Everybody agrees… A cage match between Elon and the Zuck would be the highest grossing ‘pay-per-view’ event in history. How will you buy your ticket – with Bitcoin (BTC)? BTC is back above its Summer 2021 lows. What’s the risk of NOT owning enough Bitcoin (BTC)? The chart shows that a ton of 2021 support has turned into resistance, but for how long?
- Now that big banks are lining up to adopt crypto, and the SEC is granting active BTC ETF licenses: How fast can Bitcoin get back to $60k?
- If BTC gets back to $60k, what are the chances that it stops there?
Do you have enough BTC exposure? Personally, if Bitcoin is above $31,000 – I do NOT own enough. The risk is NOT that Bitcoin gets back to $60,000, but rather that it goes through $100k.
I need more Bitcoin. The last move for Bitcoin sent prices up 20x from the end of 2018 to 2021. A 20x return from the recent lows would take BTC above $300,000. I'm already long, but if we remain above $31,000 – I want to be very very long.
The Market:
How many times in my life have I heard the entrepreneur say: “We’re trying to make a difference. We just need to find the right people, tell them the right (true) story – that helps them get to where they’re going – and they need to tell all their friends?” Per SG: Let’s dissect this statement:
- ‘We’re trying to make a difference’: No entrepreneur wants to maintain the status quo. Be clear about your ‘difference’, and the ‘first step.’
- ‘Find the right people’: What’s your customer profile? What do they want, fear, and believe? How do you jump from mediocrity to being superior & specific?
- ‘Tell the right (true) story’: Make the story about: status, affiliation, change, and fear – then you can continue to build on it overtime, and users won’t get disappointed.
- ‘Help them get where they’re going’: It’s difficult to get prospects to want something. The opportunity is helping them get what they wanted all along.
- ‘Tell all their friends’: Why would people tell others they trust? They will do it because it: (a) raises their status, (b) increases connection and/or (c) gives them another form of satisfaction and purpose.
After you get all of this figured out, then promotion makes sense.
InfoBits:
- Retailers from Nordstrom to Whole Foods are closing stores… in urban shopping areas where sales are down and retail crime is up.
- RV sales are down by 50% this year… as we ditch the open road and return to normal life.
- When interest rates were zero… banks borrowed short at 0% to lend long at 3%, then rates went up, asset values collapsed, and there was a run on deposits. All of this was predictable except bankers forgot that interest rates could go up.
- U.S. housing starts jumped 21.7% MoM in May. The unit increase was the most since January 1990, and the largest percentage gain since October 2016.
- "I think inflation is a bit stickier… and there's really a chance that rates go higher" – Goldman Sachs CEO David Solomon.
- US regulators approved the first commercial product (chicken)… produced from lab-grown meat. Labs are trying to do what ‘plant-based’ couldn’t.
- US charitable giving dropped 3% in 2022… only the fourth time in 40 years that giving declined.
- ChatGPT in 6 to 12 months will supply… Images, audio, video, and yes – will be smarter.
- BofA thinks that over the next 2 months… banks and commercial real estate will have a recessionary vibe. They believe that the tech rally will fizzle, and give way to bonds.
- The Bank of England raised rates 50bps… as Turkey raised interest rates from 8.5% to 15%. Brazil held rates constant at 13.75% for the 7th month.
- Overstock shares jumped after they won the auction… for Bed Bath & Beyond’s digital assets, the brand’s name, and other IP.
Crypto-Bytes:
- Per AP: There are only 21m bitcoin that will ever be available. For the last 15 years, retail investors and individuals had an opportunity to accumulate as much bitcoin as they wanted. And since bitcoin has been a bottoms-up adoption story, we only recently started to see corporations embrace it. Recently, BlackRock filed for a publicly-traded bitcoin trust with daily creation and redemption functionality. People are excited about BlackRock’s filing because they have a stellar track record of approval (575-1 in 576 applications). BlackRock currently has over $2.4T in their ETF products, including equities, fixed income, commodities, and asset allocation funds. This means that significant demand is likely to flow into the bitcoin market over the coming 12 months. It doesn’t take a genius to realize that the supply-demand equation is in favor of the bulls in that scenario. But that’s NOT the full story:
o Bitcoin’s current supply is highly illiquid. More than 68% of all bitcoin in circulation has not moved in over a year.
o It seems that governments printing money, cutting then raising rates, cutting bitcoin’s incoming supply in half, and institutional capital flows into the market are a repeat of a perfect storm.
- The above scenario seems more probable with each passing day. There are only 21m bitcoin that will ever be available, and we still have the chance to front run financial institutions.
- Fed Chair Powell said stablecoins are a "form of money"… and that our FED should have a role in regulating them.
- A NYC crypto miner's bathhouse… is using heat generated by its bitcoin mining rigs to warm its pools, and the cooler water from tubs to chill its mining setup. Talk about ‘dipping your toe in crypto.’
- Charles Schwab, Fidelity, and Citadel… have launched a new crypto exchange for institutional investors. EDX is non-custodial, and only trades bitcoin, bitcoin cash, litecoin, and ether. EDX won’t serve retail investors directly, but expects brokerages to route customer orders through their platform.
- The first-ever leveraged Bitcoin futures ETF… began trading on Friday after being approved by the SEC. Bitcoin continued its rally, topping 31,000 as Ethereum approaches 2,000.
TW3 (That Was - The Week - That Was):
Tuesday: Overdue + Necessary + Overbought + Extended = a Pullback. But we've seen one day wonders before. There are no great levels to watch – just marginal supports. The DOW could make it down to 33750 and the S&P to 4300. If that fails, then 4200 would make sense. We can’t say that the pullback is upon us just because of a grumpy Tuesday.
Wednesday: Yesterday was more like a lack of buyers. Today Chairperson Powell kicks off his two-day testimony with Congress. All eyes and ears will be focused for hints that he's done hiking rates. But if he stands planted firm in the idea that a couple more hikes are necessary, we might just get that ever-elusive correction. He is saying that they still have a lot of work to do – reinforcing his rate hike decision.
Thursday: Yesterday gave us a ton of up and down action. As Powell was standing firm on "higher for longer", Atlanta FED Pres. Bostic put out a note saying he thinks they should pause for months and see what lag effects the previous hikes have had. But in the end, we closed red for the 3rd straight day.
AMA (Ask Me Anything…)
Real Estate – you may do it again! Occupancy in the 10 largest U.S. business districts remains 50% below its pre-COVID levels, as employees spend 28% of their workdays at home. As demand has dropped, equity and debt investors have been trying to identify the current value of some of their properties. A San Francisco office building previously valued at $300m – was put on the market for $60m = a 80% discount. 2 office buildings in Midtown Manhattan just sold for 50% less than their asking price. “Steeper borrowing costs, coupled with tighter credit conditions and a decline in property values brought on by remote work – have increased the risk of default. 35% of commercial mortgages coming due between April and December 2023 will not be able to be refinanced.” To make matters worse, 67% of commercial real estate loans were issued by small and medium-sized banks. And commercial property taxes contribute a sizeable portion to our municipal city budgets. Welcome to raising taxes or cutting government spending. The facts:
- Higher rates and falling property values are bringing the commercial real estate market to a perilous precipice.
- In the US, about $1.4T in commercial real estate loans will be due by 2023. Owners facing large principal payments may decide to just default.
- Nowhere in the US is the crisis more severe than San Francisco, where tech-fueled properties are defaulting right and left.
Next Week: Before Selling… Buying Stops.
Every day this week, we opened ugly and markets scratched and clawed off their lows. We could have failed strategic levels, but each day we were rescued. With that in mind, and the fact that none of us know what’s going on inside Russia – I haven’t a clue about next week. Markets may ignore the Russia ‘thing’ and go about business as usual, or they may get worried and decide they don’t need the drama. Russia is real, and I will be quite interested in seeing what plays out.
Some Facts:
- The other-side of a gamma squeeze going higher… is one hinting to go lower.
- The At-The-Money implied volatility in the SPX… is at pre-COVID level lows.
- We sold off, but then bounced back in TECH. Don’t blink until TECH sells off.
- Commodities continue to sell-off, and bonds are hinting like they may rally.
- Signs of markets unwinding:
o #1 – Hints of negative gamma squeezes inside of major tech stocks.
o #2 – Watch commodities as they are showing recessionary signs.
o #3 – BUT, it’s all about tech.
Ideas for Trades:
o INMD… > $40
o BTC > $31,000
o VTNR > $6.20
SPX Expected Move:
- Last Week’s EM = $51 (4-day week)… and we moved $60 lower.
- Next Week’s EM = $55 (5-day week).
TIPS:
HODL’s: (Hold On for Dear Life)
- PHYSICAL COMMODITIES = Gold @ $1930/oz. & Silver @ $22.40/oz.
- 13 Week Treasuries @ 5.41%
- **Bitcoin (BTC = $31,200 / in at $4,310)
- **Ethereum (ETH = $1,920 / in at $310)
- Apple (AAPL = $186.70 / in at $177)
- Big Bear Holdings (BBAI = $2.34 / in at $2.90)
o BOT Sept $4 CALLS for $0.35
- DNN – Denison Mines ($1.18 / in at $1.32)
- MESO – Mesoblast Ltd. ($4.03 / in at $3.60)
o SOLD July $5 CALLS for $0.85
- NFGC – Newfound Gold ($4.74 / in at $3.75)
o SOLD July, Oct. & Jan. $5.00 CALLS
Follow me on StockTwits.com to get my daily thoughts and trades – my handle is: taylorpamm.
Please be safe out there!
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