What Could Go Wrong?

Dear Investors,

While the market sentiment is turning optimistic, we have an important week ahead of us.

Let’s explore what could shake the markets and either offer one more dip or kick off the next bullish period.

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Ether US ETFs

The US Ether ETFs should be launched next Tuesday, July 23rd, a major event bringing the second-biggest cryptocurrency to traditional investors and hedge funds.

When this happened with Bitcoin, it was the “buy the rumors, sell the news” event. This means investors sold BTC when the ETFs were approved, and the price briefly declined before the new money started flowing in through the ETFs.

This can happen again, and ETH can experience a brief decline before the money starts flowing in.

Furthermore, the numbers in the first few days of trading will be crucial as investors anticipate signs of actual demand for Ether.

• Low inflows:?New investors are not interested enough in ETH, and prices drop as the current valuation has priced in new demand.
• High inflows: We are not even at the previous all-time high; the asset is undervalued and should trade around $4,500 levels

If approved (Monday), it will be a volatile week, and long-term ETH will benefit from new inflows that could bring the price above 2021 levels ($4,878 in Nov 2021).

Mt. Gox

We covered this in the last newsletter — Mt. Gox distributing approximately?$9 billion in BTC, which will also start next week.

Kraken plans to release all $3b of BTC they received from Mt. Gox in the next 12 days.

It is unclear how many of the investors would sell and if right away or slowly over time. The exchange collapsed in 2014 when BTC was around $400 - $1,000, giving those investors 60x-150x returns, and they have been waiting ten years for their funds.

Imagine being in their shoes. Would you sell or hold?

This decision will shape the next two weeks and the price of BTC.

If they sell, it depends on how quickly and if the market demand can offset it. If not, it will trigger liquidations of leveraged positions, and we can see a sharp decline.

NVDA and Tech Stocks

On Wednesday, the S&P 500 was down 1.4%. Why?

Because the Biden administration is considering using severe trade restrictions if companies continue to give China access to advanced semiconductor technology.

After this news, NVIDIA, AMD, and Broadcom all fell 6%, dragging the market as well.

The big tech companies capture 30% of the S&P 500 index, and if their individual stocks decline, it also has a?significant effect on the market.

Next week, most of them report earnings.

As with previous events, there is a positive and negative scenario. If they surprise and beat the earnings, again, the market can go higher.

If they miss the earnings, it could drag down the traditional indexes and, with that, spook crypto investors as well.

My Thoughts

The big mistake I can see here is making a harsh decision and trying to catch the market — both panic sell and panic buy.

I have decided to keep some cash ready for next week's events and to buy the dip. If there is no dip and crypto takes off, then I keep the cash and wait, not jumping in at the last minute when it is exploding.

Meanwhile, I’m increasing my positions in altcoins, mainly Avax and Solana, and watching the DePin/AI infra sector to increase my position there over the next 2-3 weeks.

Regards,

Matt Curda

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