Foreign To the coin Bureau Weekly News Roundup Here are the top stories in crypto this Week Crypto Market uncertainty coins and Tokens take a pause after an Unprecedented recovery rally as Indicators continue to extend into Overbought territory how much higher Could crypto go Ethereum unstaking testnet developers Deployed the first of three test Nets in Preparation for the highly anticipated Shanghai upgrade which will allow Validators to withdraw what does this Mean for eth Crypto regulations incoming the Governments of India the Philippines Hong Kong and the UK all announced Details about their upcoming crypto Regulations everything you need to know Google versus Microsoft two of the Biggest Tech Giants compete for AI Dominance and Retail investors wonder How to get exposure to this new asset Class here's why you shouldn't get too Excited just yet U.S debt default Republicans and Democrats lock horns Over raising the debt ceiling while the Treasury Department continues to flood The markets with liquidity here's when The money injections could end And we'll close out in style as always With the thoughts of Mr Benjamin Cowan
All this and More in just a moment Good morning afternoon or evening thank You for tuning in my name is guy and What you're about to see is educational Content not Financial advice and here is The news Last week the total crypto market cap Surpassed one trillion dollars for the First time in months this massive move Was driven by the Federal Reserve Specifically the fed's press conference On Wednesday where Jerome Powell Acknowledged that inflation is starting To come down more on that tomorrow Now the crypto Market slumped in the Days that followed and this was for two Reasons the first was big Tech earnings Q4 2022 earnings for Apple Amazon and Alphabet were all much lower than Investors expected crypto's correlation To tech stocks caused most coins and Tokens to slide along with share prices The second reason why the crypto Market Slumped was the jobs report for January The number of open jobs in the US last Month was more than double what Investors were expecting This underscored the fact that the labor Market is still tight which is something The FED is trying to stop by raising Rates what's odd is that the markets Didn't crash nearly as much as expected On this news now this could be because Investors don't believe these job
Statistics are accurate it could also be Because investors are more focused on The fed and believe that it will pause Or pivot later this year regardless of Job stats in any case it's clear that The recent crypto Market rally has been Driven almost exclusively by Institutional investors besides the Confirmed buying of BTC by institutions The unsustainable rallies we've seen in Cryptos with lots of VC investment Suggests institutions are trying to Create exit liquidity more about how Vesting impacts crypto prices using the Link in the description anyways what's Annoying is that the charts for BTC and Eth are sending conflicting signals on The Daily the 50-week and 200-week Moving averages are about to create a Golden cross prices typically tend to Rally after this happens and history has Shown that crypto prices can rally for Months afterwards the thing is that the Weekly chart shows that the 50-week and 200-week moving averages are about to Create a death cross for BTC and could Soon create a death cross for eth these Longer term price trends can take Precedence over short-term price trends Which could invalidate the Golden Cross Not only that but the daily charts show A massive Divergence between price and The RSI for both BTC and eth The macd also suggests that we're in the
Middle of a trend reversal to the Downside in plain English these two Indicators suggest that the current Crypto rally is losing momentum by the Day what's concerning is that the weekly Charts for BTC and eth are starting to Show the same divergences we see on the Daily with the RSI the caveat is that The macd is far from showing a trend Reversal this suggests that the rally Could last for a little longer perhaps Because of the golden cross fomo the Charts for eth against BTC are where Things get interesting the daily chart Suggests that eth is about to start Losing lots of value against BTC This is because of the death cross the Divergence on the RSI and the trend Reversal on the macd the weekly charts Suggest the start of a downtrend too This is why I couldn't help but feel a Bit anxious when I saw the news that Ethereum developers had announced the Launch of jejang which appears to be the First of three test nets for the Shanghai upgrade in March obviously if Anything goes wrong with these test Nets Then eth could plummet this is simply Because validators on ethereum's Beacon Chain have been waiting for more than Two years to withdraw their staked eth And their staking rewards if anything Goes wrong with any of shanghai's test Nets withdrawals of staked eth and
Staking rewards could be pushed back by Months or more the Xiang test net should Be complete sometime today the two Remaining test nets for Shanghai will be Going live sometime today or tomorrow It's not entirely clear how long the Second two test Nets will last but it Sounds like they'll run in parallel for The remaining weeks leading up to Shanghai if you watched our latest Ethereum update you'll know that the Ability to unstake Ethan claim staking Rewards will increase the confidence Institutional investors have in the Project which could lead to inflows and Pump eth's price Conversely selling of eth rewards by Validators could crash eth's price then There's the issue of on-chain censorship As some of you may have heard more than 70 percent of ethereum blocks were Complying with U.S sanctions a few Months ago making it harder for some Transactions to get confirmed the good News is that this number has since Fallen to 60 percent the bad news is We're about to get the first big test of Ethereum's censorship resistance that's Because spare Bank Russia's biggest bank Has announced that it will be launching A D5 protocol on ethereum sometime Between now and may newsflash Russia has Recently been hit with lots of sanctions Spare Bank launching a D5 protocol on
Ethereum could therefore increase the Regulatory scrutiny of eth and possibly Even the entire ethereum ecosystem in The U.S and elsewhere the idea of an Ethereum Crackdown sounds insane Until You realize that Defy is designed to Replace existing Financial institutions It's also worth pointing out that the Only cryptocurrency that's been Confirmed safe from the SEC is bitcoin's BTC that's because SEC chairman Gary Gensler has repeatedly insinuated that Every other crypto is a security heck he Even said proof-of-state cryptos were Securities on the day of the merge now I'm by no means an expert in the sec's Reasoning but I do worry that Gary will See eth as being more like a security Once it's possible for validators to Withdraw their stakes and claim staking Rewards then again it's more likely that The SEC will instead Target another Large crypto it knows it can take down This ties into another pressing topic And that's crypto regulations in general If you watched our video about the Upcoming bullish catalysts for the Crypto Market you'll know that crypto Regulations are one of them That's because they will create the Clarity institutions need to invest more In the industry as I also mentioned in That video however not all these crypto Regulations will be good and it's likely
That a few of them will be very bad when They're first announced the Silver Lining is that the increase in Investment will inevitably increase the Lobbying to remove these bad regulations In the longer term in the short to Medium term however the appearance of Any sub-optimal crypto regulations from Certain jurisdictions could do serious Damage to the crypto Market a great Example here is India which recently Doubled down on its harsh crypto taxes In 2023 promising jail time to any Violators India also revealed that it's Working closely with the international Monetary fund or IMF and the G20 Countries to create standards for Global Crypto regulation this is scary because The IMF is extremely anti-crypto Discouraging the adoption of crypto has Literally been a part of its government Debt deals now it's a similar story in The Philippines where the Filipino Security and Exchange Commission is Looking to crack down on the crypto Industry with its new regulatory Proposals I suspect this has something To do with axi infinity the popular nft Game which was reportedly being played By almost 1 million Filipinos in Hong Kong meanwhile the government is looking To introduce stablecoin regulations by The end of the year which will require All stablecoin issuers to register with
Regulators this could cause short-term Pain if usdt doesn't make the cut but it Would result in long-term gain as Trusted stable coins grow and in the UK The government finally released a first Draft of possible crypto regulations I'll be going through these in detail Later this week all you need to know for Now though is that stable coins are Surprisingly not targeted but the UK Wants to crack down on icos and wants More information about D5 Tron founder Justin Sun Also recently Said that China will be legalizing Crypto this is because the country is Going to start taxing crypto Transactions I'm skeptical given the Ccp's cbdc Ambitions but I suppose Hong Kong legalizing crypto for retail Investors later this year could be what Justin is talking about meanwhile in the United States the cftc is urging Congress to create some common sense Crypto regulations with some luck these Crypto regulations will be focused on The cftc which has been a much more Reasonable regulator than the SEC Unfortunately it's too soon to say what The US will do that said it wouldn't Surprise me if the U.S reveals its own Crypto regulations by the spring this is Because the spring seems to be when most Other governments will be revealing Their crypto regulations again the
Crypto Market could go both ways on this News just remember we're in a bear Market That is unless we're talking about AI Related cryptocurrencies of course these Have been posting triple digit games Over the last few weeks this is Essentially because there's no way for Retail investors to get exposure to AI All the AI companies are private and Limited to VC investment If you watched our video about open AI Though you'll know that it was in talks To receive 10 billion from Microsoft for Almost 50 percent of the company this Deal has now closed and this investment Combined with Microsoft's current and Future open AI Integrations has Investors saying it's the best AI play Now this is debatable because Google has Been working on AI much longer than any Other publicly traded company and Arguably has access to more data than Any other publicly traded company take a Second to consider that openai was Created as an open source response to Google's deepmind AI initiative although Microsoft's de facto acquisition of open AI reportedly has Google on Red Alert Google has moved quickly to address Concerns that it's falling behind in the AI cyberspace race Google will Reportedly be revealing an alternative To chat GPT this Wednesday so keep your
Eyes peeled Google has also been Aggressively investing in AI over the Last few months what's scary is that its Latest AI investment was in a company Which had received over 500 million Dollars from FTX and Alameda research Founder Sam bankman freed just a few Months before his exchange and trading Firm collapsed the AI company in Question is anthropic and Google Invested 300 million dollars for a 10 Stake Google's investment is estimated To have made Sam's stake in the company Worth well over 1 billion dollars which Begs the question of what he will do With that money probably spend it on Cucumbers In all seriousness Google's peculiar Investment just underscores how Interconnected the elites are while Sam's earlier investment in anthropic is Probably nothing more than a coincidence It's still being viewed with scrutiny by The crypto community and rightfully so The FTX Alameda plot just keeps on Thickening Now as exciting as all this AI hype has Been there's one reason why all the Speculation could come to a screeching Halt and that's regulations to my Knowledge there aren't any countries That have introduced AI regulation yet And there's no way in hell that Governments will allow AI to go
Unchecked what this means is that we're Going to see AI regulations sooner Rather than later governments could go As far as demanding a pause on all these Technologies until they can catch up and Understand what's going on That's because they can't afford to let This industry get away from them like All the others did technology is a Deflationary force and deflation makes Debt more expensive AI is probably the Most deflationary technology that's ever Existed and it's starting to go Parabolic this means that debt would Eventually become exponentially more Expensive and that is something Governments can't allow This relates to another pressing issue And that's the debt ceiling if you Watched our video about the debt ceiling And when governments could default You'll know that the US government is Currently scheduled to default sometime In the summer unless the debt ceiling is Raised by Congress you'll also know that The debt ceiling deadline passed because Of a disagreement between Republicans And Democrats about government spending Republicans want the government to cut Spending and after the most recent Midterms they have the ability to block A debt ceiling raise until this happens It initially looked like the Democrats Were ready to compromise but according
To the hill they are now planning on Something called a discharge petition to Raise the debt ceiling without any votes From Republicans the discharge petition Process will begin sometime in March Assuming they go this route this is Significant because raising the debt Ceiling would be bearish for the markets This is because the debt ceiling means The treasury can't issue new bonds and Must spend money from its account Instead this has reportedly contributed To the recent Market rally for reasons I Honestly don't understand what I do Understand is that the opposite outcome Would likewise result in a market crash For context the US government nearly Defaulted on its debt back in 2011. this Caused the markets to Crash by almost 20 And resulted in U.S government bonds Being downgraded for the first time ever In the absence of a discharged petition In March the next month to watch will be April this is when U.S President Joe Biden is expected to sit down with Republicans to discuss the details of a Bill to raise the debt ceiling if they Can't come to an agreement then the Markets may start to crash in advance This is more than likely to happen if The FED continues to sell U.S government Debt from its balance sheet selling U.S Government debt is shortening the U.S Government's Runway this means that the
Government could default sooner than June if the debt ceiling isn't raised Sometime in the spring Anyway it's safe to say that the world Has been very volatile lately this might Feel overwhelming at times but it's Important to remember that when there is Lots of chaos there's also lots of Opportunity pay attention no matter how Much it hurts to look and take advantage Of the opportunities that arise and on That note it's time for Ben Cowan's Amazing crypto analysis take it away Ben Hey guy thanks for having me pleasure to Be here as always I wanted to spend a Little bit of time today talking about Modern portfolio Theory this has been Something that's been used in Traditional Finance for decades of Course but I do think it's worthwhile to Use it to try to better understand Cryptocurrency and the risks that come Along with it so in this case what we're Looking at here is the expected return Versus volatility now we might wonder Well how could we possibly know what the Expected return will be we don't right We don't we simply cannot know what the Expected return would be at any at any Point but what we can do is we can take Historical returns and then sort of Project those out into the future now Unfortunately as the market caps go up Diminishing returns becomes increasingly
More of a thing that we have to deal With it was a thing last cycle and the Cyclical for that the cycle before that So unfortunately diminishing returns Will likely continue But we can at least get a better Understanding of of what is the risk You're taking on for various portfolio Allocations so you have your expected Return which is based on historical Returns versus volatility and if you Wanted to maximize your risk-adjusted Returns based simply on historical Returns and and volatility you'd be Looking at at the sharp ratio which says That it's 67 Bitcoin and 33 ethereum now This is not Financial advice this is Just simply based on historical data That's all it's based on and what's Interesting is and the way to understand This is six seven percent Bitcoin 33 Each Is that we would say all right well the Annual expected return for this Portfolio would be about 65 Plus or minus 78 79 okay so what that means is Annualized this portfolio based on what We've historically seen has given 65 Percent plus or minus 78 or so now the Likelihood that the return projected out One year falls into this range is 68 or Within one standard deviation so you Would generally expect this portfolio
Allocation to give you a return of 65 Plus or minus 78 meaning it could be Negative but it could also be you know Over a hundred percent that might seem Kind of a wild range but It's kind of why we're here right I mean The volatility of crypto is is is quite Attractive to to a lot of people and we Also must remind ourselves that in in January alone Bitcoin went up about 40 So we do understand that that volatility Is is rampant in the crypto verse and And therefore sort of the expectations Um you know while they might always seem Well they might seem very optimistic There are risks that come with it to to Both the upside and the downside now Let's suppose though that someone wanted To take on more risk For instance I don't really like taking On a lot of risk I prefer to be you know As conservative as as really I can while Still maintaining exposure to the Cryptoverse but some people might say You know what I I want to take on more Risk to try to chase a higher return Right And so therefore you know if you look at Historical bull markets in the altcoin Market you can find better returns Historically in the altcoin market than In Bitcoin that's just a fact at least Over the last several Cycles now if you Look at bitcoin's first cycle it it
Pretty much dwarfs any anything else That we looked at but compared to where Bitcoin is today a lot of the altcoin Market can outperform it in a bull Market Unfortunately they can they can Drop a lot harder in a bear market so There's sort of a fine line there but What you'll notice as you go up this Curve which is also known as the Efficient Frontier the portfolio Allocation shifts away from being heavy Bitcoin to being heavy ethereum so as You continue to go up For instance if you're looking for an Expected return of 80 percent annualized You would have to go all the way up here And the portfolio and this again is just Based on historical returns it's not Projecting out you know what what will Happen or anything like that says it'd Be about 10 Bitcoin 90 each but there's No guarantee of course that you'll see 80 return it's just saying that within One standard deviation or 68 probability Your annualized return will be eighty Percent plus or minus a hundred and ten Percent meaning it would range from Negative 30 percent to two to one Hundred and ninety percent and that's What your expected annualized uh return Would likely be to within one standard Deviation so there's a chance it could Fall outside of that range although you Know it's uh it'll say like a 32 chance
It could fall outside of that range Based on what we historically see So it what I like about this chart is That it shows you that there's really Not a right answer right there's not a Right answer to what a portfolio Allocation should be it's just it Depends on what risk are you willing to Take on for someone that wants to Minimize their volatility which is this Blue dot here it would mean 93 Bitcoin And seven percent ethereum now you might Say well why wouldn't it just be a Hundred percent Bitcoin it's because to Minimize your volatility it can also it Can often include things like you know There's some days where where Bitcoin Might go down where perhaps ethereum Goes up some that day and so sometimes It can be useful to actually have you Know to be slightly Diversified to help Help reduce your overall volatility that Way you're not only exposed to the Idiosyncratic risk of a single asset but You're you're getting it sort of spread Out over multiple assets So there's some people who would only Want to be you know all the way down Here very very conservative there's some People that might be might like to be at The sharp ratio which is 67 Bitcoin 33 Eth there's also something called the Sortino ratio now the difference between The sharp ratio and the sortino ratio is
The sharp ratio punishes positive Volatility so you might say well if You're in crypto why would you punish Positive ultimately you want to see Positive volatility so that's why you Have the sortina ratio which does not Punish positive volatility it only Punishes negative volatility and you can See when you change it from the sharp Ratio to the sortino ratio you go from 67 Bitcoin to 33 Eve to 65 Bitcoin and 35 each so again it really depends on on You know what exactly you know what Definition you're interested in in terms Of understanding what the volatility is Or what the risk is Um on the portfolio allocation is is Going to be very dependent on on what Risk any individual person is willing to Take on now I know this is some somewhat Simplistic we have Bitcoin and ethereum We can add Litecoin and you know Litecoin has been around for for quite a Long period of time as well so we can Actually recalculate this out with Bitcoin ethereum and Litecoin and Interestingly enough the sharp ratio is Maximized with 67 Bitcoin 33 each But that's what we saw in the last chart Right and the sortino ratio is maximized With 65 Bitcoin and 35 each which is Also again what we saw on the last chart So it sort of like raises the question Well why is that
Well unfortunately for Litecoin it's Just that it's not that it can't go up Right it's not that it can't go up it's Just that Historically it hasn't been as worth the Risk because even though sometimes it Can go up normally you have Bitcoin and Ethereum outperforming it that's why if You pull up a Litecoin chart on its Bitcoin pair or on its ethereum pair it Tends to bleed over the macro scale and That's why you see that it shows zero Percent now interestingly enough though If you wanted to minimize your Volatility it would actually call for Having a little bit of Litecoin 92 Bitcoin five percent eth three percent Litecoin that would actually help you Minimize your volatility now you know I I could simply leave it at that And and just sort of leave leave Litecoin thrown under the bus but I I Will remind people that there's Historically one time during the cycle Where where Litecoin tends to shine and I mean not anyone who's been licking a Litecoin for the last several months has Seen it right Litecoin tends to do Better than some of the other than a Majority of the of the market during its Having year so we saw that in 2015 we Saw that in 2019 and we're also seeing It now again in 2023 to having of course For Litecoin is coming up this summer
But again on a macro basis like a Portfolio that's you know designed to Carry it be carried out for say like Five or ten years it does say that it Still should just be limited to bitcoin And ethereum based on historical returns Now if you had you know the opinion that Litecoin was going to finally start out Performing then you would not want to Use historical returns so then project Out what you should have maybe you have Some you know you have some insight into It and you think it will outperform this Time then of course that's where that That's where Things like this could break down a Little bit if if they no longer go based On their historical returns but I did Think that this was you know interesting To look at and again this this lineup Here is known as the efficient Frontier So on the efficient Frontier you're Maximizing your return by going with That portfolio per unit risk you're Taking on so for instance if you wanted To Max if you wanted an expected return Of 70 and you want to just be on the Efficient Frontier you would just simply Go over here to 70 scroll over and you Would say okay well at about a 70 Percent Expected return the portfolio that would You know maximize my my Sharp ratio at That expected return would be about 45
46 Bitcoin 52 each and two percent Litecoin now where you probably would Not want to be based on historical Results not based on projected but just Based on historical where If you go down here this is sort of like The inefficient Frontier right this Would show only like 35 Bitcoin like two Percent eth and then like 62 Litecoin Which would not you know at least based On what we've historically seen would Not be Um the most optimal because again it's It's minimizing the ethereum component Uh when ethereum has outperformed both Of them for the last several years so This is an interesting way to look at The data again we always have to remind Ourselves that in Bull markets you know Bitcoin can up form early on then later On the altcoins outperform but in Bear Markets the altcoins can often go down Quite a bit not only on their USD pairs But often on their Bitcoin pairs as well So that's sort of the risks that you Take on and that's not volatility right That's the negative volatility that we Don't like to think about but it's Probably something we should think more About is yes you have you might have a High expected return over over many many Years if once you know once we're back Into like full swing bull market but in The short term you know there's always
Going to be on any given year there's Always going to be the risk that you Could see that downside and that's Really what I I want to drive home Um by by looking at this chart and again It's not it's not Financial advice we're Not talking about you know what it Should be going forward this is all Based on historical Returns the last Note is this was just a Monte Carlo Simulation of 50 000 portfolios but you Can also use quadratic programming to Just identically solve for the portfolio For anyone wondering if you know running Another 50 000 way maybe you want to Change the results it actually wouldn't Have but again Hopefully this is useful and perhaps We'll provide some uh somewhat Infrequent updates on it whenever Whenever they slowly make changes and And what the portfolio allocations are Based on historical results thanks for Having me guy pleasure to be here as Always I'll see you again next week Thanks Ben don't forget to catch Ben Rob From digital asset news and myself live On coin Bureau Clips this Thursday at 9 00 a.m Eastern 2 p.m GMT I hope you can Join us then and that is all for today's Coin Bureau weekly crypto review if you Enjoyed it you know what to do hit that Like button subscribe button and Bell Icon too if you're looking to maximize
Your gains during the bear Market the Coin Bureau deals page is where you Should go you can find the link to that Resource and many others in the Description below thank you so much for Watching and I will see you all in next Week's episode
