Bitcoin and Crypto Market Updates (March 20th)
Bank contagion persists… Bitcoin remains strong.
Over the weekend we had a shock announcement from the federal reserve: https://www.federalreserve.gov/newsevents/pressreleases/monetary20230319a.htm
Central banks across the world take coordinated action to ease up liquidity in markets. Put simply this action allows nations to swap their currency for USD at the federal reserve at an agreed rate. The fed is essentially used as a USD loan vehicle and the fed makes interest on the loan repayments.
Due to the fallout in Europe with the banks, the liquidity has frozen so these actions are used to ‘’oil the system’’
Is this a form of QE? I need to do more research here to determine whether it is OR not. It’s worth noting that these swap lines were already open… just on a week-by-week basis. The announcement on Sunday changed it to a day-by-day basis — making it more fluid and easier to get liquidity QUICKLY. So on that basis alone I don’t see this as QE… the programme was already there to use… Just not on a day-by-day basis.
It’s early days but looking at the market reaction I think this is being viewed as more of a panic move from central banks (VIX UP). History tells you that these ‘’panic moves’’ from central banks typically come before everything blows up… Not to be dramatic but that’s just the way it’s usually gone.
On the legacy market/stock side my view and positioning haven’t changed: Long VIX while I rotate into recession names, gold and long-duration bonds like TLT.
One aspect of the market that is REALLY interesting here is what’s happening with BTC. WHY hasn’t BTC been under pressure, why is it now moving with gold, is it now being used as a hedge (what it was built for), is it just moving up because of expectations around QE / a looser fed / weaker USD?
I’m going to try and answer those questions today in the Discord group in a separate report.
If this is genuinely it… then expect DOM to rip and get ready to make generation wealth accumulating BTC. So a pretty important thing to understand.
$1 million bet on BTC to $ 1 million
Former Coinbase CTO, Balaji Srinivasan, has made a bold bet on Bitcoin’s performance, predicting that it will reach $1 million within 90 days. Srinivasan’s prediction is based on his belief that hyperinflation in the United States will lead to a crisis that will deflate the US dollar and cause a surge in the price of BTC. The bet was initiated on Twitter when a user under the pseudonym ‘James Medlock’ offered $1 million to anyone who disagreed that the US would experience hyperinflation. Srinivasan accepted the bet, and if he wins, he will keep 1 BTC and receive $1 million worth of the dollar-pegged stablecoin USD Coin. Srinivasan has moved $2 million into USDC for the bet and believes that buying Bitcoin is a wise investment in the current economic climate. Publicity stunt or does he really believe hyperinflation happens in the next 3 months?
The Billion Dollar Arbitrum Airdrop
Arbitrum, the most popular Ethereum layer 2 scaling solution, is launching a token. The new token, ARB, will be distributed to community members on March 23. The new tokens will be distributed as follows: 11.5% to eligible Arbitrum users, 1.1% to DAOs in the Arbitrum ecosystem, and the remaining 43.4% will go to the Arbitrum DAO treasury controlled by ARB holders. ARB’s total circulation will be 10 billion, with 44% going to investors and employees of Offchain Labs, the firm that built Arbitrum. Currently, an ARB IOU token is trading at around $10, although this is unlikely to be a reliable launch price considering it would value the token at around $100 Billion. Arbitrum’s main competitor, Optimism (OP) is currently trading at an $11.3 Billion market cap and would be a better indication of the ARB token price around launch. We may see $1-$2 or above on Thursday.
BlackRock CEO Larry Fink: tokenization could “drive efficiencies in capital markets”
BlackRock CEO Larry Fink believes that digital assets and underlying technologies in the digital assets space could have exciting applications for the asset management industry. Fink highlighted how some countries like India, Brazil, and parts of Africa are making significant headway in terms of faster and more efficient payments, leaving developed markets, including the US, lagging behind in innovation. The BlackRock CEO believes the asset management industry is yet to utilise some of the most promising technologies in the digital asset space, specifically, the tokenization of assets, which could drive efficiencies in capital markets, shorten value chains, and improve cost and access for investors. Despite acknowledging the risks associated with participating in the digital assets industry, Fink believes that the next generation of securities will be the tokenization of securities.
Epic Games has almost 20 Crypto Games in Store Pipeline
Epic Games, the developer behind the popular game Fortnite, is jumping on the crypto-gaming trend by planning to add nearly 20 more crypto-powered games to its online marketplace by next year. The company already has five such games on the platform, including Blankos Block Party, a multiplayer game launched by Mythical Games. Although Epic won’t be developing or publishing any of the games itself, Steve Allison, head of the Epic Games Store, has said that the early success of Blankos Block Party and Core, a metaverse platform, is encouraging. Epic Games have maintained the position that all games will undergo thorough scrutiny to protect the consumers from any “bad behaviour” from crypto game publishers
Trading With a Bias
As a trader, one of the most important skills you can develop is the ability to form and maintain a bias in your trading. A bias is simply your overall view or opinion on the direction of a particular asset, market, or economy. Having a bias can help you make better trading decisions, stay focused on your goals, and avoid emotional trading.
So, why is having a bias so important in trading? Here are a few reasons:
- Helps you stay focused: When you have a bias, you have a clear idea of what you want to achieve in your trading. This can help you stay focused and avoid getting distracted by market noise or short-term fluctuations.
- Improves decision-making: By having a bias, you can make better trading decisions. You will be less likely to second-guess yourself or make impulsive trades, as you will have a clear view of what you want to achieve.
- Avoids emotional trading: Emotional trading is one of the biggest pitfalls for traders. When you have a bias, you can avoid making trades based on fear or greed, as you will have a clear view of the market and your goals.
So, how do you form a bias in your trading? There are several factors you can consider, some of them could include:
- Macro analysis: This involves analysing macroeconomic data such as GDP, inflation, and employment figures. By looking at these factors, you can get a sense of the overall health of the economy and determine whether it is likely to improve or worsen. If you believe that the economy is likely to improve, you might form a bullish bias on the market.
- USD strength: The US dollar is the world’s reserve currency and is therefore a crucial factor in many global markets. By analysing USD strength, you can get a sense of how the market is likely to move. For example, if the USD is strong, it might indicate that investors are seeking safe-haven assets, which could lead to a bearish bias on riskier assets such as stocks.
- HTF trends: This refers to the overall direction of the market over a longer period of time, such as several months or years. By analysing HTF trends, you can get a sense of the overall direction of the market and form a bias based on that direction. For example, if the HTF trend is bullish, you might form a bullish bias on a particular asset or market.
You can simplify or complicate the process as much as you want, but keep in mind that the ultimate goal of shaping any bias is being able to answer this question:
Where do you think the price is going, Up or Down?
Once you have formed a bias, it’s important to respect it by favouring setups that are in line with it. This means either looking for trades that are consistent with your overall view of the market. For example, if you have a bullish bias on a particular asset, you should favour longs vs shorts, or at least size them differently.
As important as it is to have a bias in trading, it’s equally important to stay fluid and be ready to change your bias when something changes in the market. While having a bias can help you stay focused and make better trading decisions, it’s essential to remember that the market is constantly changing, and you need to be able to adapt to those changes; staying fluid doesn’t mean abandoning your bias altogether but staying alert to spot fundamental changes and ready to react.
In conclusion, having a bias is a critical component of successful trading. By analysing multiple data such as macroeconomic, USD strength, and HTF trends, you can form a bias that’s going to help you stay focused and avoid emotional trading, increasing your chances of success. But always remember that any bias has an expiration date and the sooner you can drift a change in it the better the opportunities you might get.