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Here’s 5 things you need to know about the crypto markets today:
🌎 BlockFi Is Pursuing Plans to Go Public – Even as Regulators Close In
BlockFi aims to go public in 12 to 18 months, according to documents circulated to investors Wednesday amid growing regulatory scrutiny of the cryptocurrency lender.
😡 Blockchain Protocol Thorchain Suffers Another Hack Totaling $8M
Thorchain has been hit by another exploit, this time costing around $8 million, Thorchain confirmed to CoinDesk on Thursday.
🇺🇸 Coinbase and top execs face securities class action over Nasdaq listing
A Coinbase shareholder has filed a securities class action against Coinbase for allegedly misleading investors ahead of its public listing about the company’s financial state and resilience as a crypto trading platform.
🐦 Bitcoin will be a 'big part' of Twitter's future, says CEO Jack Dorsey
Twitter CEO Jack Dorsey for the first time has publicly said that bitcoin will be a “big part” of the company’s future. Dorsey said bitcoin could be integrated into Twitter’s products such as Super Follows, Commerce, Subscriptions, and Tip Jar.
🇳🇬 Nigeria to pilot central bank digital currency in October
The Central Bank of Nigeria will start the pilot of its central bank digital currency, which runs on the Hyperledger Fabric blockchain, on October 1 2021.
🦀 What’s Up, BTC?
Market structure: the same. Continual higher lows. Don’t be fooled by the dip below and consequent reclaim of the $30k level. This bounce is nothing to be excited about. The bears continue to convey more strength (through higher lows).
To shift our bias? Reclaim $34k at the very least. Structurally, the next key level is around $36k. Note that none of these have been touched.
Downside target? Still $24k should we lose the $30k level.
There was a good short opportunity on BTC. Shared on our Discord:
We have now retested the same levels. Should we get above $32.8k, short term scalpers could use this to potentially target the next upside target of $34.5k.
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🐝 Binance US ‘Looking at IPO’ Route
Despite an ongoing regulatory crackdown, Binance US (US based crypto exchange operating separately from Binance) is looking to go public. Here’s what we know:
An initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance.
Changpeng Zhao (CZ), founder and CEO of the global exchange Binance, talked about these future plans at the blockchain virtual summit REDeFiNE Tomorrow 2021 on Friday.
CZ admitted that cooperating with regulators has been challenging. However, he noted that was part of the natural transition from a tech startup to a financial service.
He went on to say that the developments today could help make it easier for an IPO to happen.
This is exciting news for Binance and the crypto markets. However, it is worth noting that CZ stated he has no direct plan for IPO right now. Instead, the exchange will continue to prioritise market growth, especially away from active trading and into the burgeoning space of crypto gaming, decentralized finance (DeFi), and NFTs. Perhaps this is telling of the potential of these different focus areas.
🤫 What On ETH Is Going On?
Market structure: structurally the same. Bears are getting stronger.
To shift our bias? The key level we want to break is around the $2.3k level for more upside. Achieve that and $3k could be back in the picture.
On the way down we have some support levels indicated too.
Using trend lines, we see a clear downward direction.
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🧭 So... What’s Your Bias?
We often use the personal finance section to dissect a specific bias or cognitive effect, providing actionable information that you can use to improve your decision making ability and ultimately to build wealth. Today we are going to look at exactly why our brains have so many cognitive failures in order that we can understand what we can do to improve our thinking.
Consider the image at the top of this article. At a glance, the straight lines appear to be different lengths. However, we have been deceived! The lengths are in actual fact, the same. This is known as The Müller-Lyer Illusion. It clearly shows under certain circumstances our brains have difficulty processing information in the correct manner and investing is no different. However before even thinking about specific biases and how we can mitigate their negative effects on our financial behaviour we face a roadblock. Everyone can agree that the world is full of bias. However, few are ready to admit that they fall foul of the same biases as everyone else. This is known as the Bias Blind Spot1. Yes that is correct - there is a proven bias against admitting that we are just susceptible to cognitive failures as others!2
So why do these failures occur? To understand this, let's consider Nobel Laurate Professor Daniel Kahneman’s explanation of cognition3. Imagine we have two operating systems that dictate our thinking. System 1 is the “brains fast, automatic, intuitive approach”. System 2 is the “minds slower, analytical mode where reason dominates”4. Activities that are natural (such as ducking when something is thrown at us) are governed by system 1 and activities that require more complex logical thinking (such as solving mathematical problems) are governed by system 2.
Due to the amount of processing that occurs on a daily basis, we often, without intent, use heuristics, or mental shortcuts, to cut down on the amount of processing required. These shortcuts are one of the predominant reasons for cognitive failures. It should be noted however that not all failures arise from system 1 operating. Take confirmation bias - a tendency to favour information that confirms our prior beliefs. This often happens during system 2 thinking. Whilst it is difficult to generalize, these often occur due to our innate requirement to preserve both internal and external opinions of ourselves5.
Hopefully we all now realise that, just like everyone else, we experience cognitive failure but what can we do to overcome these?
1️⃣ Study and take action. There are plenty of resources on the internet to better understand our thinking and how to improve it (including our articles which you can find a glossary of here). Whilst studying these is fantastic you also must take action and apply your knowledge to real life decisions.
2️⃣ Think critically. This deserves its own article however is essential to overcoming inherent biases that affect us all. It starts with applying system 2 thinking to all areas of life. Whilst heuristics can be useful, make sure to constantly question your assumptions and the information you receive from even the most reliable of sources.
3️⃣ Be self aware. As with the other two tips, this is much easier to read in a newsletter than it is to practice in life. You can view this as thinking critically about the emotions that guide our decision making. Before making important decisions take note of your emotions and ask yourself whether any of these could be the driving force of that decision.
Not only do cognitive failures exist, it is likely that anyone reading this experiences them on a regular basis. Whilst it is not easy, apply critical thinking to both your rationale and your emotions and maybe you will become less biased than everyone else.
Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
Disclosure. Some of the links we’ve included are affiliate, they give you rewards and discounts and earn us a commission. Additionally, the Market Meditator writers hold crypto assets. See our investment disclosures here.
Pronin, E. et al. “The Bias Blind Spot: Perceptions of Bias in Self Versus Others.” Personality and Social Psychology Bulletin 28 (2002): 369 - 381.
Scopelliti, I., Morewedge, C.K., McCormick, E., Min, H.L., Lebrecht, S., & Kassam, K.S. (2015). Blind spot bias: Structure, measurement, and consequences. Management Science, 201561:10
Kahneman, Daniel. 2013. Thinking, fast and slow.
The Harvard Gazette (2014). Layers of choice. Retrieved from https://news.harvard.edu/gazette/story/2014/02/layers-of-choice/
Miller, D. T., & Ross, M. (1975). Self-serving biases in the attribution of causality: Fact or fiction? Psychological Bulletin, 82(2), 213–225.