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🥜 It gets worse...
PLUS: FED 100% cutting rates
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We're the crypto newsletter that's more exhilarating than a high-speed train ride with a thief... 🚆🔫
What we’ve cooked up for you today…
📉 What is going on?
🤔 Is 2024 the new 2008?
🤔 HODLer breakdown
💰 And more…
MARKET WATCH ⚖️
Prices as at 4:15am ET
Only the top 20 coins measured by market cap feature in this section
WHAT IS GOING ON? 📉
BREAKING: Bitcoin plunges below $50,000, ether under $2,200 amid Jump Crypto moves, US election uncertainty
Everything is f*cked…
It’s rough out there…
Everything is crashing, not just Bitcoin and crypto…
The recent crash accelerated on Sunday, sending Bitcoin back to levels not seen since February.
And Ethereum plunging to prices not seen since December.
But what caused this crash?
Well, the Bank of Japan (Japan’s central bank) is to blame…
Last week, The Bank of Japan raised interest rates from a range of 0% - 0.1% to 0.25%.
This resulted in the Japanese Yen shooting higher and the stock market tumbling.
Increased rates in Japan also resulted in the USD-JPY carry trade unwinding…
Now this is a pretty complex topic but here’s a quick breakdown on how it works:
An investor borrows in a currency with low interest rates, such as the yen, and reinvests the proceeds in a currency with a higher rate of return. (like USD)
If you’d like to learn more about the carry trade, click here to watch an excellent explanation.
This unwinding of the JPY-USD carry trade eventually found its way to the US, where the stock market began to collapse.
But according to Hunter Horsley, clients aren’t panic selling.
Nothing has changed about the thesis for Bitcoin and crypto.
In the next section we’ll discuss whether the Fed missed the mark on monetary policy.
Should they have cut rates at the last FOMC?
We think so.
KEEP YOUR CRYPTO SAFE 🤑
What’s that? You’re still storing your precious coins on an exchange?
It’s time to take control of your crypto.
Now that the bullrun is here, self-custodying your crypto is more important than ever.
To make the most of this bull cycle, you should be using the wallet that’s never been hacked.
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What’s more is that Zengo’s 3FA ensures your account is always recoverable, based on your email account, 3D FaceLock (an encrypted biometric scan), and the Zengo recovery file.
Did we mention it’s completely free and more secure than a hardware wallet…
So what are you doing? Join the millions of customers who choose Zengo to self-custody their crypto today!
IS 2024 THE NEW 2008? 🤔
Have we seen this before?
We may be witnessing a full blown economic meltdown…
That’s the latest out from Fred Krueger.
If you haven’t heard of him, here’s Krueger’s credentials:
Worked on Wall Street for close to a decade 💼
Extremely successful entrepreneur - has exited 10 companies, with some exits in the tens of millions 💰
Studied mathematics, with a P.H.D from Stanford University 📚
In his latest video, Krueger explained that we may be witnessing 2008 all over again.
Back in 2007/08 interest rates were in an almost identical position to where they are right now.
US interest rates
From this peak, rates were cut dramatically. (more than 2% in three months)
So what can we expect from today’s interest rates?
Here’s what Fred had to say:
“We probably should have lowered rates on Wednesday. But of course the Fed decided that they would play it extremely cautiously and say ‘we only want to do it when the data is 100% in our favour’. Well the data just came out and it’s massively in our favour.”
That data that Fred mentions is the US unemployment rate.
And if you’ve been reading our recent newsletters, you’d know that it isn’t good.
US unemployment came in higher than expected at 4.3% for July.
Fred explains that with the way things are going right now, it’s basically a 100% chance that the Fed cuts rates in September.
And we’ll likely see a 0.50% cut instead of 0.25%
“We are going to go a whole percent lower than where we are now by November. But that might not be enough. We could be in a situation, even before the election, where we are in an economic meltdown.”
But there’s a silver lining here.
Fred explains:
“We are almost certainly going to get lower rates pretty quickly. The entire world will shift in about 40 days. The new normal will be rates are going down and they’re probably going to go down to 3%. That’s the new normal.
Now while things may not be looking great in the short-term (as mentioned in the first section).
Lower rates are BULLISH for Bitcoin in the long-term.
“While I think it’s possible that we go lower short-term. I think the reward for sticking this thing out up until and through the election is going to be substantial.”
HODLER BREAKDOWN 💪
Today we’ll be taking a look at the Long / Short-Term Holder Threshold.
Here’s how this metric works:
🔴 Short-Term Holders (STHs): coins that have been held for less than 155 days
🔵 Long-Term Holders (LTHs): coins that have been held for more than 155 days
🟥 Short-Term Holder Cost Basis: all coins purchased in this price range are STHs
🟦 Long-Term Holder Cost Basis: all coins purchased in this price range are LTHs
This metric is extremely powerful as we can see exactly what price STHs and LTHs purchased Bitcoin at. 🔎
The LTH / STH threshold is currently at 3rd March 2024, back when Bitcoin was ~$63,100.
All coins purchased before this date are classified as LTHs.
All coins purchased after this date are classified as STHs.
Today there is currently 13,688,376 Bitcoin in the hands of LTHs. (69.36% of the circulating supply) 💪
Whereas the amount of coins held by STHs is only 3,045,314. (15.43% of the circulating supply)
Recently we’ve been seeing the amount of short-term holders decrease…
This is likely in response to weak price action.
Remember, these short-term holders are more sensitive to sudden price drops compared to long-term holders.
As a result, the amount of long-term holders has begun to increase.
HODLers are waiting out for higher prices before they decide to take profits. (which makes sense, with current price movements)
CRACKING CRYPTO 🥜
Bitcoin falls to $57k as market bleeds amid fears of recession, war. Bitcoin has fallen more than 8% since the start of the weekend to $58,061 — the lowest price recorded in almost three weeks.
ARK Invest Sold $14.8M of Coinbase Shares Thursday Ahead of the Exchange's Earnings Report. Coinbase revenue beat Wall Street analysts' expectations, while profit came in lower than the consensus.
Galaxy Research warns of sustainability issues for Bitcoin layer-2 rollups. Galaxy Research reports that most Bitcoin layer-2 rollups may not be sustainable due to high data posting costs.
Jump Crypto moves hundreds of millions in crypto as prices slide. Jump Crypto appears to be liquidating hundreds of millions of dollars worth of staked ether, among other tokens, as prices slide across the industry.
WHAT WE’RE READING 📚
Want to get even smarter? Check these out.
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Raremints (link) - Daily crypto news
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Bullseye Trades (link) - Daily stock market tips
Crypto Pragmatist (link) - Actionable alpha 3x a week
The Hustle (link) - Get Smarter on Business and Tech
Your Next Breakthrough (link) - Personal growth with Mark Manson
The Neuron (link) - AI trends and tools to keep you ahead
CAN YOU CRACK THIS NUT? ✍️
Select your answer below and you’ll be redirected to the results page. (answer explanation can be found after “Meme Corner”)
How often is the difficulty adjustment in Bitcoin?(approximately) |
MEME CORNER 😂
Because what would the crypto world be without its share of memes?
Trivia Answer: B) 2 weeks 🥳
Mining difficulty in the Bitcoin network is adjusted automatically after 2,016 (2 weeks) blocks have been mined in the network.
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DISCLAIMER: The content of this newsletter is not financial advice. This newsletter is strictly educational and is not investment advice. Please be careful and do your own research.
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