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The Wolf Den #552 - Will Insiders Finally Limit Insider Trading?

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July 29 · Issue #552 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. Will Insiders Finally Limit Insider Trading?
  2. Crypto Soars Despite Macro Conditions
  3. Legacy Markets
  4. Biases Are In Full Force
  5. Ethereum’s Final Stop
  6. Gig Workers Want Crypto
  7. We Are In A Recession, I Guess
  8. My Recommended Platforms And Tools
Will Insiders Finally Limit Insider Trading?
On March 28th, 2006, Congressman Brian Baird (D-WA) and Congresswoman Louise Slaughter (D-NY) introduced a historic bill to end insider trading on capital hill. Dubbed the STOCK act (Stop Trading on Congressional Knowledge Act), the bill was designed to end the centuries-old practice that our elected officials have enjoyed since the 18th century.
Did you know that the first recorded case of insider trading was in 1792 when William Duer, who was appointed Assistant Secretary under Alexander Hamilton, was borrowing money to speculate on the nation’s debt? He subsequently crashed the market and was nearly killed by an angry mob. He died in a debtors’ prison a few years later.
A century passed and nothing changed.
In 1933, the Massachusetts Supreme Court ruled that insider information was a “perk” in Goodwin v. Agassiz. In this case, the president of a mining company was told by a geologist that his mine was sitting on pay dirt. The president scooped up as many shares of his company as he could on the open market and profited immensely. The seller of the shares sued, claiming he wouldn’t have sold had he known what the buyer knew. The Supreme Court ruled in favor of the buyer and considered insider knowledge a “perk.”
Over the following decades, opinions slowly changed and ethics and standards committees met to address this complex issue. Laws were passed around “tipping,” “fraud” and “disclosure,” but major changes never happened.
Major overhauls were finally put on the table in 2006, aimed to end this widespread problem. But nothing happened. Support on Capitol Hill was thin. No surprise.
STOCK did not yet pass.
STOCK is reintroduced in 2007. Nothing happens.
STOCK is reintroduced in 2009. Nothing happens.
STOCK is reintroduced in 2011. Nothing happens.
STOCK is signed into law in 2012. Still, nothing happens.
Yes, the bill named after stopping insider trading failed to actually stop insider trading. Other than some minor changes, mostly involving transparency, nothing actually changed. The COVID pandemic turned out to be one of the most profitable times to be an elected official, and Nancy Pelosi is still gunslinging shares of NVIDIA like her life depends on it.
Highway robbery in broad daylight.
Congress has continued to beat Wall Street at its own game.
But maybe there is an end in sight.
Legislation is being proposed under Democrat leadership that bans lawmakers, their spouses, and senior staff from trading stocks.
In other words, there will hopefully be an end to middle-aged stay-at-home spouses speculating on endangered steel manufacturers, always at the perfect moment. (This actually happened in 2020, you can read about it HERE).
This new legislation doesn’t mean lawmakers can’t invest; it just means they can’t invest using their inside knowledge. Lawmakers will still have the option to utilize qualified blind trusts for investing. This is a fair compromise for those that make the rules.
The legislation has seen support from both Democrats and Republicans, but it raises questions as to how spouses that are brokers will continue to work and demands more diligence for staffing to approve the trusts. The downsides are there, but are negligible considering the positive change. An end to this pervasive problem may finally be on the horizon.
Hopefully it passes.
Crypto Soars Despite Macro Conditions
This report is written by Daniel Ferraro. Twitter: @danielferraros
Crypto Soars Despite Macro Conditions
Bitcoin and the crypto market, in general, have been in a consistent uptrend despite the latest reports that indicate that we might be heading into a recession. The latest CPI data was 9.1%. Combined with a negative GDP report yesterday, this has historically signaled an economic recession.
But despite all of that, altcoins recorded double digits gains while ETH climbed above $1,700 for the first time since June 10. While the GDP report was certainly negative, that data is barely relevant for asset prices.
As Powell stated before: “I tend to take first GDP reports with a grain of salt… GDP data is subject to major revisions”.
The news appears to be priced in already and with possibilities of inflation going downwards, crypto-assets have been soaring considerably. The correlation with traditional assets is currently at a 3 month high.
We spotted a few interesting on-chain insights signaling positive movements. 
As the price of Bitcoin crosses the $24,000 barrier once again, the number of addresses profiting from their $BTC positions surpassed 50%. The GIOM  indicator aggregates all addresses’ positions into clusters based on the number of addresses (or volume) that had previously been bought at a certain price range. The larger these clusters, the more support/resistance is expected around these price levels.
At a price of $24,000, there are now 25.52 million more addresses in profit, with 20.35 million at a loss. This suggests that a high proportion of the addresses that were at a loss last time prices were at this level decided to double down on Bitcoin at lower prices.
And the accumulation by small holders of BTC continues.
Increasing from 5.25 to 6% - The balance held by address with < 1 BTC has been increasing continuously since June.
  • Addresses holding 0.1-1 BTC increased their balance by 2.86% in just 30 days, becoming the largest growing cluster of BTC holders
  • Long term accumulation by HODLERS continues, as experienced before in other bear markets.
Legacy Markets
US Futures Jump on Earnings, Cooling Fed-Hike Bets: Markets Wrap - Bloomberg
The Eurozone reported record inflation at 8.9%, but smashed growth estimates by roughly 3x expectations, dampening recession fears. Amazon and Apples smashed earnings. Some good news, for once!
Some of the main moves in markets:
Stocks
  • Futures on the S&P 500 rose 0.7% as of 7:15 a.m. New York time
  • Futures on the Nasdaq 100 rose 1%
  • Futures on the Dow Jones Industrial Average rose 0.2%
  • The Stoxx Europe 600 rose 0.8%
  • The MSCI World index rose 1.2%
Currencies
  • The Bloomberg Dollar Spot Index fell 0.2%
  • The euro rose 0.2% to $1.0218
  • The British pound was little changed at $1.2171
  • The Japanese yen rose 0.7% to 133.39 per dollar
Bonds
  • The yield on 10-year Treasuries advanced two basis points to 2.70%
  • Germany’s 10-year yield advanced six basis points to 0.89%
  • Britain’s 10-year yield advanced eight basis points to 1.94%
Commodities
  • West Texas Intermediate crude rose 2.2% to $98.56 a barrel
  • Gold futures rose 0.5% to $1,777.50 an ounce
Biases Are In Full Force
The strength of the crypto echo chamber is beginning to pick up full force, regardless of your bias. It is readily apparent on social media, with both sides deeply entrenched.
Bulls are convinced that the Fed has pivoted, the merge will flip Ethereum over Bitcoin, alt season is upon us, and the worst has definitively passed.
Bears are convinced that the Fed has not pivoted, stables are the last safe asset, the contagion hasn’t been contained, and the market is in one massive bull trap.
As for me, I’m continuing to dollar cost average and stick to the plan. Complicated, right?
Biases and news are noise, not signal. There’s no reason to change anything if you have a long time horizon.
Ethereum’s Final Stop
Ethereum dev confirms Goerli merger date, the final update before the Merge
The date of the final testnet merger has been announced for August 4th. It should complete between August 6th - 12th. Dubbed Goerli, the merger will consist of two phases and act solely as a dress rehearsal to make sure all new code fits. This is the closest we have ever been to Ethereum 2.0. After this, there is nothing left but the merge.
Not everything is guaranteed to go smoothly. There has been a resurgence of talks around a contentious hard fork for Ethereum, similar to the BTC vs. BCH situation. If the movement gains enough traction, the chain could split at the time of the merge, leaving Ethereum to exist in its old POW state and also in its new POS state. It’s a headache for devs, dapps, and stablecoins, but for average investors, it can be a chance to acquire more coins. We will have to wait and see.
Gig Workers Want Crypto
50% of gig workers prefer portion of salary payment in crypto, study reveals
A recent survey from digital asset platform Baakt discovered this shared sentiment regarding gig worker preferences: “38% said they were open to getting paid in crypto and openness rose to nearly 50% when asked if they were open to getting paid a portion in crypto.” Gig workers can loosely be defined as workers outside of traditional income-earning positions. A gig worker could be your Uber Eats driver, a freelance writer, or an independent contractor that sells a service. Interestingly, the survey data was collected at quite possibly the worst time in crypto (the depths of the bear market), which could be indicative of real numbers being even higher if sentiment slightly improves with prices.
Here are a couple of stats from the survey:
Potential for increase in value of pay rated as the most compelling reason for getting paid in crypto (49%), followed by getting paid immediately instead of a waiting period (26%), it is non-tangible currency that can replace cash (13%), and its potential as a long-term investment plan for retirement (11%).
Within the gig economy workforce, there are differences among the type of worker who is open to getting paid a portion of income in crypto, with freelance writers/designers/developers and property renters with the highest openness rate (62%), followed by rideshare drivers (56%), and grocery shoppers (55%).
We Are In A Recession, I Guess
Gross Domestic Product | U.S. Bureau of Economic Analysis (BEA)
The Bureau of Economic Analysis has released long-awaited GDP numbers Sure enough, we are technically in a recession. Keep in mind that the BEA has only released an estimate based on data up until today. The second estimate, which is, “based on more complete data” releases this August 25th.
Real gross domestic product (GDP) decreased at an annual rate of 0.9 percent in the second quarter of 2022, following a decrease of 1.6 percent in the first quarter. The smaller decrease in the second quarter primarily reflected an upturn in exports and a smaller decrease in federal government spending.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to “Buy,” “Sell,” or “Hold” an investment.
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