Beginning of Freedom – Issue #96

Following all the news about the ever-increasing odds of a spot Bitcoin ETF getting approved soon, we’ve also got the first attempt at a spot Ether ETF, filed by ARK Invest. As discussed in previous newsletters, we should get the decision on the ETH futures ETF by mid-October, but a spot ETF is, of course, much more exciting.

When it comes to ETH in particular, there’s an additional reason why spot ETFs could be a huge deal, even if it takes a while to go through all the regulatory obstacles. Apart from just the prospect of people putting their retirement savings into spot ETH—so the same reason why a spot Bitcoin ETF would be such a breakthrough for the industry—Ethereum also has staking as an (essentially) risk-free way of earning yield. An ETF that stakes its ETH could generate rewards that are higher than the management fees, making it more profitable than just holding spot ETH without staking it.

Getting something like that approved would be difficult—it’s not like the regulators had PoS assets in mind when the rules were written—but it would be an absolute gamechanger. Imagine TradFi players putting a bunch of money into the staked ETH ETF, earning a few percentage points of risk-free yield (especially when interest rates on USD go back to being negligible) and then just using their yield-bearing holdings as collateral to get some more liquidity to play around with stocks and crypto.

Speaking of ETH, and in relation to the recent streak of phishing attacks across crypto, even Vitalik had his X account hacked, leading to approximately $700k stolen from users that clicked a malicious link posted on his account. In this case it probably wasn’t a simple SIM-swap, but whatever the details, it just goes to show that you shouldn’t click on random links, no matter who’s posting them.

Apart from basic security practices, another way to help keep your money is to watch out for the CPI numbers that are coming out on Wednesday. The Fed has been taking a very “data-driven” approach in their recent comments, so this will influence their next interest rate decisions.

Bitcoin

Bitcoin Weekly

Bitcoin keeps hanging out at the $25,000 weekly support.

Not much has changed since the previous week; bulls are still trying to defend the weekly support as well as the lower high that was printed in June. The 5th consecutive red candle on the weekly is not looking too bullish, but candle bodies are extremely small, indicating indecisiveness among the few traders left in the market.

The longer the accumulation, the bigger the move. To me it seems that both sides are waiting for a narrative to pick up and trade it. I expect some kind of news (e.g., bullish CPI numbers on Wednesday) to heavily impact the markets at this time and once again to suck all of the liquidity from alts and into BTC.

SPX, Gold and DXY

S&P 500

Gold

U.S. Dollar Index

Are stocks printing a lower high?

We discussed the possibility of a lower high last week and now it’s becoming a reality. It’s not a surprise since many are expecting poor CPI data, increasing the probability of further rate hikes. The levels remain as they are; $4325 must hold if we want to see continuation.

Gold back to $1916

I am pretty sure that I have mentioned the $1916 level way too many times, but here we are again. Gold printed another lower high and the structure remains bearish, leaving the path open to new lows. For now, however, $1916 is holding up. 

U.S. Dollar Index is unstoppable 

DXY printed its 8th consecutive green weekly candle and has pumped right into the 105 weekly level. Breaking above here would open a big gap towards 107 and inflict a lot of pain on risk-on markets. Given that these markets aren’t exactly pumping right now, it is no surprise that DXY is going higher.

Ethereum

Ethereum Weekly

Ethereum is mirroring Bitcoin’s price action by resting at support.

ETH is slowly bleeding towards its $1591 support with volume dropping. Decreasing volume as we approach an important level means only one thing: a higher possibility of the level being broken. Whether you want to gamble on the CPI being bullish, that’s your decision, but I am sticking to the technicals, so I am staying sidelined on ETH for now.

Losing $1591 would mean we are going back to the 2018 ATH level at $1400 and that’s where my bids will be unless something changes.

Blood’s content recap

The “I am Too Busy to Learn Trading” starting pack

“- Doing nothing on weekends

– Watch Netflix every evening

– Checks #BTC price every 15 mins

– Scrolls Twitter 3 hours per day

– Sleeps as much as possible

We all have time. Your Focus is the problem.”

Reminder

“You can hold Spot and trade with the same asset.

Many find the trade to make 2x but won’t trade it because that asset is in their long-term bag.

They are emotionally attached to their bags and miss opportunities.

Be different.”

Concluding notes

There’s a reason I mentioned interest rates when talking about the prospects of a staked Ether ETF, and crypto-native people often underestimate how important they are. It’s not as simple as rate hikes being bad for risk-on assets and vice versa because of some magical “rates up = prices down” mechanism; rather, it has to do with how the basic incentive structures for market participants work.

That can sound complicated, but it’s extremely simple: imagine you’re an institution that wants to earn yield on (relatively) delta-neutral strategies. During a bull run, you can find plenty of opportunities to get juicy double-digit yields across DeFi with fairly little risk, especially if you know what you’re doing, while risk-free TradFi rates are negligible. But when you can make 5% on your USD in money market funds and there’s hardly anything in DeFi that offers more than that without taking on a ton of risk—as is the situation now—there’s just no reason to put your dollars on-chain. 

Things will change in this regard: rates will be cut, ETFs will be approved, and money will start flowing in. If you want to make the most of it, all it takes is some patience.