Bitcoin and Crypto Market Updates (December 12th)

Huge week this week

• Tomorrow: CPI

• Wednesday: FOMC

• Friday: HUGE OPEX

Looking at the action recently and as I’ve highlighted several times already what we seem to be seeing here is a shift from inflation fears to recession worries. The market’s battling between these two narratives on a daily basis.

Last weeks PPI data spiked due to food prices and I keep hearing ‘’The PPI was only high because of some specific food inflation, everything else was down’’

Hahaaaa… its COPE on a disgusting level. Ask yourself this… Has your food bill OR energy bill gone down drastically in the last few weeks? Because MINE HASN’T!

Yes we’re seeing signs of deflation on an EPIC scale and I do think the fed will achieve its goal of bringing inflation down in 2023 – Possibly to 2/4%. But at what cost? What will it take? Will this be done by Q1? I seriously doubt it.

In short Its going to take a lot more and the fed is walking a very very fine line… One misstep and Kaboom, so the downside risks are huge.

I look at the landscape in traditional finance today and there’s a eerie feeling I can’t shake – We have seen the effects of tightening liquidity in crypto… This lack of liquidity coupled with panic has exposed so many levels of shit, bad actors, broken ponzi systems and downright fraud.

We’ve been on a decade long bull run in traditional finance and while this has been happening the ‘’system’’ has become more and more complex. FX swaps, leverage, loans on top of loans and HUGE build ups of USD debt.

I’ll be totally honest… I’m not smart enough or experienced enough to pin down exactly where the risks lie. I think very few people are. BUT I do know one thing… Where there’s ‘’opacity’’ – when things are overly complex in a web of things that are hard to understand there’s usually a reason for that… They don’t want you to understand because if you did there would be uproar.

In short I think something goes boom soon and we’re left the statement’s – ‘’What have we built here?’’ ‘’where did it go so wrong’’ ‘’How did we not see this coming’’

DON’T be left holding the bag.

Binance FUD ?

Binance has committed to transparency in recent months concerning their exchange solvency and proof-of-reserves. An article published by The Wall Street Journal raised some issues around Binance’s recent ‘audit’ as the checks conducted were done with “agreed-upon procedures” meaning conditions set out by Binance themselves. It was also stated that the letter wasn’t an audit report, it didn’t address the effectiveness of the company’s internal financial-reporting controls. The global accounting firm which conducted the report, Mazars also stated they would “not express an opinion or an assurance conclusion,” referring to an inability to vouch for the numbers themselves.

LUNA Price Manipulation

US federal prosecutors are apparently investigating Samuel Bankman-Fried for his potential role in manipulating the prices of LUNA and UST leading to their collapse earlier this year. Although the investigation is very early and it is unclear if there was any wrongdoing on SBF's part, it comes as little surprise after the collapse of FTX. The claim is that the prices were manipulated and ultimately caused the Terra ecosystem collapse for the benefit of SBF-controlled entities.

Release of Staked ETH

Ethereum developers have announced that the staked ETH related to the network's transition to proof-of-stake will be available for a withdrawal around March 2023. This will be introduced with the network's hard fork dubbed “Shanghai”. Around 13% of all ETH is currently staked in the network.

NFT Use Case

One of the world's largest asset managers is exploring use cases for NFTs after issuing an NFT to certain clients themselves. Franklin Templeton’s head of digital assets technology, Mike Muir said “We see NFTs in their literal sense and more generally than just for their application with artwork or collectibles” and that “[An NFT] is an applicable construct for any unique asset for which only one exists”. The asset manager which controls over $1.3 trillion in funds, said they are devoted to finding new applications for NFTs outside of simple art - something which inevitably will have a big future in society.

Starbucks NFT

Starbucks Odyssey is the coffee chain's new Web3 platform built on the Polygon network. On December 8, this was officially rolled out to the world starting with a select group of employees and customers to beta test the product. The full launch is expected in early 2023. Players will be able to participate in interactivities called “journeys” to earn points to gain rewards and access “immersive coffee experiences”. Another huge company adopted Web3.

Nigeria withdrawals in CBDC

The Central Bank of Nigeria is attempting to promote the use of its CBDC by limiting cash withdrawals from banks to $224 a week for its citizens. Even corporate organizations will be capped to $1,154 per week in free withdrawals, being charged processing fees of over $5% and 10% respectively for anything over that. A concerning development which seems to limit the financial sovereignty of its population.

Visa and Mastercard stablecoin settlements

Visa started a fast-track program for crypto startups back in 2019, before Circle (issuer of USDC) joined Visa’s corporate card program enabling transactions in USDC. Visa’s first settlement payments were made with the USDC stablecoin. Mastercard also partnered with Circle and others to enhance its card program for crypto wallets and exchanges. Both Visa and Mastercard announced they had chosen USDC to be the first crypto asset to offer their clients.

What is Trading?

The concept of trading in the financial markets involves buying and selling assets in order to generate a profit. It is a common practice among individuals and institutions who seek to capitalise on market movements and fluctuations in prices.

What can I trade?

Trading can take place on various financial markets such as the stock market, the forex market, the commodity market, the cryptocurrencies market, etc. These markets offer a wide range of financial instruments that traders can buy and sell, including stocks, bonds, currencies, commodities, cryptos and many others.

What is technical Analysis?

Traders typically use technical analysis and other tools to identify opportunities to buy or sell securities at specific prices. They then make decisions based on the information they have gathered and execute trades accordingly.

Making educated guesses using technical analysis (TA) to increase the odds that those guesses might be correct is the main activity of any trader.

One of the main differences between traders and investors is the time frame in which they operate. Investors tend to hold their assets for longer periods, often to achieve long-term growth. Traders, on the other hand, have a shorter time horizon and are typically more focused on making profits from market movements. Traders can make a profit in markets in both directions, longing on uptrends and shorting on downtrends.

Is Trading Risky?

Another key difference is the level of risk involved in the two activities. Investors are generally more risk-averse, as they are looking to protect their capital and generate steady returns over the long term. Traders, on the other hand, are often willing to take on more risk in pursuit of higher returns. Risk management is one of the key aspects that a trader needs to master and follow its guidelines with discipline.

Despite these differences, both traders and investors play important roles in the financial markets. Traders help to provide liquidity and facilitate price discovery, while investors provide the capital that allows businesses to grow and expand.

Trading can be a challenging and rewarding activity, but it is important to have a strong understanding of the risks involved before getting started. It is also essential to have a disciplined approach and a well-defined trading strategy to maximise the chances of success. Conviction, psychology and mindset are other fundamental keystones of traders in order to be able to execute without getting overwhelmed by market volatility.

In conclusion, trading in the financial markets has some degree of complexity, it’s a dynamic activity that involves buying and selling assets using TA looking to generate a profit on a market’s move. Those who are interested in getting started in trading should take the time to educate themselves and develop a strong mindset about the markets and the risks involved.

Once the mindset is set, there is a good understanding of the markets, and the skills needed for doing proper technical analysis are acquired in the moment to execute and carry on with a trading strategy. The process of journaling is fundamental to growing conviction in the system a trader is using to operate and is the only way to find an edge or refine the strategy to make it profitable. Being confident about using a strategy that provides an edge allows you to carry on despite losing some trades in a row.

Stay disciplined! And see you next week