There are a lot of risks in the crypto markets, known and unknown. As I have mentioned previously, September could be a month where some of these risks manifest themselves.
Irrespective of what happens though, there is one factor that is likely to make the impact of these risks that much more severe – and that factor is leverage.
I have talked about the risks that leverage poses to the individual trader on a number of occasions. However, there is a far greater risk to the broader crypto markets from the high levels of leverage we see. Leverage that is taken on through unregulated and disparate offshore exchanges.
So today, I am going to do a deep dive exposé on the market instability that is caused by leveraged trading. I will be breaking down the leveraged trading sector and explaining how minor price moves can lead to flash crashes that unnecessarily increase Bitcoin’s volatility.
I will also show you how both of Bitcoin’s largest crashes over the past 2 years have been exacerbated by leverage.
You can watch that video here.
📊 Portfolio Update 📊
Took a bit of profit on ADA & SOL. Both have had some pretty crazy rallies recently and want to lock in some gains on the way up. I am allocating a bit of this to DOT and the rest split 50/50 between PAXG & USDC.
I think that DOT has some pretty strong potential over the next few weeks. The Kusama PLOs have got off to a strong start and this is a harbinger of things to come on Polkadot when they get going.
In terms of other coins I am looking at, there are some really interesting projects being built in the Solana ecosystem. I will be keeping a close eye on them and update you on moves in my Telegram channel.
Updated portfolio here:
ETH 28.69% | BTC 23.11% | SOL 14.71% | ADA 6.86% | DOT 6.02% | PAXG 4.74% | USDC 4.56% | RUNE 2.33% | INJ 2.31% | ATOM 1.77% | MATIC 1.32% | AR 1.24% | LINK 1.24% | YFI 0.84% | LIT 0.26%
📈 Thoughts on Market 📈
Historically September has been a very bad month for Bitcoin, but so far we haven’t seen history repeat itself. This doesn’t mean we’re out of the woods yet, however. Besides the fact that past performance doesn’t predict future performance, there are a lot of bearish events and developments on the horizon for the crypto industry.
One of these bearish events is the regulatory crackdown that could be the result of that infrastructure bill which will likely pass in late September / early October. If you aren’t quite convinced that this is a threat yet, take a second to consider the recent news that the Treasury is trying to add MORE crypto provisions to the OTHER ‘infrastructure bill’. To me, this just shows how eager regulators are to go after crypto, and some of them aren’t waiting around anymore.
As I mentioned in my weekly crypto review a few weeks back, the SEC seems to be dead set on taking down DeFI, and it’s possible that the first of many moves has officially taken place. This is of course the news that Uniswap Labs is under investigation, though this has not yet been officially confirmed by SEC officials nor members of Uniswap Labs.
Although Uniswap is technically a decentralized protocol, the website we use to access it (the interface) was built and is maintained by Uniswap Labs. This means that if the regulators really wanted to twist their arm, they could require further monitoring on the uniswap.exchange front end.
Luckily the markets haven’t responded too negatively to this news, and it’s probably because there are boatloads of “more decentralized” alternatives, namely SushiSwap. Moreover, someone can just as easily host the Uniswap front end somewhere else and fork the code – the beauty of open source.
Even so, this looks like it could be the beginning of a bigger trend, and the real jugular DeFi needs to protect is stablecoins. Just last week, Canadian regulators barred cryptocurrency exchanges from listing / trading the USDT stablecoin issued by Tether.
This news was somewhat missed by the crypto media, yet it too could be a sign of bigger things to come. Keep your eyes peeled on the news this week and ask yourself what effects regulatory actions, if any, could have on the crypto market as well as your own portfolio.
Now, while things appear bearish on the regulatory front, it’s slightly more optimistic on the global macro front…
🤔 One Risk Off The Table 🤔
For those of you who watched my video two weeks ago about some of the risks and opportunities of Bitcoin, one of those risks was that the Fed would start to taper their bond buying program. There was talk of this happening because of higher inflation and an improving job market.
Of course, this mere talk caused markets to fall on the realisation that they would have to be weaned off of their easy money crack. Bitcoin was not immune to this and it also fell post release of the July fed meeting minutes. As I have said before, Bitcoin is now in a “risk on” bucket for global investors and it is becoming negatively correlated with interest rates.
Well, it seems as if this risk has somewhat subsided this week. That is because we had jobs data that appeared to show the recovery is not as strong as first hoped. This therefore means that the Fed is unlikely to want to taper for fear of hampering an already weak recovery. This was of course a signal to the stock markets that the Fed money party will continue – and they rallied in response.
It’s still pretty crazy to me that bad news for the broader economy can be construed as good news for the markets, but that’s where we are right now. Either way, this also helped to propel Bitcoin as it broke the $50k level again.
Yet, it seems as if everyone has once again forgotten the other reason as to why the Fed was considering tapering and that is because of the risks of inflation. I know that I have been talking about inflation for over a year now but it really is coming to a head. I have heard from so many people about how much prices have gone up over the past year. It’s permeating society.
Of course, not all of this is driven by Fed policy (demand pull). A great deal of it is also coming from critical shortages and the cost increases that come from it. This is the “cost push” or supply shock that has been driven by disruptions caused by the pandemic.
This is also likely to get that much worse on the back of surging Covid cases in the region. Factories in China, Vietnam & Malaysia have had to either close down or reduce capacity. This will mean further shortages for everything from Semiconductors to shoes. In order to remain profitable, these factories will have to increase their prices. On top of that, the cost of shipping these goods to the US and Europe is at record highs.
So, what does this mean for Bitcoin?
Well, I still maintain that it’s a highly effective hedge against inflation. Moreover, if there is a situation in which we have a toxic combination of low growth & inflation (stagflation), it’s likely to be one of the few global macro lifeboats.
One of the most interesting data points to watch will of course be the August CPI numbers. These are due to come out on the 14th of September. I happen to have a feeling that they will once again be above expectations.
So, it’s good to know that at least the “Taper risk” is off the cards for Bitcoin and the markets for some time. However, don’t forget those other risks.
🔝 Top Trading Tips 🔝
Over this last week I must have received over a dozen messages from friends saying they are back in the green after buying the top back in April and May. This is definitely good news, but the crypto market is slowly starting to look a bit frothy.
I said the same thing on Twitter back then and I’ll say it again today – the market might soon start getting a bit overheated, and when that happens you have to make sure you’re taking some money off the table.
If you’re one of the unlucky few who has not yet seen their altcoins moon, I have one word for you: patience. One of my mates is a die hard Litecoin holder and he was on the verge of selling his stash before LTC started pumping like crazy. Typically when your favorite crypto hasn’t rallied, it just means it hasn’t YET.
This obviously depends on the cryptocurrency we’re dealing with, but as a general rule of thumb, anything in the top 20 and especially top 10 by market cap will follow BTC sooner or later.
If you happen to be holding a meme coin though, you might be out of luck. As hyped as this market has been, we still haven’t seen nearly the same amount of buzz as the spring by all metrics (e.g. Google Search Trends, crypto fear and greed index).
This could mean that there are still bigger gains to be had, but it could also mean that what we’re seeing now is one big bull trap. To be clear, I’m not saying that this is a bull trap, but it’s important to be cognisant of the different outcomes and what the likelihood of them happening is.
This brings me to my final point, and that’s expectations…
I’ve lost count of the outrageous price predictions I’ve seen now that the bull market is back on the menu. The brutal truth is nobody knows how high or low the crypto market could go in the coming months. If you’re holding altcoins, their upside potential will be limited by Bitcoin, specifically Bitcoin’s market cap.
Be honest with yourself about the coins and tokens you’re holding and set reasonable expectations on when to take profits and cash out. This is what I do as part of my own crypto strategy which will be making a video about soon – so keep your eyes peeled for that.
🔥 Deals of The Week 🔥
So, you want to take advantage of those crypto markets and stay away from that dangerous leverage trading?
💶 Best Way To Buy & Trade Crypto: Now it is no secret that I am no fan of leveraged trading. But so many exchanges have those leveraged markets hidden away and the truth is that some people out there are tempted to use them.
What’s the solution? Setup an account at a top crypto exchange that doesn’t offer leveraged markets!
My top pick here would be the Swissborg app, I actually use it myself to get in and out of those crypto markets and to do a bit of trading on the go. Now, if you have been in crypto and your local currency isn’t a major global one like the EUR, then you’ll be all too aware of those annoying fees for switching currencies. Swissborg offers support for 16 different fiat currencies. Some of these are pretty exotic, like the South African Rand and Emirati Dirham.
All that makes Swissborg the perfect option for those wanting to get into crypto, whilst avoiding currency conversion fees.
Swissborg offers access to a reasonable selection of cryptos and that includes some more exotic plays like Enjin Coin, REN and Chiliz.
On top of all that, the app gives you easy access to some cracking crypto interest rates. Interest rates as high as 9% are available here!
Also, if you deposit €50 then you’ll get up to €100 FREE in CHSB tokens!
👉Try Swissborg & Get Up To €100 FREE!
Need help getting started on Swissborg? Well, you’ll want to watch my step-by-step guide!
🕴️ Best Crypto Tax Solution: Sadly, taxes are an everyday reality. Sure, you can pretend those gains never happened. However, I personally would rather sleep well at night. If you are in the same camp as me, you’ll want to make sure your tax calculations are as painless as possible.
Sure, you could do all that yourself by learning about your country’s tax rules and then spending days playing around with excel spreadsheets. However, those that value their time are going to want to grab a dedicated crypto tax solution, which automates nearly everything for you.
Personally, I turn to Koinly for all that tax mumbo jumbo.
👉 Try Koinly & File Your Crypto Taxes The Easy Way!
🗞️ Crypto News Focus 🗞️
– Legally Blonde Star Gets Into Crypto – Reese Witherspoon reveals that she’s bought into crypto following a $900 million sale of her company!
– Justice At Last – Bitconnect founder, finally charged by the SEC with $2 billion fraud!
– Cardano Says No To Vaccine Passport Feature – IOG boss says that his values and beliefs prevent him from getting involved in vaccine passports.
🔮 Video Pipeline 🔮
- My trading strategy revealed!
- Best crypto apps 2021
- Complete guide to using Solana
- Terra Update: Where is LUNA Headed?
- El Salvador adopts Bitcoin: What it means
- Complete Kraken Review: Worth It?
🏆 What’s New At CoinBureau.com This Week? 🏆
Sorry guys, there have been no new articles written by my team for CoinBureau.com this week. However, I am very excited to announce that the NEW CoinBureau.com website is up and running!
This has been the culmination of months of hard work. So, I hope you guys like it and think that this facelift has been well worthwhile.
Yes, my team is still tweaking a few things here and there. However, I hope this shows that the Bureau will stop at nothing to fulfil our vision to educate the world about crypto!
Anyhow, I’ll let you check out that new site at your leisure!
Now, that’s about it for this newsletter. However, I want to thank you for all the support that you’ve shown me and my team. It has been a crazy journey so far and I am super excited for you to be with me every step of the way. You are what makes all this crypto educational content possible.
Anyhow, I hope you learn a thing or two from my latest video and thanks again for being part of Team Coin Bureau.
Guy your crypto guy