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Now that you’re in the loop, let’s dive into today’s content 🔥
Here’s what’s in today’s issue:
- David shares his thoughts on Cathy Wood calling Gary Gensler a liar, crypto supporters flooding the IRS with 124,000 comments, XRP’s fake news & OKX building an Ethereum L2.
- Rekt Capital has the latest technical analysis for you on the market.
- Erik has an article on BitVM a new use case for complex smart contracts on Bitcoin.
- In case you missed it by Rebecca.
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Cathy Wood Speculates on CNBC about Gary Gensler’s ETF Motives
Cathie Wood appeared on CNBC’s Squawk Box on Tuesday. Most of the conversation centered on the U.S. spot Bitcoin ETF environment and Ark Invest’s SEC application.
Here’s the segment if you missed it.
The most interesting point in the conversation came when Wood and anchor Joe Kernen analyzed a contradiction in Gary Gensler’s reasoning for rejecting all previous spot bitcoin ETF applications.
Wood mentioned that Gensler’s stated reasoning for rejecting the previous applications is because bitcoin can be manipulated.
But then both Wood and Kernen agreed that when one understands the Bitcoin protocol, they’ll know that bitcoin in fact cannot be manipulated.
And because Gensler taught a blockchain course at MIT, he therefore must know that bitcoin actually can’t be manipulated.
Basically, both Cathie Wood and Joe Kernen implied on national TV that Gensler is a liar. You know you love to see it.
So then, the natural question became what is the real reason for why Gensler has been rejecting these ETF applications, given he knows the manipulation argument is bogus.
Kernen declined to speculate. But that didn’t stop Wood from floating her theory: “there’s speculation that [Gensler is] interested in the treasury secretary position at some point. And what does the treasury secretary do? It’s very focused on the dollar.”
Wood didn’t elaborate past that, but it’s clear what she was suggesting. Perhaps Gensler has been tough on bitcoin because he believes this track record somehow benefits him politically in the near future.
What do you think about Cathie Wood’s comments? Do you think there’s any merit to her idea, and why would she say this on national TV when her company has an active spot bitcoin ETF application with the SEC right now? Respond to this email and let me know. I’d love to hear your opinion.
Crypto Supporters Flood IRS with 124,000 Comments
On Monday, the IRS and U.S. Department of Treasury held a public hearing to discuss the government’s proposed crypto tax rule that was drafted back in August.
And wouldn’t you know, the plebs have done it again.
About 124,000 comments were submitted to the IRS, and most of them were from crypto proponents who were critical of the tax rule as written.
The main controversy boils down to the government’s definition of “broker”.
Crypto experts say it’s overly-broad as written and would place a tax reporting burden over DeFi platforms, DAOs, and non-custodial wallet developers. And most of these entities are technically incapable of complying even if they tried.
So if the rule is adopted as currently drafted, it’s thought that most of the U.S.-based decentralized tech sector will move overseas.
Other concerns raised at Monday’s hearing related to how the tax rule impacts stablecoins and broader privacy issues.
Regarding stablecoins, the rule as written would require the reporting of swaps between fiat and stablecoins or between stablecoins. Crypto advocates say this doesn’t make sense because these swaps generally never result in a gain or loss. Thus, the reporting of such doesn’t offer the government much in terms of tax revenue.
Regarding privacy, crypto advocates say the rule is antithetical to it because the rule creates a massive reporting dragnet across most of the industry. Coinbase’s VP of tax, Lawrence Zlatkin, said the rule will give the government an “unchecked” ability to track the financial choices of Americans.
Despite everything said above, here’s some silver linings to consider:
- Crypto miners and validators are exempt from the rule’s current definition of “broker”.
- The passing of some tax rules will bring needed clarity to the industry. It’s expected that the IRS will roll out a simplified tax form for crypto similar to the 1099 stock form.
- The IRS and Department of Treasury seem to be open to changing the rule. The questions asked by the government panelists showed a degree of flexibility with how they view the issues.
The crypto tax rule will now go through a period of further review and finalization. Let’s see what form the final rule takes. The tax rule is expected to go into effect in 2026.
XRP Rips N Dips on Fake News
It’s been another wild week for XRP. And this time, it’s because a scammer manipulated government records systems to their benefit.
On Monday, someone submitted to the Delaware Division of Corporations a fake filing for a spot XRP ETF application by BlackRock. Once the filing appeared on the agency’s website, news of it quickly spread throughout crypto social media channels.
And then you know what happened.
The price of XRP ripped north 12% within minutes of the filing appearing online. But BlackRock’s phones must have been ringing off the hook because company representatives within the hour confirmed the filing was fake. And once that news got out, XRP’s price tumbled right back to where it was before the fake news was released.
As of Wednesday, the entire matter was turned over to Delaware’s Department of Justice for investigation.
OKX Exchange to Build New Ethereum Layer-Two
Last week, we speculated that Kraken might be in the process of developing their own L2. Well, there’s no need to speculate this week because OKX announced on Tuesday that they will soon be releasing their own Ethereum L2, dubbed “X1”.
X1 is expected for a Q1 2024 release. For X1, OKX developers are using Polygon’s Chain Development Kit and zk rollup technology. And the exchange’s native token – OKB – will be used for gas fees on X1.
Currently, CoinMarketCap places OKX in 4th place for its spot centralized exchange ranking. The exchange has approximately 50 million total users, 22 million monthly users, and 25 billion in total crypto assets.
X1 further builds momentum for both Polygon 2.0 and Ethereum, as it ultimately increases the use-cases and traffic for the latter two networks. And as we reported last week, rumor has it that Kraken is also considering Polygon’s Chain Development Kit for its L2 as well.
Let’s dive into today’s Altcoin Market Update.
Today we’ll be looking at some charts for OCEAN and MATIC but if you’re interested in TA on the full list below, make sure to upgrade to the Premium Membership.
- Ocean Protocol (OCEAN)
- Polygon (MATIC)
- Polkadot (DOT)
- Theta Token (THETA)
- Verasity (VRA)
- Virtua (TVK)
- Binance Coin (BNB)
Let’s dive in.
Ocean Protocol — OCEAN/USDT
OCEAN has been an Altcoin we’ve been covering for weeks now.
It started with downside wicking below the Channel:
Followed by an immense +57% rally last week:
And here’s today’s update:
OCEAN is now trying to retest this green region as new support on the Weekly timeframe.
This green region is very important as it represents a Monthly reference point for OCEAN:
From the Monthly, we can observe that this green region is a major resistance area beyond which price tends to upside wick.
But if the Weekly retest is successful, this Monthly picture will drastically shift.
Crucial retest for OCEAN on the Weekly right now.
Failing the retest could then set price up for a bearish Monthly Close or at the very least for a dip into the black $0.32 level below.
Polygon has broken out from its macro market structure.
Of course, a Monthly Close beyond this Macro Downtrend would confirm the breakout.
However, there are still many weeks left in the week.
Which is why it is important for MATIC, should it dip, to retest the Macro Downtrend as support on the lower timeframes first.
It is that sort of stability on the retest going into the end of the month that would enable a Monthly Close above the Macro Downtrend to kickstart the beginning of a new macro uptrend.
CLICK HERE to go Premium and read the rest of this week’s Market Analysis – Premium subs can read Rekt capital’s full report.
BitVM: Is there a Use Case for Complex Smart Contracts on Bitcoin?
BitVM is a proposal that will make it possible to create and run complex smart contracts that settle on the Bitcoin blockchain.
A healthy dose of skepticism feels appropriate here – after all, why compete with Ethereum and its Layer 1 kin on a turf that is firmly theirs?
But on closer inspection, there might be something to be said for niche-type smart contracts that rely on the most secure chain of them all.
Crypto Market News
- BlackRock has kicked off the process for a spot Ethereum ETF after the Nasdaq filed an application on its behalf with the US Securities and Exchange Commission (SEC). Source
- Crypto fund inflows have surpassed $1 billion for 2023 led by Bitcoin, Ethereum, and Solana. Source
- Robinhood is planning to start EU crypto trading and launch a UK brokerage operation. Source
- The US Securities and Exchange Commission (SEC) is struggling to hire crypto experts due to the rule that they must sell their assets. Source
- Cathie Wood’s Ark Invest has sold $3.8M in Grayscale Trust (GBTC) shares and bought $5.6M in Block shares. Source
- Ark Invest has bought 1.1M Robinhood shares in one day totaling $9.5M. Source
- Ark Invest and 21Shares have partnered to launch 5 digital asset ETFs that will be listed on the Chicago Board Options Exchange. Source
- Nouriel Roubini AKA “Dr Doom” has received backlash for launching his own cryptocurrency after speaking negatively about Bitcoin and crypto. Source
- Crypto lender Hodlnaut looks set to be liquidated after restructuring plans have failed. Source
- Justin Sun’s Poloniex exchange has been hacked for $100M and is offering a 5% bounty. Source
- Roblox CEO sees a future for NFTs in the metaverse gaming platform. Source
- Disney has created an NFT platform with Dapper Labs which will go live by the end of the year. Source
- CryptoCom has been granted a digital assets license to operate in Dubai. Source
Coins and Projects
- El Salvador’s Bitcoin ATM network will integrate the Lightning Network into 100 machines. Source
- Bitcoin fees have jumped almost 1,000% since August as Ordinals make a comeback. Source
- Bitcoin’s long-term holder supply is at an all-time high according to Glassnode. Source
- The SEC’s first window to approve all 12 spot Bitcoin ETFs has opened between November 9-17. Source
- Cathie Wood speculates SEC Chair Gary Gensler’s ambition for Treasury Secretary is affecting his ability to approve a spot Bitcoin ETF. Source
- The Cboe Digital exchange will launch leveraged Bitcoin futures trading in January. Source
- USDC issuer Circle is reportedly considering an IPO in early 2024. Source
- Circle has released USDC and EURC v2.2 with improvements to account abstraction, security, and lower gas fees. Source
- Circle will enable cross-chain USDC transactions using Cosmos’s Noble network later this month. Source
- Ethereum scaling startup Stackr has raised $5.5M in a seed round from a16z CSS, Archetype, and others. Source
- LidoDAO has launched its official version of Wrapped Staked Ethereum (wstETH) on the Base network. Source
- Aave’s sister project Lens Protocol has launched its v2 upgrade on Polygon. Source
- Uniswap has launched an Android wallet app with a built-in swap function. Source
- Binance has launched a new Web3 wallet within its primary Binance app. Source
- Grayscale’s Chainlink Trust has been trading at a 200% premium due to increased institutional demand. Source
- Grayscale’s Solana Trust is trading at an 869% premium compared to the current spot price. Source
- Polygon and Near are teaming up to create a zk prover for WASM-based blockchains. Source
- OKX exchange has launched a testnet for its Ethereum layer-2 network called “X1” using Polygon’s chain development kit (CDK). Source
- Solana-based NFT marketplace Magic Eden has expanded its support for Polygon by introducing new features on the network. Source
- Solana’s price dropped by 7% after FTX transferred 250,000 SOL worth around $14M to Kraken on November 13. Source
- THORChain has become the second-largest DEX with daily trading volumes of $334.3M after surpassing PancakeSwap. Source
- Toncoin has reached its highest levels in a year after Telegram launched a Giveaways feature. Source
- Ripple-owned tech firm Metaco has partnered with HSBC to allow institutional investors to hold tokenized securities on its new custody platform. Source
- Ripple has expanded remittances between 27 African countries, Australia, the UK, and the Gulf Cooperation Council (GCC). Source
- Ripple’s CEO has criticized the SEC for holding the crypto industry back and not protecting investors. Source
- XRP Ledger (XRPL) is set to introduce new features in the coming weeks after its FixReducedOffersV1 upgrade has been initiated. Source
- US inflation data came in lower than expected at 3.2% on an annual basis in October and came in flat from the previous month. Source
- UBS is forecasting the Fed will cut US interest rates by as much as 275 basis points in 2024 which is 4x the market consensus. Source
- Moody’s has cut its outlook on the US from stable to negative due to the spiraling budget deficit. Source
- Goldman Sachs says the world economy will perform better than expected in 2024. Source
- Australia has updated its capital gains tax guidance to include wrapped tokens and decentralized lending protocols. Source
- CBDCs will sit at the core of the future financial system, says Bank for International Settlements (BIS) general manager Agustín Carstens. Source
- The BIS has said stablecoins are “not a safe store of value” in its latest research report dated November 8. Source
- The world’s biggest bank, China’s ICBC, was forced to trade using a USB stick after getting hit by a cyber-attack. Source
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Wealth Mastery (Lark Davis, and the Wealth Mastery writing team) are not providing you individually tailored investment advice. Nor is Wealth Mastery registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. Wealth Mastery is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.
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