So the Bakkt futures contract would, via proxy, open spot trading on a fully regulated exchange - no more using unreliable crypto exchanges for spot bitcoin. This is huge to attract institutions. Bakkt could thus be an extremely bullish development IF demand is there. BIG if.
On the flip-side,
- Don't see much demand at the moment => low liquidity for a while.
- Low liquidity won't improve ETF odds.
- Could be fully priced in.
- Information provided by ICE/Bakkt is limited at best.
It also is focusing on "consumers" rather than traders/investors.
In 2017 I wrote an article on how ICOs were dreadful for investors and why there was a bubble. Asked some big names to put my piece out. Market was raging, nobody cared. Ignored but for @lopp who added it to lopp.net. Reading it should have saved investors big $.
This is it: hackernoon.com/all-you-need-t…. Tone was a bit more positive than my thoughts, toned it down to minimize trolling. I am a trader, I traded that bubble. Riding with the masses is great. Yet recognizing a bubble helps not falling in love and getting out.
That said the best piece on the subject I've read is this one by @jlppfeffer. It got me more bearish, and made me change my view on Ethereum. Sharing this now as someone just asked me about this via DM, and thought worth revisiting.
1/ Thread on midterms. Polls indicate Republicans would keep the Senate & Democrats win the House, leading to a political gridlock. Thread covers expected market implications for that scenario. TL;DR bearish for stocks. Scenario is mostly priced in, so if GOP wins, LONG STOCKS.
#1 Higher volatility on risks around:
-budget delays & threat of government shutdown
-disagreements over debt ceiling
-re-opening of Russian investigation
-impeachment talks (close to impossible, yet talks still impact markets)
=> bearish, as volatility reduces valuations
#2 Fiscal drag on inability to agree on budgets =>bearish
#3 Higher infrastructure spending, starting 2020 =>bullish
#4 No further tax cuts =>bearish
#5 Increased uncertainty around forecasts =>bearish
#6 Opposition to immigration reform =>neutral
#7 No border wall =>neutral
Understanding an asset and its competitive landscape is more important than charting. The largest trades are driven by news & fundamentals. Charting helps in many ways. The best approach to markets combines both fundamental and technical analyses.
The strongest moves, those driven by big stories and big flows, can take a long time before offering a pullback. Dip buyers thus often miss the boat. The bitcoin run of late 2017 and the equities Trump train of 2016 are great recent examples.
If one doesn't know how to trade and catch a running train, one may turn into a bitter conspiracy theorist, who justifies missing the train with "this market is clearly manipulated, it's all a scam, it's just melting higher for no reason".
Fantastic newsletter by @BitMEXResearch. It has a great take on stable coins. I particularly like its take on volatility. Low volatility is NOT bullish. A soul crushing down candle can come out of nowhere and easily crash a market with depressed volumes. (mailchi.mp/96b261906bf9/c…)
And there is no charting way to predict such soul crashing candle. No RSI or MACD or Ichimoku or Fib or trendline can tell us when it is going to happen, if it happens. One can only react to the ripple effects such whale would generate.
This makes me think of the Pacific Rim monsters, the Kaijus. In the movie they attempt to predict their appearances.
Nobody is supposed to save in fiat. Fiat is not designed to appreciate in time. Well managed fiat depreciates slightly every year, by design. For saving, invest in financial or real assets. Can also retain value by using a MONEY MARKET account instead of a savings/checking acct.
Opening a money market account is as easy as opening a regular bank account. Investing in stocks is as complicated as investing in cryptocurrencies. And investing in a financial instrument that replicates the performance of the Dow Jones is as easy as buying Bitcoin.
Therefore, contrary to what some bitcoin maximalists believe, there is no need to invest in a complex portfolio or bitcoin or gold just to preserve value. There are easy alternatives available to all.
- Fed rates trajectory relative to expectations
- China success/failure in reflating domestic demand
- Trump's infrastructure plan (currently half dead, could resurface)
- Extent of trade wars
- Trade wars affect world's GDP growth negatively
- World economy slows down
- US continues growing faster than Europe, UK and Japan
- US slows down. Inflation steady or lower
- Fed continues tightening: rising rates & balance sheet reduction
- Fed expects three hikes in 2019, market two
- Fed becomes more dovish, hikes in line with market
- 10 year UST yields go down
- Yield curve continues flattening
Bridgewater's asset classes environmental boxes framework and its All Weather asset allocation. Each bucket does well in a particular economic environment. #investing
The world is shifting towards slower growth relative to expectations, as markets underestimate the impact of reduced central bank liquidity. Not sure where we are on the inflation side, as inflation expectations have already shifted up drastically in the last two years.
Want to get large asset allocators like Bridgewater interested in bitcoin? Prove how it responds to varying growth and inflation relative to expectations.
3/ Auditors only be able to perform an agreed upon procedure (attestation report) => must instead rely on a 3rd party to attest to whether an assertion (1:1 backing) is accurate. A quick procedure any properly supervised first year associate can perform.
CT has screamed "alts season", "bullish af", and "alts about to pop" so many times in 2018 it is laughable. Yes, bulls will eventually be right, yet timing matters, e.g. even after popping +70% since Oct/10 lows, $BAT still lower than three months ago.
Volumes speak of a sick market. The drop in volumes is extreme. Across all crypto, not just bitcoin.
Used $BAT as example to illustrate how even when handed easy money as with $BAT, thanks to the Coinbase listings, most of those who have been repeatedly bullish and bought accordingly (and hodled instead of take a loss) are still down after +70% in two weeks.
If you are a for profit company with a very large balance sheet and have high reason to believe tethers are not fully backed by USD, you unleash a bank run and keep on shorting until Tether runs out of dollars.
#1 Directional speculator sells USDTUSD in Kraken
#2 Arb trader takes other side, buys USDTUSD
#3 Arb trader sends USDT to Bitfinex to get USD
#4 Bitfinex credits arb trader with USD
#5 Bitfinex redeems USDT for USD with Tether
#6 Arb trader withdraws USD, sends to Kraken
While shorting USDTUSD, price keeps going down. If short goes on until the end, then:
If USDT not fully backed by USD, eventually Tether runs out of USD, directional speculator hits home-run on USDT shorts, arb trader is stuck with worthless USDT, and Bitfinex/Tether go bust.
Can we please stop with the Tether FUD and unsubstantiated allegations? Even @novogratz, a self-made billionaire and crypto entrepreneur with significant skin in the game, believes tethers are backed 1-1 by US dollars.
Lots of emotional responses. Yes, Tether has let the marketplace down by not providing the regular audits promised on its whitepaper. Big stretch though between being unhappy with that and believing in unsubstantiated allegations. Seems like I should write a piece on Tether.
I don't defend Tether, I am highly critical of it, believe the marketplace will make it progressively disappear due to its own incompetence. I stand against the spreading of unsubstantiated allegations, which is very different.
$BTCUSD levels: 6850, 6650-6600, 6400, 6250, 6150. I like longs above 6400, and shorts below 6250. Fact that Tether crash made crypto spike rather than crash was bullish.
No reason to believe "the" bottom is in. Crypto remains a shit-show. Alts are mostly overpriced useless speculative vehicles. Bearish news have not been moving the market, yet neither have bullish news. The rabid Yale and Fidelity rallies were not precisely exhausting, right?
This market can always crash (or pump) out of nowhere. Technically a break of 5750 should push prices much lower. I do believe though a flush down, if any, would be temporary.
My bubble talk was not very popular though. It generated some overly aggressive responses and nocoiner accusations. Whoever didn't see the crypto bubble in late 2017 and early 2018 was experiencing severe tunnel vision.
It is easy to bash those who recommended to buy crypto in Dec/2017. And fair. Yet we all experience tunnel vision sometimes. Furthermore, if the one making a call is a trader, realize good traders are used to being wrong, taking a loss, and flipping direction.
Saudi Arabia vowed to retaliate if Trump follows through on 'severe punishment' threat over Saudi critic gone missing. Oil will go ballistic this week. Topside is particularly vulnerable after last two weeks drop. #OOTT