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Mad Hedge Fund Trader

January 13, 2022

Bitcoin Letter

Mad Hedge Bitcoin Letter
January 13, 2022
Fiat Lux

Featured Trade:

(THE TURKISH LIRA AND THE DEATH CROSS COME INTO PLAY)
(BTC), (LIRA), (ETH), (USD)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2022-01-13 11:04:092022-01-13 13:56:30January 13, 2022
Mad Hedge Fund Trader

The Turkish Lira and the Death Cross Come Into Play

Bitcoin Letter

The infamous Death Cross is just around the corner again staring us in the face as another potential liquidity event could drive us lower or higher.

Even if you don’t fancy dealing with this phenomenon, algorithms lap it up and these technical events signal short-term price momentum and the direction of it.

To get even more exact, the death cross is the situation in which an asset's average price over the last 50 days drops below that of its 200-day moving average, an indication that its momentum is toast.

And this event is even more scrutinized after Bitcoin’s disgusting start to the year that has left it languishing in the lower $40,000s.

Not exactly the start we wanted and lots of complaints about the dufus called Fed Chair Jerome Powell and his handling of monetary policy.

Now, we should zone in on the big whales — the ones that hold massive amounts of Bitcoin and by that, I don’t mean 1 BTC or 1.2333 BTC.

All eyes are on them, many have said they will hold until infinity, but that’s easier when you bought BTC 10 years ago and not at $60,000 per unit which is what many retail traders did last year.

As we inch towards the vaunted death cross, will this trigger a 10% escape hatch that deadens the asset?

So far in 2022, Bitcoin has outperformed for just a few days and has been under relentless selling pressure.

To make matters worse, Ethereum appears to be forming a death cross as well.

The macro turning putrid has had a meaningful effect on the drop of Bitcoin prices, and if BTC can get through this death cross quagmire by holding onto the $40,000 level, then that could signal greener pastures ahead in the mid-term.

Speculative investments like Bitcoin are being abandoned under such aggressive tightening. Reports show only 5% of the clients surveyed by JPMorgan Chase expect Bitcoin to reach $100,000 per piece by the end of 2022.

Although the "death cross" is a bearish indicator, Bitcoin's historical record surrounding the indicator remains unclear. When the metric appeared last June, Bitcoin’s performance was dismal. But when the metric appeared last March, Bitcoin’s performance was strong. The emergence of this indicator in November 2019 sent Bitcoin lower.

As the U.S. economy is grappling with rip-roaring inflationary prices searing through the consumer prices to home prices, emerging countries are doing so bad with inflation that some are already completely giving up their own fiat currency.

Sure, El Salvador sucked up all the headlines for nationalizing Bitcoin as the de-facto medium of exchange for their citizens, but Turkey and its massive population of 84 million straddling the European continent have comprehensively pivoted towards Bitcoin as hyperinflation wrecks the purchasing power of the Turkish Lira.

The situation in Turkey is what crypto fanatics want to happen in the United States and it also represents what could unfold if the US Federal Reserve neglect doing their job.

Luckily, we are nowhere near that yet.

The Turkish lira has become so unpredictable that bakeries are closing down by the thousands citing a local currency that has lost most of its value.

In Turkey, cryptocurrency trading volumes using the lira exploded to an average of $1.8 billion a day across three exchanges, according to blockchain analytics firm Chainalysis.

Turks favor stable coin tether, whose value is pegged to the dollar.

The rise of cryptocurrencies in recent years has presented a unique tool kit in which to store wealth, albeit far more volatile, and the shortage of US dollars circulating has forced the hand of the average Turk.

The Turkish lira has lost 40% of its value against the U.S. dollar in the past 5 months.

In the capital Istanbul, on the ground level, the local bazaars are accepting Bitcoin as standard currency over their own Turkish Lira.

This trend could mirror the future for some of these marginal economies that are run into the ground by renegade dictators.

Although the U.S. Federal Reserve has been irresponsible, the degree of policy mistake in Washington is nowhere near as atrocious as the events in Turkey.

There are numerous countries whose population could resort to crypto as a store of wealth including every ex-Soviet republic, big swaths of the Middle East, and major areas of Central and South America along with all of Africa.

My guess is that over time Bitcoin gets elevated as the de facto third currency behind the U.S. dollar and Euro. At this point, Bitcoin is too big to fail and too big to get rid of.

In a time of desperate need and no access to dollars and euros, Bitcoin is giving hope to large parts of the world as the pandemic and omicron inches closer to their shores.

Wait out this sideways correction then we march higher.

 

 

https://www.madhedgefundtrader.com/wp-content/uploads/2022/01/binance-jan13.png 564 954 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2022-01-13 11:02:202022-01-13 13:53:40The Turkish Lira and the Death Cross Come Into Play
Mad Hedge Fund Trader

Quote of the Day - January 13, 2022

Bitcoin Letter

“We've arranged a civilization in which most crucial elements profoundly depend on science and technology.” — Said American Astronomer Carl Sagan

https://www.madhedgefundtrader.com/wp-content/uploads/2020/06/sagan.png 164 180 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2022-01-13 11:00:582022-01-13 13:53:11Quote of the Day - January 13, 2022
Mad Hedge Fund Trader

January 11, 2022

Bitcoin Letter

Mad Hedge Bitcoin Letter
January 11, 2022
Fiat Lux

Featured Trade:

(ANOTHER TECH COMPANY BETS THE RANCH ON BLOCKCHAIN)
(GME), (NFT)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2022-01-11 12:04:072022-01-11 14:42:10January 11, 2022
Mad Hedge Fund Trader

Another Tech Company Bets the Ranch on Blockchain

Bitcoin Letter

GameStop Corp is getting into the nonfungible tokens industry and eyes the crypto industry to launch its new growth strategy.

What are Non-Fungible Tokens (NFT)?

NFTs are coded on the Ethereum blockchain. Ethereum is a cryptocurrency, but its blockchain also supports these NFTs. NFTs store extra information that programs a piece of code uniquely tying it to a specific item.

This unique and non-interchangeable unit of data is stored on a blockchain, a form of digital ledger. NFTs are usually associated with reproducible digital files such as photos, videos, and audio.

NFTs use a digital ledger to provide a public certificate of authenticity or proof of ownership, but do not restrict the sharing or copying of the underlying digital files.

GME intends to create a division in which a marketplace facilitates the buying, selling, and trading NFTs of virtual videogame goods such as avatar outfits and weapons.

They are also likely to sign partnerships with two crypto companies to share technology and co-invest in the development of games that use blockchain and NFT technology, as well as other NFT-related projects.

This could trigger another avalanche of capital into this new industry that has commanded hundreds of billions of new investments in just a few years.

Crypto is the predictable landing stop for GME as their retail gaming business has failed in the face of the pandemic and their stock was only saved by a Reddit Army bidding up the price of the stock in order to dissuade hedge fund managers to profit off its decline.

The truth is that GME’s business model has been crushed as the gaming industries have been uploaded to the cloud and consumers are opting to directly download titles they want straight from their Wi-Fi connection.

Waiting around malls for people to come and pay in-person is an outdated model and instead of joining the cloud and copying the rest of the industry, this drastic change signals they are ready for something vastly different.

They tried executing a few technical changes in order to stage a turnaround, but its loss widened compared with the same period a year earlier. The revenue growth came from sales of hardware and accessories, while revenue from game software slipped 2%.

GME is involving itself in blockchain and NFT technologies as a last-ditch effort to be relevant again.

Luckily for GME, blockchain and NFT is where all the action is and new venture capital is stacking its chips in the fledgling industry as well.

That doesn’t mean they are going to turn the ship around in one day but of course, you want to be where the pie is growing.

GME shares had plunged by more than 45% over the past six weeks signaling that internally, they are desperate for wholesale changes.

The meme mania has largely worn off and to rejuvenate the mediocre business model they are looking for the magic bullet.

It’s not just GME getting in early, a marketplace called OpenSea said it raised $300 million in venture capital and is now valued at $13.3 billion, greater than GMEs valuation of close to $10 billion.

The videogame industry is more than likely to be first mover in the adoption of cryptocurrency, NFTs, and blockchain technology.

Gamers are poised to be among the first to embrace the technologies because this environment feels like something they could make the next jump to conceptually.

In recent weeks, some of the industry’s biggest publicly traded videogame companies have launched or announced plans to sell NFTs, including Ubisoft Entertainment, Zynga, and Square Enix.

GME is among many that are hoping to front-run other investors before this industry explodes 10X which could easily happen.

They don’t want to miss the big thing and they clearly made errors by avoiding the cloud.

NFT is just one technology that has exploded from blockchain and there will be many iterations of useful software that will need to be decentralized in nature.

NFTs have caught on quite well with famous athletes, actors, and musicians who are looking to secure proof of ownership of a digital good representing their image and likeness.

The idea is genius, but some might question if a stash of code is really proof of ownership.

Naturally, there will be non-believers and believers, but if the stars of the world are convinced, which many have already sold items as NFTs, then I believe it will legitimize an industry moving forward and it will grow 100X in the next 10 years.

Or it could easily evolve into something more secure and complex with the next iteration of NFTs.

To grow a tech company, firms are starting to bet the ranch of decentralized apps and crypto.

This is only positive for the long-term sustainability of crypto as we inch towards the metaverse.

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2022-01-11 12:02:552022-01-11 14:41:48Another Tech Company Bets the Ranch on Blockchain
Mad Hedge Fund Trader

Quote of the Day - January 11, 2022

Bitcoin Letter

“It has become appallingly obvious that our technology has exceeded our humanity.” — Said Scientist Albert Einstein

https://www.madhedgefundtrader.com/wp-content/uploads/2022/01/einstein-jan11.png 420 310 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2022-01-11 12:00:422022-01-11 14:41:21Quote of the Day - January 11, 2022
Mad Hedge Fund Trader

January 6, 2022

Bitcoin Letter

Mad Hedge Bitcoin Letter
January 6, 2022
Fiat Lux

Featured Trade:

(THE US FED MOVES FRONT AND CENTER)
(BTC), (ETH)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2022-01-06 14:04:302022-01-06 14:16:20January 6, 2022
Mad Hedge Fund Trader

The US Fed Moves Front and Center

Bitcoin Letter

The US Central Bank has confirmed our biggest fears — they plan to move faster than expected to head off hyperinflation that is crushing the cost of living in the United States.

Bitcoin has never been through this type of scenario before and the bad news for us is that Bitcoin is negatively correlated with the yield of US 10-year interest rate.

The price of crypto isn’t looking past the secular drivers of inflation, mass adoption, and store of wealth at this point because the Fed has usurped the narrative and is front and center.

The Fed is the driving force now of every asset class in the world from fiat currency to housing prices to tech stocks, yes, they are that influential.

I don’t want to sound like a broken record but until there is some sort of solution or handoff creating an easing in the accelerating interest rate expectation, Bitcoin and other cryptocurrencies are capped to the upside and exposed to the capriciousness of rate fluctuations.

The price movement tells the story of the digital gold dropping to the lowest level since its December flash crash as the first month of trading appears to have generated the conditions for unimpressive performance.

I say that because in the world of cryptocurrencies, conditions can turn on a dime, but in the short term, cryptocurrencies of all flavors will have a hard time re-accelerating.

If you had to choose one crypto to hang out in, I would choose Ethereum (ETH) because it will outperform relative to bitcoin in the long run.

This weakness won’t be the case forever. We simply need an event to greenlight the movement into crypto and that will happen sooner than later.

Bitcoin has surged by about 500% since the end of 2019 in the wake of stimulus measures put in place during the Covid-19 pandemic.

Tokens of popular DeFi applications including Uniswap and Aave are also down.

Certainly, this won’t be a buy-and-hold type of year where the price goes in one direction.

The knee-jerk reaction came out of nowhere and buyers of crypto must reload their bullets for when the time comes.

The weakness has really been in all subsectors such as bitcoin mining stocks which took a beating as analysts reconsider their outlooks after a record-breaking year.

Bitcoin had climbed to a record of almost $69,000 in early November after U.S. regulators allowed Bitcoin futures-based exchange-traded funds.

A secondary reason for today’s weakness is the geopolitical flare-ups in Kazakhstan.

The internet shutdown all over the country due to protests against inflationary pricing meaning mining computers are down.   

Why does this matter?

Kazakhstan is the second-largest country for Bitcoin mining, with 18% of Bitcoin’s computing power, so the internet shutdown caused a 12% drop in Bitcoin’s hash rate within a few hours.

The hash rate is not directly correlated to the price of Bitcoin, but it gives an indication of the network’s security, a drop might scare investors in the short term.

Kazakh miners are still offline and it’s yet to see how the situation shakes out in the small Central Asian country.

The reason for these protests were inflationary prices which is a common theme all over the world and particularly higher energy prices will hurt the Kazakh bitcoin mining sector in the long run and could shift them to other jurisdictions.

 

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2022-01-06 14:02:352022-01-06 14:16:47The US Fed Moves Front and Center
Mad Hedge Fund Trader

Quote of the Day - January 6, 2022

Bitcoin Letter

“The civilization that channels energy most effectively always wins.” – Said CEO of MicroStrategy Michael Saylor

https://www.madhedgefundtrader.com/wp-content/uploads/2022/01/michael-saylor.png 502 280 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2022-01-06 14:00:442022-01-06 14:22:51Quote of the Day - January 6, 2022
Mad Hedge Fund Trader

January 4, 2022

Bitcoin Letter

Mad Hedge Bitcoin Letter
January 4, 2022
Fiat Lux

Featured Trade:

(BITCOIN HOLDS STEADY)
(BTC), (MSTR)

https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png 0 0 Mad Hedge Fund Trader https://madhedgefundtrader.com/wp-content/uploads/2019/05/cropped-mad-hedge-logo-transparent-192x192_f9578834168ba24df3eb53916a12c882.png Mad Hedge Fund Trader2022-01-04 13:04:552022-01-04 14:19:44January 4, 2022
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