that’s good because it means cryptos will have to prove they have value on their own merits, not from speculative buying/selling. They’re right. On the other hand, that approach also shuts off an enormous source of capital and compensation for early users while funneling the best investment opportunities to “accredited investors” and insiders.
Why we care: the US holds about 25% of the world’s wealth and Wall Street controls an even larger share of the world’s financial assets. If taken to its natural extreme, Gensler’s approach will keep that US money from going into most new altcoins and many existing altcoins.
Ethereum should switch to Proof-of-Stake this week, potentially with volatility and a new fork.
Timothy Craig put together some tips for Crypto Briefing in his article, “Playing the Merge: How to Get Free Money From Ethereum's PoS Upgrade.” You may want to read it.
Relax and enjoy the ride!
Weekly Rundown - September 11, 2022