This week, the US Federal Reserve will raise interest rates. It says it will also sell its assets faster than before.
Woe to anybody holding anything that has financial value in the US.
Could be worse, though. Australia’s housing market is a toxic mix of variable-rate mortgages and insanely high property values. China’s real estate market seems on the verge of collapse.
And here we are with crypto.
No surrender, no escape.
While the smart money investors wait to see whether the Fed raises rates by 75 or 100 basis points, it seems silly to think that way. Both decisions get the same result. Until the target rate goes above 4% or inflation goes below 4%, you know exactly what the Fed will do.
Some people say stick to cash. Not a bad idea in all market conditions. When things are zooming, you keep yourself from chasing after the markets, whether that’s crypto or anything else. When things go bad, you can take advantage of those times. This is part of my portfolio strategy.
Consider your options, though. Bitcoin is undervalued based on all historical benchmarks and data models, while most other assets remain elevated (including the US dollar).
We know things are going get worse—we’ve known that for a long time—but nobody knows how bad things will get or how long the bad times will last. Do you upend your finances for a 20% swing in an asset that goes up and down 50% at the drop of a hat?
For that reason, I stick to my plan.
In my most recent update, I gave my opinions on the top-10 altcoins.
I also talked about percent supply in profit. Not even three days later, famous analyst Willy Woo tweeted about that data, with a different chart.
Coincidence?
As I noted in my update, this metric includes 4 million bitcoins that are probably lost but sitting in profit. It also doesn’t account for paper-traded bitcoins on exchanges and investment funds. As a result, it’s skewed.
For that reason, I don’t worry about the specific levels, just the trends and behaviors it reveals.
In my next update for paid subscribers, I’ll look at some other trends and behaviors, and share my thoughts on the altcoins ranked 11-20.
Scroll down for a poll and some news and content you may enjoy.
Poll: do US interest rates matter more than crypto market analysis?
All of the US government’s crypto reports in one place
For those who want to keep up with the US government’s thinking around crypto, The Block published all of the agency reports.
US agencies publish these reports so the public, Congress, and other agencies know what’s going on. They don’t carry any legal weight, they’re published for transparency and commentary. We may not have new rules or regulations for months or years—and nobody knows what Congress will come up with in the meantime.
All of these changes will come in 2023.
On that note:
Nice summary, great that it’s a tweet, and hopefully it gets into the hands of people who can make money off of this information. They will be our biggest advocates in Congress and the White House.
On another note:
Treasury Won’t Punish Dusted Celebs, Will Allow Users to Recover Funds From Tornado Cash
Bottom line: US citizens can create and use mixers but not Tornado Cash. Also, the US government will let you recover any lost funds and will not prosecute you for your past use of Tornado Cash unless they have some evidence you did something illegal.
My take: who’s going to create Hurricane Cash? And what’s this thing about recovering funds? Sounds good but you need to fill out an OFAC license application with your personal information, which defeats the whole purpose of using a mixer. And then you have to wait god-knows how long to get your funds, through some mechanism that seems unclear to me.
Why we care: people think US law enforcement wants to kill crypto. More likely, they don’t know how to police the use of crypto under US laws—which makes sense because US laws make no sense.
This chart from Ecoinometrics shows the growth of the number of bitcoins in public companies and ETFs.
While companies and ETFs added to their holdings, the overall total went down across all entities.
That drop may come from a gap in the data set that went into the chart. Dig deeper and you see that big drop in “governments” comes from the way BitcoinTreasuries.net accounts for Ukraine’s holdings. The 2021 data includes disclosures from civil servants—government officials, not the government itself, but that’s how it’s accounted for. The 2022 data doesn’t exist (yet?) and presumably went into the calculation as 0, which makes it look like governments saw a precipitous drop in their holdings but we don’t really know.
The coming months will tell us a lot about just how strongly these entities want that bitcoin.
Relax and enjoy the ride!
Weekly Rundown - September 18, 2022