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The Wolf Den #558 - The Ethereum Hype Train

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August 15 · Issue #558 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. The Ethereum Hype Train
  2. Bitcoin Thoughts And Analysis
  3. Legacy Markets
  4. Poloniex Will Support The Ethereum Hard Fork
  5. Arthur Hayes Is At It Again
  6. Another Stablecoin Falls
  7. Brave Browser Will Beat Google By Paying for Your Attention | Brendan Eich, Brave
  8. My Recommended Platforms And Tools
The Ethereum Hype Train
One of the guaranteed constants in crypto is that taking a week off will feel like missing an entire year.
While I was “gone,” the Ethereum merge date was officially set, the possibility of a hard fork became a reality, and a coordinated global attack ended Tornado Cash.
Wow.
And if it wasn’t already obvious enough, everyone is seemingly focused on Ethereum.
Here’s a quick overview of what went down.
The merge is tentatively scheduled for September 15th/16th, making the switch from proof-of-work to proof-of-stake imminent. This upgrade has taken years. Phase 0 started at the end of 2020 and planning on Github spans as far back as 2015. The merge is as big of a deal as everyone is making it out to be.
Many critics point at the “likelihood” of the merge damaging Ethereum. While this doesn’t seem likely, it is certainly possible. To ease your mind, Vitalik just recently said the following at a conference in Seoul: “I don’t expect Ethereum to really be significantly harmed by another fork. My impression from pretty much everyone I talked to in the Ethereum ecosystem is that they’ve been completely supportive of the proof-of-stake effort and united around it.” There’s been a lot of rumors regarding how a fork could destroy stablecoins, lending services, and Dapps, but none of these threats seem to be legitimate.
It will not be socially acceptable or responsible for any crypto entity to support the Ethereum proof-of-work chain outside of miners trying to continue to generate a profit from mining. It would effectively be suicide. Nobody legitimate is going to jeopardize their longevity and take a stand on the Ethereum proof-of-work chain. As I say this, I am knocking on wood, preparing to look stupid. But in all seriousness, things should go well and we have good reason to have faith.
But that doesn’t mean the ETHPoW token won’t have or hold value. Bitcoin Cash and Ethereum Classic are great examples of this. Although most investors consider forks to be ghost chains, they still hold value because they have publicly listed tokens with price and value determined by traders.
The talk about the hard fork leads me to my second point - Ethereum holders are getting free tokens!
Hopefully I will be one of them - as you know, my Ethereum is largely tied up on Voyager, but I digress.
As long as Ethereum miners stick to their guns and continue mining on the old chain, we are going to receive 1:1 Ethereum 2.0 and Ethereum proof-of-work tokens. You might notice that a lot of people are distinguishing ETHPoS vs. ETHPoW, but it will eventually be Ethereum and something-yet-to-be-named when enough time passes.
For advanced arbitragoooors, there’s a big chance to scalp some serious profits here. But 99% of investors/traders should avoid getting fancy. Poloniex has an active IOU market right now for the new tokens and some traders are going to take loans with ETHPoW as collateral. Also worth noting is that bots are going to front run time-sensitive trades, so tread with caution. I’ll discuss Poloniex further below.
And lastly, we have to cover Tornado Cash. 
Are we really surprised that the U.S. government came in hard and fast at another mixer? Bitcoin mixers have been the target of government crackdowns for years. This is yet another overreach and violation of our freedom, but it’s also par for the course. We need more details, but it’s a well-known fact that mixers assist criminals in laundering money, and that is not something that governments are likely to allow. Unfortunately, that means dropping the hammer and blasting the entire platform rather than attempting to stop the individuals who are guilty. Shutting down Tornado Cash is akin to banning Iphones because criminals are using them to coordinate their activity. But the government sees it differently.
The real shame is that coders of open source software are being arrested as a result, but I will reserve judgment on that situation until more details arise. If he was truly arrested simply for programming Tornado Cash, then this is a horrid violation… but we need to wait and see if that is all that he did.
Ethereum is the focal point of the market for now, which is unlikely to change anytime soon. An important metric to watch will be how many current investors opt into staking post-merge. The total locked supply is likely about to skyrocket.
Overall, there are a lot of bullish narratives for Ethereum and as a long-term trade, I love it.
Bitcoin Thoughts And Analysis
WEEKLY CHART
I have avoided looking at charts for the past 10 days, so I am starting from scratch. Not surprisingly, little has changed!
As you can see, we now have 3 consecutive weekly closes above the 200 MA on the weekly chart, which is exactly what bulls were hoping for after trading below for 6 weeks.
Strong support.
Assuming this continue to hold and trends up, we should see prices continue to grind higher. No guarantees here, of course. One news story could send things tumbling.
$32,375 is the most important line now, because a break above would signal the first higher high since the all time high. Everything between the current price and that line is effectively just chop.
Legacy Markets
Stock Market Today: Dow, S&P Live Updates for Aug. 15, 2022 - Bloomberg
Here are some key events to watch this week:
  • Earnings include Walmart, Target, Home Depot, Tencent
  • Hedge funds’ 13F filings, Monday
  • Federal Reserve July minutes, Wednesday
  • New Zealand rate decision, Wednesday
  • UK CPI, US retail sales, Wednesday
  • Australia unemployment, Thursday
  • U.S. existing home sales, initial jobless claims, Conference Board leading index, Thursday
  • Fed’s Esther George, Neel Kashkari speak at separate events, Thursday
Some of the main moves in markets:
Stocks
  • Futures on the S&P 500 fell 0.4% as of 7:09 a.m. New York time
  • Futures on the Nasdaq 100 fell 0.2%
  • Futures on the Dow Jones Industrial Average fell 0.4%
  • The Stoxx Europe 600 rose 0.3%
  • The MSCI World index was little changed
Currencies
  • The Bloomberg Dollar Spot Index rose 0.5%
  • The euro fell 0.5% to $1.0203
  • The British pound fell 0.4% to $1.2089
  • The Japanese yen was little changed at 133.31 per dollar
Bonds
  • The yield on 10-year Treasuries was little changed at 2.83%
  • Germany’s 10-year yield declined four basis points to 0.95%
  • Britain’s 10-year yield declined four basis points to 2.07%
Commodities
  • West Texas Intermediate crude fell 4.9% to $87.56 a barrel
  • Gold futures fell 1.2% to $1,793.40 an ounce
Poloniex Will Support The Ethereum Hard Fork
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Most major exchanges will likely decide to support the Ethereum hard fork. Poloniex already has an interesting setup. If you are a Poloniex user (and degenerate), this is for you. Ethereum holders on Poloniex can navigate to the “swap” page to change their Ethereum into two IOU tokens, ETHW and ETHS. From here, traders can speculate on the value of their IOU tokens. As of Sunday evening, ETHW is priced at $68 and ETHS is at $1885. This puts the current ETHW/ETH ratio at .035.
Arthur Hayes Is At It Again
Max Bidding. (Any views expressed in the below are… | by Arthur Hayes | Aug, 2022 | Entrepreneur's Handbook
In the spirit of (Ethereum) consistency, I had to mention Arthur Hayes’s most recent blog titled “Max Bidding,” in which he outlines his bull case for Ethereum. If you don’t have 39 minutes to spare on it, I will do you the service of spoiling the best parts below.
The blog is centered around 4 possible scenarios, including the likelihood of each and their subsequent effect on Ethereum’s price.
Scenario 1: Fed Pivot + Successful Ethereum Merge (this is what I subsequently present arguments in favour of)
Scenario 2: No Fed Pivot + Successful Ethereum Merge
Scenario 3: No Fed Pivot + Unsuccessful Ethereum Merge
Scenario 4: Fed Pivot + Unsuccessful Ethereum Merge
For the first half of the article, Arthur argues that the Fed is ready to pivot towards supporting the American economy over fighting inflation. There’s about 25 minutes worth of chart porn to support his thesis. I suggest you check it out.
Assuming the FED does pivot and the merge is successful, Arthur predicts a conservative price of $5,000 for Ethereum prior to March 31, 2023.
For the other 3 scenarios, he predicts, “$3,562, $1,081, and $1,600.” He follows up these predictions by assigning an equal 25% chance to each scenario to predict a conservative fair value of $2,815 by end the end of March, 2023. Take it for what you will, but Arthur is clearly an Ethereum bull.
Another Stablecoin Falls
Network and token freeze after Acala exploit raises questions
Acala users had to sit and watch as a hacker minted one billion tokens out of thin air. As a result, the stablecoin depegged by 99%, forcing the founders to freeze the hacker’s wallet.
It was too late.
From the freeze, other features of the protocol including swaps, price feeds, and cross communication also failed.
Another brutal end to a promising stablecoin.
Brave Browser Will Beat Google By Paying for Your Attention | Brendan Eich, Brave
Podcast - The Wolf of All Streets
Can anyone take on internet giants like Google and Facebook? If anyone can, it’s Brendan Eich. Brendan is an internet legend, the brains behind Netscape and Firefox, the inventor of Javascript, and former CEO of Mozilla.
Now, he’s taking on the monster he helped create. He’s the CEO of Brave - a browser that pays users in crypto (via the Basic Attention Token, BAT). Brave is flipping the model that made Google rich by giving users back power, privacy, and paying them for their time and attention. This is a can’t-miss interview for anyone interested in privacy or the future of Web3.
In this episode with Brendan, we discussed:
  • Privacy Concerns with Browsers
  • What Makes Brave Different
  • When Brendan Became Concerned About Privacy
  • How Scared Should We Be?
  • How To Protect Yourself
  • Brave’s Basic Attention Token (BAT)
  • How to Beat Google
  • What’s Next for Brave and Web3
  • Metaverse
  • When Will People Care About Privacy?
  • Technological Privacy Solutions
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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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