This will be a long read, it took me days of research, it is a pessimistic view but all based on facts.
If you are not interested in understanding broader market risks then dont read further.
If you have a lot of your money invested in Crypto its worth reading.
I am not doing this to spread FUD or sway your decision, my posts are a labour of love, i earn nothing from this.
I own Crypto, I am 100% pro Bitcoin and many other projects, i recently purchased more long term spot.

If you chose the red pill, read on.

Firstly, If we go back to the end of 2023 it was widely predicted that the FED would cut interest rates 5-6 times this year, this would be needed to stave off recession, fast forward 6 months and we have had no cuts, we also have no clear direction, this does not show signs the FED is in control of the US economy.
Powell and the FED are focusing on inflation and unemployment and are using this as validation that their higher for longer stance is working.
Inflation is a lagging indicator, its like looking backwards to see what is ahead of you, also the labour market can collapse at a rapid rate once it starts to deteriorate, it is not always a gradual decline.

Here are some things to consider that show the FED might be about to cause a recession,

-The Sahm rule, The Sahm rule is an indicator which tracks the moving average of unemployment, the rule has applied to every recession since 1948, currently the Sahm indicator is flashing a risk warning, if (only if) unemployment keeps rising at the pace it has in the last 3 months it will trigger the Sahm rule recession warning in the coming months. Unemployment and job loss dynamics feed on themselves, if people lose their jobs, they stop spending money, leading to more jobs losses.

-Spending on the US national debt interest(not debt just the interest) is now the second largest item in the US budget, it has surpassed the National defense and Medicare budget, it is expected to reach $870 Billion in 2024 (3.1% of GDP)

-Hundreds of US banks at risk of failure or falling below their minimum capital requirements.

- Credit card default rates at the highest level in 12 years.

- Delinquency transition rates increased on all debts types in the last quarter.

-Yield Curve inversion is now the longest on record, for decades the Yield curve inversion has been a leading indicator used to signal a recession.

-Pending home sales fell by 7.7% in April, they fell in all regions, this is the slowest pace since 2020. Pending home sales is a forward looking indicator(unlike existing home sales) as the contract is signed several weeks before the house is counted as sold. Pending home sales have a far reaching ripple effect on the economy, when people buy homes they spend on renovations, a morgage is sold, brokers are paid and so on, it is a leading sign of economic health.

-Consumer spending and retail sales declining (Consumers make up 70% of the US GDP)

-Consumers appetite for nonessential goods declining.

-Consumers more likely to trade down or use pay later option when making purchases.

-Many G10 Central banks have already started lower rates as they see the recession risk, many have done so with inflation still above the target price, The Fed remains stubborn.

-In most major recession and economic crashes of the past, we have seen a stage of Euphoria which pre-dated it, this is exactly the same conditions we have seen in Crypto, S&P 500 and many other stocks over the last year.
-In many stock market crashes of the past we have seen similar conditions to what we see today with Nvidia. The Nasdaq and S&P 500 gains are all being supported by Nvidia, yes AI is booming but this also shows risk, firstly it shows extreme greed(FOMO), Secondly it shows investors are not finding value(diversity) in other stocks, this is a huge warning sign for the overall market.

There are many other warning signs, these are just a few that need to be noted.

Each of these warning signs alone are not enough to cause alarm, but when you combine them all (and others) it is time to pay attention.
If the FED had lowered interest rates even once i would have a more positive view, i just cant look past 5-6 cuts now becoming possibly 1.

These signs may take many months to materialize but if(only if) many do it will be terrible for crypto, also note the FED might take drastic steps if these do materialize (lower interest rates too late in desperation, pump stimulus into the economy) this can lead to a last gasp(short lived) Euphoric Bull phase.

If Unemployment starts to break down and we see increased numbers in the next 1-2 months i would advise positioning yourself for the worst case scenario, expect the best but prepare for the worst.

Cash out some/most of your crypto or stocks if this happens(this depends on your short-mid term financial sittuation), ask yourself is the possible 5-10% extra you could make worth the risk of a massive shock( Im assuming most high leverage traders didnt make it this far, so this applies mostly to Spot holders)

I dont presume to know more than the FED, i research and listen to analysts i trust, not paid analysts who are employed to ONLY be bullish.
Now, more than ever, it will be important to monitor the US economic data, especially the labour market, dont ignore or be stubborn if this shows signs of breaking down further.

This is not anti crypto or FUD, i post to try help people who dont understand market risks.
Many new traders dont see how Crypto and the global economy is linked but it is, if we see a recession or crash then crypto prices will be hit hard, it will be a firesale. Crypto is a "Risk on" investment, BTC is the only current store of value.
The FED has stood by its policy for to long, they will need to act fast and correctly in the coming months, it could already be to late(Policy changes take a year or more to have an effect)
The market will be very sensitive to data in the coming months, especially Unemployment and Inflation, before you do anything, before you enter any trade, monitor the news ahead for the week.(Forexfactory.com)
It sucks but the price of Crypto is now firmly in the hands of the FED and the policy decisions they make in the next 3 months, dont be naive and think otherwise.
Please also note i recently did a portfolio breakdown, this seems to contradict that, it doesnt, that portfolio was for long term spot(1-2 years), i purchased many of these projects at the prices i listed, if BTC falls further i will buy more, i also noted in that post and in previous posts that the most sensible option currently is to have most of your portfolio in BTC 60-70%.(Held off exchange)
For now nothing has changed, i still feel those entries were good, should we see further warning signs i will re evaluate(and post), i will hold BTC regardless.
I am not predicting an imminent crash or recession, most analysts and the FED dont foresee a recession, what i am saying is we need to monitor the labour market, we have many warning signs, too many to ignore at this point, if the labour market breaks down further(over a few readings, or a rapid increase in unemployement) it will be the final warning sign i need.
This is not a post intended to make you short the market, as noted things can take many months to materialize(hopefully they wont), we could also see further upside if we get positive readings in the coming months(this is what i want), even if we dont the market might pump if the Fed makes policy moves in desperation.
"The market can stay irrational longer than you can stay solvent"

It took me a long time to research and write this post, if you made it this far(and found this helpful) a like is always appreciated.

Thanks for reading.

Peace.

#CryptoTradingGuide #CPIAlert #BTCFOMCWatch #ETHETFsApproved

What happens in the next 2 days is part of a far larger game, sadly that game also effects Crypto price in a big way.

July 9th 2PM UTC
Fed Chair Jerome Powell and US treasury Secretary Janet Yellen will testify before the finance committee
July 10th- 2PM UTC
Jerome Powell will resume day 2 of testifying before the finance committee.

Things to note,
This will be Powells last scheduled public address to congress before electionsWhat Powell says will have far greater impact than what Yellen says.(Yellen is speaking for Bidens economic policy,it wont have as much effect this close to elections)The Fed(Including Powell) is an independent government agency(Central Bank), they are not controlled or funded by either party or the President.

I have including these election odds because these mattter more than ever, including for the short term price of Crypto.

After Bidens horrendous showing in the first presidential debate it was widely speculated he would drop out, in the days that followed Harris overtook Biden as the odds on favorite to run against Trump.
Since then Biden has firmly denied any chance he will drop out, he has even gone on national TV and done high profile interviews to enforce he will run in this election.

What the FED does now is KEY!

As noted the Fed, Chaired by Jerome Powell is an independent Government agency responsible for the central banks policy, they are not funded from the government budget, they are however accountable to congress and the American people for their monetary Policy.
Only a fool would be naive enough to believe the FED, including Powell and all its voting members have 0 political agenda this close to election.
In the next 2 days the democrats will be pushing for a clear indication of an interest rate cut, either in July but more likely in September, they need this as the US economy is either already in a hidden recession or on the brink of recession, the American people are already feeling the pressure of this higher for longer stance, these are the people who will decide the next president.
Keeping rates higher and putting more stress on the American economy and a vast number of its population would empower Trump and his campaign even more, one of Trumps many campaign promises is to lower Interest rates and taxes.
The American economy could already be passed the point of a "Soft landing", any shocks in the coming days will likely be politically motivated.

Things that could shock the market in the next 2 days,

Powell makes a July interest rate cut a realistic possibilty, this would without question be politically motivated to help the cause of the democratic party, it would also send stocks and crypto up A LOT.Powell says the economy and the labour market is strong and the Feds higher for longer stance is working and needs more time, decreasing the odds of a September cut, once again this would be politically motivated and favour the republican party, the US economy and the labour market are not fine.

Please note that no interest rate decisions happen in August, its July or September for the near term.

The wider market is also waiting to see what happens in the comings day, the start of the week has shown total indecision in the market, Gold price has lost its Friday gains, the S&P500 started today up but has since lost its early gains, the DXY has made up for some of its losses last week.

If we were not so close to election i would see this as a Bullish opportunity for Crypto (Short term), not because i think the US economy is fine, i think the total opposite.
I can name 50 readings that show the US economy is on the brink of recession(or crash) but for now they mean little for the short term price.
I know, and so do all the hedge funds and market movers, that before a recession or crash, the FED will make drastic, last gasp moves , these moves will lead to a last Euphoric phase before the bubble bursts.(This is only if the FED have no political agenda)
This is why i am monitoring other markets so closely, unfortunately this close to an election it adds a level of uncertainty that nobody(without insider knowledge) can predict.

If the Fed is not corrupted and has no political agenda then Powells testimony in the next 2 days should keep the odds of a September cut and possibly 1 more in November/December as the likely outcome.

What is said in the next 2 days will have huge implications as to how Crypto, S&P500, Gold and the DXY price reacts.(It will effect everything, these just give a basic market understanding)

I have no insider knowledge and also little trust in any system when the stakes are this high.

If you want to enter positions now then do so in Spot or extremely low leverage or margin.

I cant stress enough how volatile the next few days will be, there is huge uncertainty across the markets, across the world, when that pent up uncertainty hits the market it will create havoc short term, especially to high leverage and margin.

Please trade safely.

Peace

#TheWolfThatWins #US_Job_Market_Slowdown #Market_Update #MtGoxJulyRepayments

For months the Overall Crypto market cap has been ranging, we are now at a critical level that will show if previous support will remain strong.

What decides if this support holds, as it has done many times in the past 3 months has absolutely nothing to do with Crypto.
Most of the price action from previous months has been dictated by US inflation data and what the Fed says, nothing will change for the months to come.

I was going to post about each of the topics below seperately, im not great at explaning things and so i would rather just simplify it all into one post.

The Fed,
For months traders around the world have been looking for signs of an interest rate cut, many feel the US economy has already shown enough to warrant a cut but the FED holds tight.
Honestly i have 2 opinions about this,
1- The Fed is playing for time and they are in self preservation mode, The FED and Powell are just focused on the data they want to see, they are ignoring the warning signs of a possible recession/crash that could happen if consumer and small business debt , the housing market and labour market deteriorate further.
2- The Feds plan for a "soft landing" is working but now they are pricing in the "Donald Trump effect" and will hold rates higher in anticipation of that.

Donald Trump.
If Donald Trump wins the election he plans to lower interest rates, lower taxes, increase tariffs on imports and many other things that will lead to inflation(spending and costs), this might lead to the last Euphoric phase we have been waiting for in Crypto, it will also probably crash the market in the years after.
The US labour market is already showing signs of deteriorating and a lot of that labour market is made up of undocumented workers or asylum seeking workers, if Trumps mass deportation policy comes into effect it could have a huge impact on the labour market, if this happens Trump will blame Biden for allowing "these people" in and the democrats will blame Trump.
If the labour market collapses in the current US economy then the fallout will be massive, it will be recession or a crash.

US Treasuries(US Debt) - This matters for inflation.
The 2 biggest(Foreign) holders of US treasuries are Japan and China.
Japan-$1.1Trillion
China - $790 Billion

Japan,

I was going to do a full writeup of the Japanese economy and its fallout effect but basically for now it boils down to their treasury holdings.

Japan is stuck between a rock and a hard place, their economy is in huge trouble, they cant increase interest rates because they cant service their own internal debt if they do.
Japans economy has stagnated for 20 years but now with the huge difference in their 0% interest rate and Americas 5.5% interest rate their currency is declining at a rapid rate.
Japan imports most of its food and energy so its currency decline has a huge impact for an already struggling Japanese economy.
Japan has 2 options,
Option 1- They sell off 10s of Billions in US treasuries to pump into the YEN via currency intervention, this will not have a lasting effect and will basically be like burning the money, all it will do is create fear in the market like we have seen in the last week.
The BOJ has already intervened many times in the past, including this year, this led to a sharp price drop in the USD/YEN , the BOJ knows this will do little, is it purely to slow down trading against the YEN when it reaches certain levels.
Option 2 - Japan holds its US treasuries and does not intervene hoping the Fed lowers interest rates and brings them more in line with Japans interest rate.( there are so many reasons why this difference matters, outside investment, carry trading, the servicing fees on debt and treasuries.)
If the BOJ dont intervene and the threat of intervention stops slowing the decline of the YEN it could fall another 20-30%(or more) in the coming months
Basically Japan needs to either burn 10s of Billions to slow down the Yens decline in the hopes of US interest rate cuts or they need to watch the YEN freefall for the coming months and deal with the pressure of import prices that will bring.
Either way it doesnt look good for the Japanese economy, how far the fallout will be is yet to be seen.

China,
China has been dumping US treasuries for the last year, it is one of the reason the Gold price has increased so much, China has been offloading US treasuries and buying gold.
This dump of treasuries will not stop as trade tariffs and tensions increase between US and China

These long term US treasuries are toxic sludge, nobody wants them, China and possibly Japan dumping these large amount of treasuries only lead back to one thing and that is the US money printing machine, nobody will want them on the secondary market because the yield curve is inverted(short term yields offer more), the US has to buy them or they will default, the US is already in massive debt and already spends a huge part of their budget paying the interest on that debt.

If you ever wonder why the US government stopped scrutinizing USDT it could be because 80% of USDT funds are "claimed" to be in US treasuries(US debt).🤔

Basically the US government is trapped in a vicious circle of its own making.
The US economy and the USD has a massive effect worldwide whether we like it or not.

MICA
It is still yet to be seen how stable coins like USDT and others will be effected by MICA regulations, while MICA has already come into part effect there is still a window period that allow stable coins and CEXs to comply with MICA regulations, the full effect and any fallout will be felt within the next 6-12 months as these regulations come into full effect.

Mt.Gox and German Gov
Obviously most are aware of this sell pressure hitting the market, as per my understanding this Mt.Gox will be distributed over 3 months and not create an immediate $9 Billion in sell pressure.

All of these things are effecting the global market and the sentiment around Crypto, everything leads to uncertainty which is not great for Crypto.

I hold spot, unless we see sustained break below the lowest line i have put on the daily, weekly crypto MC, i will not panic.
Short term we need to see if a very solid area of liquidity and support holds.
I would not rush into any short term trades until after Friday, the jobs and earning data will likely decide what happens short term.
Also some people say BOJ might intervene tomorrow when the NYSE is closed which might cause a wider reaction on Friday(this is all hearsay)

I feel very lost at the moment, im sure many do.
I am happy to hold my spot portfolio and see how things play out in the next weeks-months.
Most of my portfolio is in BTC which i will hold regardless, if we see more worrying signs i might cash out some of my other holdings.
I will always post and update this.

Peace

#BinanceTournament #CPIAlert #BTC☀ #Market_Update

What is Eigen, what is re-staking, what is liquid staking, what is liquid re-staking?

What are the risks? (Its a long read, its well researched and not just FUD)

To start, every project and token that falls into this category is made for one thing, regardless of what they sell it as, they are made to offer higher yields on staked/locked funds.
If managed well this offers crypto investors better returns and it offers new projects a source of funding and security, if not managed well it creates the perfect environment for a Ponzi scheme.
This has been done before, billions have been scammed using this higher yield trap before (bitconnect, Celsius and many more)

I had originally intended to post this as one article but its to much information.
I want my posts to be helpful to all, this post might seem pointless or pointlessly long but you need to understand the steps along the way and how risk increases at each step.

This research is the result of asking someone with mild OCD and many crypto trust issues about the same projects all the time🤔

I get asked a lot about projects, many of these projects are re-staking or projects further up the risk scale.(liquid re-staking)

Some of these projects on Binance include,

Omni, Renzo, Ether.fi, Altlayer, Pendle, Celo, LDO, Lista

There are far far more not listed on Binance, also for the purpose of these posts i am focusing on projects related to ETH

Even if you don’t hold any re-staking or Defi projects in your spot portfolio this still effects you, more and more crypto projects are investing funds into Eigen, re-staking, liquid staking and it will just keep growing.(So will the risk)
Understanding this space is key, it could be the next huge advancement for Crypto(and money making opportunity) or lead to the next market crash.

This took me weeks of research so hopefully i can try summarize and explain in a user-friendly way.
There is no point explaining Eigen if you dont understand Ethereum, Slashing, LSTs and so on, by the end of this hopefully you will.
You need to understand how your funds go from Fiat-> Crypto -> Staked -> Liquid staked -> re-staked -> liquid re-staked.
You need to understand this because at each step the risk goes up, also how long(days,weeks,months) it could take to get your crypto back into self custody or withdrawn to fiat.

I have tried to keep this as simple and easy to understand as possible.

Included in Part 1,

-Understand the Ethereum blockchain
-Understand Slashing
-Understand Lido
-Understand what is an LST/LSD (not that LSD, get help😂)

Lets start,(Good luck)

Ethereum,

Ethereum 2.0 is a proof of stake consensus blockchain.ETH is staked by validators to maintain, secure the network.Validators are entrusted with the tasks of attesting and proposing blocks, they are essential for maintaining the network’s smooth operations and security.Staking 32 ETH is required to become a validator.Currently ETH has over 1 Million validators and nodes, over 32 million ETH staked with a value of over $115 Billion.An ETH node is the computer that runs the ETH client software, it is connected to other nodes on the network.The 32 ETH staking requirement is so validators are financially invested in securing the blockchain, if they misbehave they are at risk of being slashed.Slashing is extremely important to understand for staking and especially re-staking.Slashing is the process of penalizing validators for misbehaving or not performing their duties correctly.Slashing can result in the loss of some or possibly all of your funds, the average is 1.08 ETH/32ETH, the possible risk of total loss is only applicable to stop a coordinated attack by a large number of validators.Slashing rarely happens due to a malicious acts, it happens mosty for reasons like power outages, hardware problems or simple human error.(If a node is offline and does not perform its task, this is a slashable event)If a Validator is slashed they are removed from the validator set for 36 days, they can not validate or earn rewards for this time.Ethereum is so secure because of this risk-reward system, it is far to costly to act in a malicious way.ETH Validators earn between 4-6% APY(Annual Percentage Yield)APY is the annual percentage yield earned for staking, it includes compound interest, in crypto it varies based on price and the period your funds are locked into staking.ETH Validators funds are locked during staking (Without Eigen) , they can not be used for trading or anything else while staked.

Lido DAO
My explanation into Lido for this article only refers to ETH, Lido offers many different LSTs on different chains, i have included images at the end which shows this.

About Lido,

Lido is a DAO (Decentralised autonomous orginization)Simplified a DAO is not controlled by any single entity , it allows governance by the community.Lido’s native token is LDO , LDO serves as the governance token for the Lido DAO, it is used for community voting rights on the network.There are many other projects like Lido, Lido is by far the biggest (potentially poses the most risk)Up to 35% of the $115 Billion staked on ETH has been staked through Lido in the past years.(This can matter)Lido is not a custodial solution, they do not take custody of ETH staked through their protocol.Lido directs end users ETH, on chain, through smart contracts, via nodes, to validators, the ETH is always self custody.

So what does Lido actually do ?

If, like me, you dont have a spare 32ETH laying around to become and ETH validator then you can use a liquid staking protocol like Lido.
You can take your 0.1 ETH and stake it through Lido for staking rewards, they pool all our poor people funds together 🥺 and use that to fund trusted validators and node operators on the ETH network.
The validators do all the hard work, they have the hardware(Nodes), they get 4-6% APY, Lido takes 10% (split between validators and Lido DAO), you get 90% of the APY reward.
But wait theres more,
Not only can you be included in the staking rewards, you can also use that money while its locked in staking.
To put this very simply,(Sorry for anyone who already knows this)
If you have ever seen your favorite cryptocurrency but it has wierd letters infront of it (stETH, wETH, rETH) and you didnt understand why then let me explain, these are LSTs(Liquid stake tokens), they come in many variations but oversimplified they mean the same thing.
An LST is just a token to represent the staked asset.
If you have 0.1 ETH and you stake it through Lido they will give you 0.1 stETH.
stETH has the value of ETH(usually within a few dollars)
With that stETH you can now do what you want, you can trade, convert it, you can use it across Defi, your (Native) ETH is still earning you staking rewards with Lido.
When you want your ETH + APY rewards back, you return the stETH to Lido, they burn the returned stETH and they return your ETH and rewards, circle closed.
If you don’t return the stETH you cant get back your ETH+rewards.
This is a very simplified explanation, there are other ways to redeem, insure , leverage your Liquid staked tokens, they add to the risks which i will go into in part 2

Many in the crypto community feel that Lido is a threat to ETH and to the networks decentralisation because they control so much of the staked ETH supply.
Many feel it allows Lido funded validators a way of manipulating the ETH network to get more MEV(Maximum extractable value)
Oversimplified it means validators can manipulate the order of transaction in blocks they create for more profit. Basically it would be like paying security(ETH Validators) at a nightclub money to skip the queue.
Each blockchain has certain threshholds that allow more and more control, at 33% validators can slow down a network, at 51% they could fork a network, at 66% they could double spend, stop or reverse transaction.
Lidos dominance has fallen in recent times with more and more projects entering this space, projects like Eigen.
Many in the crypto community are happy about this decrease in dominance.
Any project or single entity that controls enough staked funds will always pose a risk.
Many other Liquid staking DAOs have voted and agreed to cap their maximum supply, this is for the decentralisation and safety of the blockchains.
In 2022 the Lido DAO had a vote and voted against a cap in their staked ETH supply.
The Lido DAO feel it is far safer to have this control in the hands of a DAO which is controlled by a large community, they feel this poses less risk than allowing a single entity, CEX or fund to gain this control.
Lido so far has been run in a sensible way and not posed any major risks, i am using Lido as an example because in the future other projects might own enough staked funds and might not be run with the same integrity, projects like Eigen.

End of part 1😅

Understanding all of this is crucial to understanding part 2, maybe now you understand why i split this post into 2 parts (This was the easy part 😳)
Many of the risks i talk about in part 2 will only make sense if you understand how Ethereum, Slashing and Liquid tokens work.
If you have any questions please ask, i have simplified this so it is user-friendly, if you want a deeper explanation about anything just ask.

In part 2
I will discuss Eigen in length, i have done a lot of research into it.I will discuss the controvery surrounding Eigens launch, Airdrop, insider trading and pro VC policy.I will explain how staked, liquid staked funds are used through Eigen and the increased slashing risks.I will explain how if not managed correctly, Eigen could lead to mass manipulation and collusion for higher yields.I will explain how liquid re-staking works (Renzo,Etherfi)I will highlight high APY scam risks.

If you made it this far congrats🤙

If you found this helpful and informative a like, comment is always appreciated.

I write and research all my posts, i stand by what i post, that being said if i missed something or someone has anything to add i would be happy to learn and confirm/update the post.

Thanks for reading

Peace.

A list of LST projects on Ethereum 👇(There are far far more across other chains)

Lists showing the vast amounts of LSTs across mutiple chains👇, i tried to include the link but it was not supported.

#ListaMegadrop #altcoins #IntroToCopytrading #TheWolfThatWins