Volatility Hits a 23-Month Low, What Now?

Market Meditations | October 5, 2020

Hello Meditators,

Koroush AK here, decided it’s time to mix it up from the generic intro. The cryptocurrency market is difficult to navigate right now, so I decided to give free subscribers full access today.

The crypto markets aren’t bullish or bearish, they’re just boring right now… As traders we can make money when the market moves, as investors we can buy cheaply in a bear market and sell in a bull market.

What do we do when the market is indecisive?

Assuming you’re not a trader who specializes in these conditions, sit back and wait till the low hanging fruit is available again.

We don’t make money calling exact tops or exact bottoms… There are so many variables at play that such precision is likely beyond any human’s capabilities and artificial intelligence is decades away from getting close.

I too feel the daily desire to jump in a trade and feel the thrill of the market but the market is an expensive place to chase thrills. Experience teaches us this, basic logic can as well if we ignore our emotions.

Right now is the time for patience, I’m risk-off and comfortable with increased FIAT and Bitcoin exposure. Knowing when to minimize exposure is essential, with global uncertainty, a pause in the crypto bull market and an overall shift in market sentiment it’s a perfect time to reduce risk. If the bull market continues we can join in later and if we enter a bear market we can play that accordingly.

Hope that intro was enjoyable, making an effort to make this a more personal experience that keeps you one with the market every week. Determined to make this newsletter one of the best in the market.

I will be continually implementing improvements and adding value. Meditators my content only matters because you read it.

Join hundreds of others today and get the full Market Meditations experience by becoming a premium subscriber.

Today’s Meditations:

  1. Kucoin CEO Claims Crypto Exchange Has Identified Suspected Hackers

  2. Bitcoin Volatility Hits 23-Month Low as the Cryptocurrency Shrugs off Bitmex and Trump’s Illness

  3. All Stocks Could Become Tokenized, Says SEC Chairman Clayton

  4. Google vs. Oracle Battle Heads to Supreme Court

  5. Mixed Signals Around Trump and Coronavirus

  6. Iran’s Stock Buying Frenzy Gives Way to Market Fall

  7. Sunnak Commits to Strong Public Finances and Warns of ‘Hard Choices’

  8. The Power of Habit

Crypto News

Oct 5. Zilliqa (ZIL): Zilswap release

Oct 6. Balancer (BAL) and Ren (REN) start trading on Coinbase

Oct 8. Loki (LOKI): SaltySaga hardfork

Oct 5-12. AdEx (ADX) project reveal

Global News

Oct 6. Speeches from Lagrade and Powell. 

Oct 7. Release of FOMC minutes.
Oct 7. Speech from Bailey. 

Google vs. Oracle Battle Heads to Supreme Court

A decade long legal battle between Google and Oracle finally reaches the US Supreme Court this week, many in the tech industry will be following the proceedings with unusual interest

It is not just that the oral hearing scheduled for Wednesday marks a rare confrontation at the top US court between two tech giants, with Oracle claiming $9bn in damages over illegal use of its software. 

Nor is it because the case comes to head just as the two find themselves on a political knife edge in Washington. The politically well-connected Oracle is trying to win government backing for its deal for TikTok’s international operations, while Google is facing the prospect of a landmark antitrust complaint from the Department of Justice, expected imminently. 

But for many in the tech world, the main interest of the case rests on a fundamental tech issue. A Google loss, according to the company’s supporters, would reverberate across the industry, greatly increasing the power of companies that control the most widely used technologies, and making life hard for would be challengers. 

  • Mixed Signals Around Trump and Coronavirus. The messaging around Donald Trump’s coronavirus illness has been mixed and confusing to say the least. He was taken to hospital on Friday as a precaution for his health. Trump’s age combined with his weight puts him in the high risk category; unknown to many is that 74 year old Trump actually weighs 110kg (almost 18 stone). The confusion arises from the fact that on the one hand, Trump’s doctors have reported he is well and that he is showing signs of improvement. On the other hand, Mark Meadows (White House Chief of Staff) commented that Trump’s vital signs were ‘very concerning’ and it was reported that Trump was given both supplemental oxygen and steroids as a result of his oxygen levels. The market seems to have reacted more to the positive tone and we have seen a degree of risk sentiment stabilization. Read more.

  • Iran’s Stock Buying Frenzy Gives Way to Market Fall. Iranian stocks have plunged more than a quarter since their August peak, threatening losses for retail investors who had flocked to the market. Tehran Stock Exchange’s benchmark Tedpix index topped 2m points for the first time earlier this year after share sales in state-owned companies helped to encourage a new generation of Iranians to buy stocks. But the index has since slumped about 28 per cent, trading below 1.5m points on Monday, in what analysts say is one of the most dramatic swings on record. Saeed Laylaz, an economist, described the sell-off as the bursting of a bubble inflated by the government’s revenue-raising initiatives and the related stock-buying frenzy. “The market is correcting itself,” he said. Maciej Wojtal, chief investment officer at Amtelon Capital — one of the very few foreign hedge funds to invest in Iran — said positive sentiment had become “too extreme” in recent months, with anecdotes of Iranians selling properties to increase their stocks exposure. “A lot of retail investors incurred heavy losses and the sentiment changed,” he said. More than 3m investors joined the stock market in the four months to July, according to domestic media, compared with a typical annual figure of about 600,000. On average, each bought stocks worth a few hundred dollars, according to one source close to the government. Read more.

  • Sunnak Commits to Strong Public Finances and Warns of ‘Hard Choices’. Rishi Sunak, chancellor, has used a speech to the Conservative annual conference to speak of the party’s “sacred responsibility” to strong public finances, warning of “hard choices” ahead as he seeks to balance the books. Mr Sunak put his party and the UK on warning for tax rises ahead once the coronavirus crisis has passed, a tough message for Tory activists whose enthusiasm for fiscal discipline is matched or exceeded by a passion for tax cuts. “We have a sacred responsibility to future generations to leave the public finances strong”, he said in a short video speech to the “virtual” conference. He said that “through careful management of our economy, this Conservative government will always balance the books”. With prime minister Boris Johnson ruling out a return to austerity, the burden is likely to fall mainly on higher taxes.Read more.

  • Kucoin CEO Claims Crypto Exchange Has Identified Suspected Hackers. We wrote about the latest details about the Kucoin hack in our Wednesday edition and it now appears that the Singapore based cryptocurrency exchange has identified those responsible for ~$280 million hack. A decent amount of the stolen funds was already recovered; with blockchain projects and exchanges freezing funds, in an effort to prevent the hacker from monetizing his attack. On Saturday, Kucoin’s CEO tweeted that they had found the suspects with substantial proof at hand claiming that law enforcement and police were already officially involved to take action. Read more.

  • Bitcoin Volatility Hits 23-Month Low as the Cryptocurrency Shrugs off Bitmex and Trump’s Illness. Institutional recognition and money inflows comes with dampened volatility, a trend that is increasingly noticeable on Bitcoin charts. Bitcoin’s 180-day volatility dropped to its lowest levels since November 2018, reaching a 23-month low as the market absorbed last week’s bad news about Bitmex’s case and Trump’s Coronavirus infection. Both resulted in a less-than-five percent drop for Bitcoin, continuing its calm period in the normally volatile cryptocurrency market. According to Coin Metrics data mentioned in the article, bitcoin volatility has dropped 43% in the last 30 days. Read more.

  • All Stocks Could Become Tokenized, Says SEC Chairman Clayton. Jay Clayton, chairman of the U.S. Securities and Exchange Commission (SEC), believes that all stocks could become tokenized one day and the also commented that the SEC’s door is “wide open” if someone is able to show how tokenizing an ETF product can add more efficiency. In a webinar on Friday, Clayton said that all stock trading is electronic today, compared to 20 years ago. The webinar was focused on what is needed to grow the blockchain and crypto space in which both Clayton and Brian Brooks, former Coinbase employee, said that they welcome innovation in the crypto space as long as it is within regulatory frameworks. “We have a strong interest in trying to envision a medium-term future, not a tomorrow future where people are speculating on bitcoin price movements, but a medium-term future where these blockchain networks that have been built are basically the internet of finance…are kind of a mind-blowing challenge to the banking model.” said Brooks. Read more.

The Power of Habit

“We are what we repeatedly do. Excellence, then, is not an act, but a habit.” – Aristotle

Everybody understands how important habits are in our day to day lives. According to researchers at Duke University, habits account for about 40 percent of our behaviors on any given day. Your life today is essentially the sum of your habits, good and bad ones. Few understand that habits can be changed. We can choose our habits, once we know how. In his seminal book ‘The Power of Habit’, Charles Duhigg writes about the habit loop as a three-step loop:

  • Cue: a trigger that tells your brain to go into automatic mode and which habit to use.

  • Routine: an action which can be physical or mental or emotional.

  • Reward: which helps your brain figure out if this particular loop is worth remembering for the future.

It’s important to realize that cravings (for the reward) drive habits. Therefore, figuring out how to spark a craving makes creating a new habit easier. Any behavior can be changed if you take a cue, provide the same reward, but shift the routine that gets you there. According to Duhigg, these are the steps to take if you want to change a habit:

  1. Identify the routine (you want to change)

  2. Experiment with rewards until you identify which one it is you crave

  3. Isolate the cue

  4. Have a plan

Realizing the cue that puts your brain into automatic pilot is the first step towards breaking a bad habit or introducing a good one. Cues can be location, time, emotional state, other people or actions. One you’ve found the cue and you know the reward that your brain or body craves, all you have to do is change the routine.

It ultimately comes down to this: “If you use the same cue, and provide the same reward, you can shift the routine and change the habit. Almost any behavior can be transformed if the cue and reward stay the same.”

Disclaimer: The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. I am not a financial advisor. Every investment and trading move involves risk. Do your own research when making a decision.