Scoop in this issue…. 6-minute read…

✍️ Bitcoin Hits 99,000 🚀 and dropping

✍️ WALL-STREET-BETS Redditer’s Hate Bitcoin ?

✍️ SEC Gensler stepping down? Really ?

✍️ Ethereum to 5000?

✍️ What’s next for Altcoins?

✍️ U.S. banks on whopping $750 billion in unrealized losses. 2008 back again ?

_{✍️ Bitcoin Hits 99,000……. Yes to the Moon !} 🚀 

Last week Bitcoin made all time high of $99,000. Unbelievable for many, dream for some and hard-work o Crypto believers! It was definitely not a easy path but it did happen. X (twitter) platform was filled with positivity and enthusiasm. Some traditional media did speak about Bitcoin reaching 100k.

Even Jim Cramer too. He stopped Bitcoin touching 100k and its kind od real : ) We all know about Inverse Cramer strategy!

Elon Musk also believes Inverse Cramer works well and tweets few hours ago. So if you want to make money Inverse Cramer is the strategy which is what X says. ( Not a financial advice)

_✍️ WALL-STREET-BETS Redditer’s Hate Bitcoin ?

With all this Crypto party… there was Wall Street Bets, who is betting against Bitcoin.

Michael Saylor, the God father of Crypto, Dimond Hand of Bitcoin , boss of MSTR calls them out. WSB was considered the people ‘s group but post Robin hood gamestop channeling, now they have been lost in touch of real people.

WSB do not want to be out friends and always against the trend.

✍️ SEC Gensler stepping down? Really ?

Finally there is hope for Crypto Innovation in the Unites States.

SEC Chair Gary Gensler announced he will be stepping down from his position on January 20, 2025. Gensler, who has been a prominent figure in financial regulation, especially in the cryptocurrency sector, served as SEC Chair since April 2021.

His tenure was marked by rigorous enforcement actions against various crypto companies and a significant focus on crypto-related issues including Chokepoint 2.0 in an attempt to kill the blockchain industry in the US.

The ongoing slaughter of lawsuits against the crypto industry has driven blockchain innovation out of US. I guess it can be converted to loss of innovation in the US and lost tax from the crypto industry in billions which probably also turn blockchain innovators vote against the current administration.

We understand new technology is not easy and regulating them is not easy either. I guess it went beyond fair with Chokepoint 2.0.

The announcement comes in the wake of Donald Trump's re-election, with Gensler's departure seen as part of the incoming administration's likely shift in regulatory approach.

✍️ Ethereum to 5000?

Ethereum is riding the free money ride with Bitcoin. Why?

That’s because the core issue of Ethereum is the gas prices and this hasn’t been fixed yet since last bull cycle. Layer 2’s are supposed to be the answer for the ridiculous fees for Defi- Transactions. Well its got better but not there yet when you compare it to Binance chain. Infact BNB chain was created to lure Ethereum folks due to insane gas fees.

On the flip side, Ethereum holders believe its Digital Silver. The tokens are not to be used for transactions and for rich folks. Well in a way its becomes real as price keeps going up. However, it questions the fundamental of Ethereum using it for Defi.

So what does fees means? Let’s say I buy a table for 100 bucks from person B. To transfer 100 bucks, I need to pay 400$ as transaction fees. Yest. This is real when traffic is congested or when lot of people perform transaction.

You can ask me how do I know about Ethereum transaction fees?

I was a Defi trader during last bull run and I have paid 300-400 per transaction. Call me crazy but its real money I paid to perform Uniswap transaction on Ethereum blockchain. It works out when large sums of transactions are performed. Story for another day.

Bottom line this is not sustainable. If I have to pay $400 for each transaction, then the blockchain is not a usable chain. At times, I used L2’s to perform transaction which did reduce gas but it doesnt work for all tokens in Defi. Again it is complicated for most folks unless one understands the technical part of it to perform swaps.

As a techno person, I am neutral on Ethereum and I want them to succeed. Either ways Ethereum will ride the wave with Bitcoin to 5 or 10,000. Lets see.

Time for some fun!

✍️ What’s next for Altcoins?

Altcoins phase is about to begin. In theory money from Bitcoin moves to Ethereum and then to other Altcoins.

Will this actually happen this way ? Not all the time since during 2021, the actual alt season didnt happen.

One can also say, we had mem coins season. Remeber the Doge and Shib ? Yes a little of it. True but before anything happened significantly, SBF’s FTX downfall happened taking the entire Crypto markets to the ground.

There are a dozen predication on Altseason. I cant say for sure when this will happen. However on average, most predictions falls for end of Q1 to Q2 for the Alt Season.

The below shows correlation of Alt-season based on Elliot Wave Theory.

Path to Alt-season :

Here is how the money flows from Bitcoin all the way to Altcoin. I do not have the actual source but have this from a thread on X from the past.

✍️ U.S. banks whopping $750 billion in unrealized losses

( This may be little serious topic)

U.S. Banks Sitting on $750 billion In Losses On Real Estate Debt Related Securities.

Is it 2008 again where we need to bail out the banks ? Will Fed print couple of more trillions at our expense ? or is it normal? Lets discuss.

I came across the below graph on X and then started to dig a little more. These dooms day concerns have been around for a while but this one definitely sounds trouble in one or the other way. Bezing’a content gave good details around it.

The current situation is raising concerns for several reasons. Firstly, the estimated $750 billion in unrealized losses is approximately seven times more than what banks held during the financial crisis of 2008. This significant increase in unrealized losses highlights potential vulnerabilities in the banking sector.

Secondly, many of these unrealized losses are concentrated in portfolios that are crucial to bank profits, increasing the financial risk for these institutions.

The most at-risk portfolios include:

• AFS (Available for Sale): These are debt or equity securities that a bank might sell before they reach maturity. Unrealized losses in this portfolio can impact a bank's capital and income.

• HTM (Held to Maturity): These are investments that a bank intends to hold until they mature. While these are not marked to market and therefore don’t affect current earnings directly, significant unrealized losses can still pose a risk to the bank’s long-term financial health if the assets are sold before maturity.

These concerns emphasize the need for banks to manage their portfolios carefully and for regulators to monitor these risks to ensure financial stability.

One of the most concerning aspects of the potential $750 billion in losses is the significant portion tied to residential mortgage-backed securities (RMBS). Banks invested heavily in these securities when interest rates were low, attracted by the ease of acquiring large debt tranches and the liquidity of the underlying assets. However, these investments now pose substantial risks as high interest rates slow sales in Available for Sale (AFS) portfolios and many Held to Maturity (HTM) loans approach their maturity dates.

Increased financing costs are significantly eroding previously profitable margins, and investors are becoming wary of purchasing RMBS in the current economic environment. This wariness decreases the value of bank-held RMBS and increases potential losses on the underlying assets. Holding large, depreciating AFS or HTM portfolios has become increasingly risky, as demonstrated by the collapse of First Republic Bank in 2023. The unrealized losses on its commercial loan portfolios were a major factor leading to its downfall and subsequent takeover by JP Morgan Chase. This scenario highlights the precarious position banks are in due to their substantial RMBS investments and the broader implications for the financial sector.

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Thats it for now. Hope you enjoyed this educational newsletter and helps you understand more about crypto space.

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