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The Wolf Den #579 - Wall Street Titans Launch Crypto Exchange

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September 14 · Issue #579 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. Wall Street Titans Launch Crypto Exchange
  2. Bitcoin Thoughts And Analysis
  3. Legacy Markets
  4. Let’s Look At CPI
  5. Doodles Receive Venture Backing
  6. Trudeau Shows True Colors
  7. My Recommended Platforms And Tools
Wall Street Titans Launch Crypto Exchange
CPI numbers dropped like Thor’s hammer yesterday, coming in .2% over expectations and chopping the legs out from under markets. The market was betting on an 8.1% print, but the real result was 8.3%.
The macro situation today is unstable, and no different than it was yesterday, two days ago, or two months ago. That does not stop humans from panicking over the slightest change in a piece of data.
The CPI report will be forgotten in a day. Why? Because now all attention will shift to the rate hike slated for next week, with expectations of a 75bps raise now at +80%. Nomura is expecting a historic 100bps hike.
These times are not for the faint at heart.
If you are wondering what all of this likely means for global markets and for crypto specifically, I recommend you take a quick listen to my conversation yesterday with Mike McGlone for Bloomberg. He is always a voice of reason and has a pragmatic approach based on decades of experience.
Bitcoin’s Bottom, Starbucks NFTs, Solana Skyrockets | Mike McGlone, Bloomberg
Speaking of crypto… we had one of the largest announcements of the year yesterday, which was completely overshadowed by a .2% difference in CPI.
Let’s get to it.
Everything just changed for the crypto space. A new exchange is launching, designed specifically to win over the hearts and minds of Wall Street, regulators, bankers, and institutions. Called EDX Markets, this digital asset exchange is the brain-child of Wall Street’s most prominent members, broker-dealers, global market makers, and venture capital firms. Who’s behind it? “Charles Schwab, Citadel Securities, Fidelity Digital Assets℠, Paradigm, Sequoia Capital, and Virtu Financial.”
Fidelity, Schwab, Citadel Securities Plan to Launch New Crypto Exchange
Wow.
The Members Exchange (MEMX) will take full responsibility for all infrastructure and the entire technical buildout. This exchange is like nothing we have ever seen. It is a non-traditional exchange built by traditional finance.
Here’s a comment from EDXM’s Board of Directors:
Crypto is a $1 trillion global asset class with over 300 million participants and pent-up demand from millions more. Unlocking this demand requires a platform that can meet the needs of both retail traders and institutional investors with high compliance and security standards. With MEMX-supported digital infrastructure that eliminates technological and organizational bottlenecks, EDXM will be a safe entry point to crypto and serve as the exchange of choice for trading digital assets on a platform designed for and used by leading financial institutions.
The possibilities of this collaboration are endless, as it bridges together the largest players on Wall Street, in retail investing and in crypto.
We want a spot Bitcoin ETF. This group of companies can likely help make that happen. We want more reliable asset pricing, price discovery, deeper liquidity, and increased market efficiency. That’s already in the works. We want to trade in a safe environment without fear of being non compliant with regulation. That should be the case on this platform.
The possibilities and upside are endless.
Let’s look at the AUM for these firms. Fidelity - $3.7, trillion. Charles Schwab - $7.3 trillion. Citadel - $50 billion. Sequoia Capital - $85 billion. Citadel - $50 billion.
Each of these massive players now has a direct monetary incentive to drive their clients towards crypto, and can do so confidently and with legal precedent.
This will take time, and is in no way a magic bullet. People still need to believe in crypto and buy en masse, which is a challenge in the current market. Regardless, a small percentage of that AUM will find its way onto the exchange, which is a huge boon for a nascent industry.
The Wall Street Power Rangers have assembled, and they will compete directly with BlackRock and Coinbase.
This news did not move the needle, which is astounding. An announcement like this a few years ago would have sent crypto markets soaring for months.
This indicates that we have matured. And also that we are still at the whim of macro, which will change the minute that people become bullish once again.
The saying that “bear markets are for building” couldn’t be more true.
It’s all happening.
Bitcoin Thoughts And Analysis
DAILY CHART
Bitcoin nuked yesterday on a day when the stock market saw its worst rout in over 2 years. Yeah, it was really bad.
As you can see, the 50 MA failed to hold as support, which was also the case on ETH. Many altcoins were testing this line, as I mentioned, and failed to break resistance.
Technically, not much changed here. Market structure is still intact.
4-HOUR CHART
Taking a look at Fibonacci levels, we can see how perfectly this drop played out. Pulling Fibs from 25K to the 18.5K bottom, we can see that the golden pocket, which is the area between the 61.8% Fib and a 65% retracement (not a Fib) was ultimately the top of this move. That is highly expected on asset charts, especially Bitcoin. Price bounced at the 23.6% Fibonacci level for now, although it’s hard to view this as more than a pause in the action. It looks like bearish consolidation after a drop, on decreasing volume. We will have to wait and see what comes next.
The real signal? Overbought bearish divergence with RSI on the 4-hour chart. I was watching this, but did not share it because there was also some hidden bullish divergence that had printed. Either way, once the bear div confirms, watch out below. This is the same signal that we love on the bottom, reversed.
RSI is almost oversold again, so we will watch for bullish divergence.
Legacy Markets
Stock Rout Eases as Traders Assess Policy Outlook: Markets Wrap - Bloomberg
“A semblance of calm returned to markets on Wednesday after the carnage sparked by hotter-than-expected American inflation that prompted investors to reassess the outlook for interest rates and economic growth.”
Here are some key events to watch this week:
  • US PPI, Wednesday
  • US business inventories, empire manufacturing, retail sales, initial jobless claims, industrial production, Thursday
  • China home sales, retail sales, industrial production, fixed assets, surveyed jobless rate, Friday
  • Euro area CPI, Friday
  • US University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
Stocks
  • Futures on the S&P 500 rose 0.5% as of 6:20 a.m. New York time
  • Futures on the Nasdaq 100 rose 0.6%
  • Futures on the Dow Jones Industrial Average rose 0.4%
  • The Stoxx Europe 600 fell 0.4%
  • The MSCI World index fell 0.4%
Currencies
  • The Bloomberg Dollar Spot Index fell 0.3%
  • The euro rose 0.5% to $1.0016
  • The British pound rose 0.6% to $1.1560
  • The Japanese yen rose 1% to 143.12 per dollar
Bonds
  • The yield on 10-year Treasuries advanced two basis points to 3.43%
  • Germany’s 10-year yield was little changed at 1.73%
  • Britain’s 10-year yield declined one basis point to 3.16%
Commodities
  • West Texas Intermediate crude rose 0.3% to $87.54 a barrel
  • Gold futures were little changed
Let’s Look At CPI
Inflation rose 0.1% in August even with sharp drop in gas prices
Here is a quick rundown of the changes in various items:
  • Shelter (+6.2%), food (+11.4%), and medical care (+5.6%) indexes were the largest increases.
  • Gas saw a -10.6% decline.
  • Energy saw a -5% decline. 
  • Energy commodities saw a -10.1% decline. 
  • Food saw a +0.8% increase.
  • Everything else underwent insignificant changes.
Basically, the numbers just haven’t improved very much. Aside from the 3 major increases above, there was an overall (insignificant) improvement in prices.
The Fed is going to stay their course.
If you have more questions, here is a great thread on CPI from James Lavish.
James Lavish
Another CPI reading, another violent market reaction.

So, what exactly is the CPI, and why is everyone so focused on it?

Time for a super simple inflation 🧵👇
Doodles Receive Venture Backing
Doodles NFT Project Raises $54M to Fund Music & Gaming Experiences - BeInCrypto
Thought NFTs were dead? Think again. The recent Series A funding round saw $54M raised for the colorful cartoonish NFT project, bringing the company’s valuation to $704 million. Doodles plans to spend the capital on product development and acquisitions around music, culture, and entertainment, with Pharrell Williams as the chief brand officer. Doodles is partnering with Columbia Records to launch a music NFT experience in the next six months. Now we are left waiting for the release date of Doodles 2, which should elevate the project to the masses.
Cool, I guess?
Trudeau Shows True Colors
Trudeau Pooh-poohs Rival's Crypto Enthusiasm - Blockworks
From Kitco:
“Canadian Prime Minister Justin Trudeau made his thoughts on cryptocurrencies quite clear in a Tuesday Twitter post in response to the pro-crypto platform of the country’s newly elected opposition leader Pierre Poilievre.
“We’ll also call out questionable, reckless economic ideas […] Telling people they can opt out of inflation by investing in cryptocurrencies is not responsible leadership,” the head of state said. 
Trudeau doubled down on those remarks in a separate television appearance, adding that “responsible leaders” shouldn’t advocate for individuals to “invest their life savings in volatile cryptocurrencies.”
These comments from Trudeau come after the Calgary-born Poilievre clenched the role as the leader of the Conservative Party of Canada by winning 68.15% of the votes, setting the stage for a face-off with the incumbent Liberal Party led by Trudeau.”
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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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