Hi YXI friends,

Trump’s inauguration was on Monday, but the fireworks already started as soon as Gary Gensler left the SEC building on Friday evening. Trump launched his own meme coin on Friday night which made the entire crypto network go crazy. Billions were made and lost over the weekend.

On the policy side, tariffs got going with US’ neighbours first. Have Trump and Xi become friends again? Before the answer is revealed, Chinese stocks are celebrating ahead of the Lunar New Year anyway.

Bitcoiners have been disappointed by the lack of a “Strategic Bitcoin Reserve” so far. It is already amazing how close this concept is to becoming a reality. Just a decade ago, Bitcoiners were prosecuted for money laundering, while the largest crypto exchange CEOs, Changpeng Zhao of Binance and Sam Bankman-Fried of FTX, both got sent to jail last year.

Finally, we have Netflix earnings coming up. Up or down post ER? Nobody knows. But I do think a potential upside setup for a $1000+ price target is in the making.

Let’s dive in!

Table of Contents

• 1. Tariffs Are For Friends, Not Enemies

• 2. Trump Coin

• 3. No Mentions Of A Strategic Bitcoin Reserve Yet

• 4. Netflix Earnings

• 5. Housekeeping

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. Tariffs Are For Friends, Not Enemies

It is perhaps a little surprising that Trump’s tariffs plan started with Canada and Mexico first, before China. Maybe Trump learnt the 36 ancient Chinese military strategies, one of which is to “Befriend a distant state while attacking a neighbour”.

During his campaign, Trump repeatedly toyed with the idea of a 60% tariff on Chinese exports. However, after a recent phone call with Xi, Trump has postponed the announcement on the exact timing and extent of the US tariffs on China. Instead, Trump kicks off the tariff plans with 25% on Mexico and Canada by Feb 1, focusing on the border issue.

Is there already a truce with China, or did Xi only borrow some time for the negotiations? My bet is on the latter. During the 2018 Trade War, the US was willing to walk away from the negotiation table just as the tension seemed to thaw, heavily hammering the Chinese Yuan, before reaching the final agreement in the second half of 2019. Nonetheless, this delay signals more careful deliberation over ostentatious aggression compared with Trump 1.0.

KWEB (https://jp.tradingview.com/x/TIS1pbsB)

Apologies as my computer is currently under repair, I am writing this article with an iPad, which limits my ability to create a lot of charts.

On the back of this positive development, Chinese equities have rallied in the past two days. This begs the question - has KWEB bottomed?

In my previous article, I highlighted that on the back of positive liquidity injections, I expected a sizeable bounce in KWEB, but its sustainability depends on the US tariffs (very damaging to the Chinese economy) and the continued resolve of China’s stimulus efforts.

Given we have got some initial positives signs out of the US, we need to be flexible in our market expectations.

Currently, KWEB’s market open of just under $30 is just over the 100% extension of the last week’s rally. Now this could simply be a wave circle-c up (highlighted in black), which is insufficient for calling trend reversal. Why? Because 3 waves up signal only a corrective move. The status quo corroborates our expectation of a lower low in the larger degree move down since the December high, because wave C is short of the 100% extension of wave A. In layman terms, it doesn’t quite feel like we saw capitulation in the final leg yet.

However, the probability shifts in favour of KWEB having bottomed if it can move past $31. This is highlighted in red. Again why? Because we will likely get our 5 waves up, which confirms the bullish trend as being the main direction.

2. Trump Coin

The biggest headline ahead of inauguration was not actually anything to do with Trump’s potential executive orders or first 100 days. It was the fact that Trump launched his own meme coin on the Solana network on Friday night, which drove the crypto market into frenzy.

Right now, 20% of the maximum supply is circulating, with the remaining 80% to be added over the next 3 years. There were traders who put down a cool mil and was up 300x at peak - generational wealth in less than 48 hours - but haven’t yet sold.

On Sunday, Melania Trump listed her own crypto, $Melania, which actually coincided with $TRUMP’s peak.

Needless to say, there is fierce debate whether Trump creating a meme coin is “good or bad” for crypto. Many participates are annoyed at 1) them missing out on such a big opportunity on Friday night, and 2) the new meme coins may have sucked crypto liquidity away from alt coins (e.g. ETH).

I won’t venture into the political legality here. For the crypto ecosystem, “good or bad” is subjective. The crypto ecosystem, beyond the original Bitcoin network, has evolved over the years to accommodate all sorts of weird and wonderful experiments that have attracted hot money or crashed and burnt. This ranges from Dogecoin and Luna, to NFTs and celebrity memes (Hawk Tuah). The dark side is, of course, millions of people losing their savings by blindly following celebrity endorsement and getting rug-pulled. In the case of FTX, even sophisticated institutions lost money through a fraudulent management.

At the same time, Trump personally launching meme coins with his wife is probably as big an endorsement as it gets for crypto.

Something quite different about this cycle is that people don’t have “pretend” uses of crypto memes anymore. I think for NFTs, there were strong arguments about the non-fungibility of a piece of blockchain-verified digital art, with money going towards supporting the digital artists who can’t access capital through TradFi. Now, it is very plain that meme coins have no genuine uses, except for cultural embracement (not all cultures involve a beautiful Roman cathedral).

Alts and memes are also much trickier / riskier to trade. Technical analysis works much better on assets with large crowd participation to draw patterns from.

But here is my first look at $TRUMP hourly chart:

$TRUMP (https://jp.tradingview.com/x/O7PTiDE1)

The wave circle-c is a near-exact 100% extension of wave cirlcle-a. This puts the rally at only 3 waves up, before the current correction. I would be quite cautious here in terms of the chart development, although we also only have got a 3-wave down so far.

3. No Mentions Of A Strategic Bitcoin Reserve Yet

Last week, much of Fintwit was getting hopeful of a “Strategic Bitcoin Reserve” announcement on Monday. In fact, Bitcoin pushed through to a new all time high above $109k on early hours of Monday.

The price sharply reversed as Trump didn’t talk about Bitcoin during the inauguration. However, generally speaking, breaking a new all time high is an encouraging bullish signal, that shows a healthy market appetite for Bitcoin.

Bitcoin (https://jp.tradingview.com/x/rO1IQHrl)

This has shifted my read towards that wave 5 has already commenced. We could possibly get a steeper pullback from here, given that the wave circle-ii pullback was quite shallow. However, as things stand, I now expect wave circle-v of 5 target to be $136k+ in this cycle, higher than my December projection.

I personally would favour a holding strategy rather than trading the sub-waves.

4. Netflix Earnings

We had the Tyson-Paul fight and new Squid Games in Q4. May I say both of them disappointed the audience?

But the market has already been punishing the stock since December (more like it rolled over with SPY and QQQ).

NFLX (https://jp.tradingview.com/x/PNchhVMd)

NFLX appears to have made sufficient correction for wave (iv) here. If earnings comes through with the stock falling, I do think it is a buy-the-dip opportunity. My wave (v) target is just over $1000.

5. Housekeeping

Unfortunately, my computer is under repair, but I do expect to access it very soon (after Apple charging me an arm and a leg). I will be able to publish more in-depth single name earnings reviews upon reunion. For now, I will focus more on the price technicals.