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Market Meditations | April 15, 2021
Let’s dive right in.
Dear Meditators
From Crypto Kaleo to ETH and LINK, there is a lot of crypto action in today’s newsletter.
So let’s dive right in.
Read, enjoy and sign up to the Market Meditations community to level up your crypto trading and investing.
MARKET BRIEFING
Crypto. Bitcoin struggles around All-Time High resistance and Berlin hard fork is now live on Ethereum.
Legacy. U.S. stocks rose to record highs with retail sales and weekly jobless claims data signaling an accelerating recovery in the world’s biggest economy. Yields on benchmark 10-year Treasury notes fell to the lowest in about a month.
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MARKET MEDITATION
Who’s Bullish ETH Today?
With the increased popularity of DeFi, it’s natural that demand to use the Ethereum network has grown rapidly over the past year despite the fact that it cannot process all the transactions efficiently. Thus, the average gas fees to use the network spiked significantly, even setting a record high in February. Today, however, the Berlin Hard Fork introduces changes aimed at making the network more cost efficient.
Berlin introduces 4 Ethereum Improvement Proposals (EIPs)
EIP-2565 aims to reduce transaction fees
EIP-2718 allows people to combine transactions
EIP-2929 enables faster processing time
EIP-2930 reduces the risk of broken smart contracts
The famous EIP-1559 upgrade which will reduce ETH’s supply thereby making it deflationary, however, is not included in the Berlin Hard Fork but rather set to launch in July.
How is this information relevant to you as a trader or investor?
1️⃣Gas fees today seem to be abnormally low, relative to what they have been recently. Given that one of the biggest things eating into trader profitability on altcoins was fees, a proposal that takes a step in the right direction to reduce gas fees could mean more people becoming comfortable with trading altcoins on platforms like Uniswap when fees are lower. A trader who has been waiting for an opportune time to move money into a Metamask or deposit funds into a protocol, may consider themselves lucky today. If you want to learn more about how money flows from Bitcoin to altcoins in crypto, check out my full Cycle Guide here.
2️⃣We’ve spoken at length about the importance of trading with narratives. From NFTs to DeFi, one of the biggest narratives of 2021 has been that of a cheaper and faster Ethereum. Whether $DOT, $ATOM, or $SOL, altcoins carrying this narrative have performed well in the past. With Berlin, however, if Ethereum fees decrease significantly, the alternative Ethereum may become less powerful. As traders, we need to stay on top of what’s hot and what’s not. Make sure to check out our Finding Gems article where we discuss how to find profitable altcoins to trade.
What about the technicals? Make sure you’re subscribed to our YouTube channel. We’ll be covering chart analysis and technicals later today.
PODCAST
How He Made $2 Million Per Day Trading Crypto with Crypto Kaleo
Crypto Kaleo is a well-known crypto trader and popular Twitter account.
It’s no surprise that people have been eagerly awaiting this release.
It’s exceeded already extremely high expectations. Enjoy.
EXCHANGE NEWS & ANALYSIS
Getting Exposure to Crypto ETFs
For the first time ever, Grayscale’s assets under management have surpassed $50 billion. The company have cited this as another reason to #GoGrayscale and have also announced plans to convert into an ETF when regulations allow. To put this in perspective, if the ETF had been approved already, Grayscale would be the second-largest commodity ETF behind only GLD (a physically backed gold exchange-traded fund).
FACT CHECK: An exchange traded fund (ETF) is a type of security that tracks an index, sector, commodity, or other assets, but which can be purchased or sold on a stock exchange the same as a regular stock. ETFs are good for portfolio diversification and tend to involve fewer broker commissions compared to buying assets individually.
GETTING EXPOSURE: Despite the lack of United-States based Bitcoin ETFs, there are top-performing ETFs that you can already invest in with crypto exposure.
1️⃣BLOK. As a share of its overall portfolio, the Amplify Transformational Data Sharing ETF (BLOK) has the great exposure to crypto. It is among the top-performing ETFs of 2021 so far, having gained 71.7% since the start of the year.
2️⃣VTI. When measured by total value of assets, the Vanguard Total Stock Market ETF (VTI) is the ETF with the heaviest allocations to crypto-exposed firms. The VTI currently represents $2.77 billion worth of Tesla, $478 million of Square, $29.4 million of MicroStrategy and $11.38 million of Riot Blockchain.
3️⃣ITOT. The iShares Core S&P Total U.S. Stock Market ETF (ITOT) is the second-largest fund by overall exposure to crypto, holding $450 million worth of Tesla, $4.4 million of MicroStrategy, $3.86 million of Marathon and $3.12 million in Riot.
PUZZLE
Today’s puzzle will draw on your problem solving skills, a tool every trader should have at their disposal. Regardless of context if you can’t solve problems you will find you will be on the back foot on every step of your trading journey.
My bus fare is 44p. If the driver can give me change, what is the smallest number of coins which must change hands when I pay this fare?
Hint: If you’re not from the UK the coins you have to choose from are 1p, 2p, 5p, 10p, 20p, 50p, £1 and £2.
CHAINLINK NEWS AND ANALYSIS
Anyone who’s checked their twitter feed this morning will have seen that Chainlink has had a good day, rallying over 20% vs 24 hours.
The rally is likely pinned by fundamental reasons. Chainlink unveiled its new whitepaper today, which details a planned expansion and pivot into creating oracle networks for computation.
The new architecture supports a larger selection of use cases, expanding its suite of services to off-chain computation of data.
Importantly, the new oracle networks would continue to focus on functions that blockchains or even layer-two networks are unable to perform.
ANSWER
3 coins
So there are 2 strategies for this puzzle;:
Pay the exact fare. The smallest number of coins is 4 (20p+20p+2p+2p) so this is our baseline we should try to beat.
Try to get the smallest number by accepting change. This means paying 1 coin 50p, £1 or £2. If you pay with this there is no way of getting one coin change, but there is a way of getting 2 coins change. That is if you pay with 50p and the driver gives you a 5p and 1p change. There you have it, only 3 coins change hands.
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Disclaimer: The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision.
