A weekly newsletter on actionable digital asset market insights and practical observations with a smidgen of green tea 🍵 insights
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📖 Book of the Month 📖
I first read this book while studying for my MBA in the early 2000s when it was in the 5th edition. I have the urge to revisit this book again and it is in it's now in the 7th edition. I have read thousands of books over the years and thankfully I have many of them saved with notes from Kindle v1.0 days. I will be adding recommended reading to my website but readers here can get what I consider to be key books to read first over the holidays and as we enter Q1 2022.
Listen to this book for free with Audible Manias Panics Crash Book
💭✍🏼 Food For Thought 💭 ✍🏼
The first day of Winter is Tuesday, December 21, 2022. ❄️❄️
The First EU nation has re-entered lock down. I include this note because of the economic knock-on effects and the key fact that you should keep your eye on this "political" reaction function (i.e. political panic) globally --no matter what anyone's opinion is personally. The reaction function of policy makers is what will impact the markets (including digital assets) and what affects your money. Lock-downs lead to more supply chain bottle necks (especially if those lock downs come back to Asia where the manufacturing base lives), more inflation and more loss of purchasing power. This is why people are flocking to Bitcoin --preservation of long term purchasing power (i.e. decades), regardless of short term volatility.
For those who read last weeks discussion on the Fed we did have them come out with a noticeably more hawkish tone. This matters in the context of (i) general market liquidity that impacts digital assets and all risk assets broadly and (ii) the Mid term election in the U.S. and the new "inflation" dynamics. Question: If you are an elected official and your consistuents are in your ear about the "inflation problem" and you need to get re-election what would you be doing? Answer: Probably advocating for getting inflation under control even if this means hitting the stock markets for a time. As one of my mentors used to say, "these folks find themselves stuck in a real pickle." Meaning, the Fed is at risk of raising rates to slow the markets and economy to get inflation under control--which could lead to a policy mistake and trigger a market "event". I am trying to give everyone reading this as much context as possible.
See my book of the month above---I highly recommend you read or listen over Christmas. I will make a video on the book as well to further emphasize this point. What I am personally noodling over is whether the market and market sentiment that the Fed will never raise rates but the politicians wanting to get re-elected pressure the Fed to hike rates with the goal of getting a market reaction with the goal of lowering an overheated market and thus inflation. As they say, be careful what you wish for.
All this macro economic context continues to matter in the face of policy intervention into all financial markets. I first witnessed this in real time in New York on September 15, 2008--that discussion is a topic for another day. In the meantime, this is worth reading.
📖 Quote of the Week 📖:
“Character is Destiny” – Heroclitis
📰 This Weeks Most Interesting Digital Asset News 📰:
1. Coinbase Urges the SEC to Approve the GBTC Spot Bitcoin ETF Conversion - Link
2. Bitwise Launches the Blue Chip NFT Index Fund (only for Accredited Investors now (see my GBTC video on how the shares will likely come to market) - Link
3. U.S. Senators (Rob Portman (R-OH) and Mark Warner (D-VA), Mike Crapo (R-ID), Kyrsten Sinema (D-AZ), Pat Toomey (R-PA), and Cynthia Lummis (R-WY) have requested Treasury Secretary Janet Yellen to keep their original intent in mind as the Treasury Department implements new tax reporting provisions for crypto brokers. - Link
4. Russia Is "Rushing", pun intended, to implement their CBDC in the Face of Threatened Ban from SWIFT (stay tuned for my videos on Stablecoins and CBDCs for additional context) - Link
5. United States Financial Stability Oversight Council (FSOC) voiced its concern over the adoption of stablecoins and other digital assets - Link
6. Polkadot network is fully operational with the initial batch of Parachains officially going live - Link
📈 Top 10 Market Movements by Market Cap over the last 7 days 📉:
📈 Call Out Digital Asset Charts of The Week 📉:
Purpose Bitcoin EFT Assets Under Management (AUM):
The Purpose Bitcoin ETF is the world's first physically backed Bitcoin ETF in Canada (not available to Americans but Canadians and others can buy in). I call out the chart above because this is a traditional ETF product and you can see that despite the negative price moves from Bitcoin the demand for physical Bitcoin from institutional investors remains.
Bitcoin: Net Realized Profit / Loss
Net Realized Profit/Loss is the net profit or loss of all moved coins, and is defined by the difference between realized profit minus realized loss. In layman terms, the red metric above is telling me that a total of $46,726,790.22 was sold at a loss and because this is calculated on a "net" basis this means that there is a high probability that these sellers are people that bought at the top / all time high area of $68,000 earlier in the year. Put another way, the sellers above (and since late November as you see in the red spike down here) bought high and sold low--smh.
Bitcoin: Futures Perpetual Funding Rate - All Exchanges
This chart represents the premium paid between the perpetual future contract price and the spot price for Bitcoin. Where the rate is highly positive this means traders (that are buying the futures contracts) and paying a premium to be long Bitcoin and are very bullish. Conversely, where the rate is negative it shows that traders are very bearish on Bitcoin and the market will actually pay a trader for being long Bitcoin. Here the level is relatively low and this tells you (in my opinion) that traders are in a level headed to slightly bearish view on Bitcoin in the short term and this also means leverage is low at the moment with Bitcoin consolidating.
Bitcoin: Net Transfer Volume from/to Exchanges - All Exchanges
As I have previously gone over Bitcoin continues to flow off exchanges into hardware wallets. See my prior weeks newsletters for historical discussions on this.
Ethereum: Net Unrealized Profit/ Loss Ratio (NUPL)(Updated)
I have updated this chart from last week. We can see that Ethereum is still holding relatively strong as I have noted in prior letters.
Ethereum Burned since the London Hard Fork (EIP 1559)
Updated from last week, the burning of Ethereum is supporting the price. "Burning" means the literal destruction of Ethereum supply which has the effect of decreasing the supply which supports the price in addition to general network demand.
I hope everyone enjoyed this weeks write up!
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