Monday, January 11th, 2021
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Your Weekly Update On All Things Crypto |
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Banks Approved to Use Public Blockchain & Stablecoins per OCC
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BTC = Ethereum? Raoul Pal Says "It's all Metcalf's Law"
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Morgan Stanley's Investment in Microstrategy
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Bitcoin's Tear Continues Past $40,000
- Crypto Market Cap Hits $1T & Altcoins in Position to Make a Move
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Picks of the Week: DOT & LINK
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OCC Approves Banks To Use Public Blockchains & Stablecoins |
On Tuesday, January 4th the OCC published a letter clarifying national banks' authority to participate in independent node verification networks (INVN) - just a fancy term for "public blockchains." The letter also ruled that US banks could use Stablecoins as a mechanism for payment activities and other banking functions.
This is a massive deal as it gives the green light to banks to start developing stablecoin-based financial infrastructure. Brian P. Brooks, Acting Comptroller of the Currency says their letter reflects, "A strong framework for ushering in an era of stablecoin-based financial infrastructure, identifying important risks while allowing those risks to be managed in a technology-agnostic way."
The release shocked the crypto-world as possibly the best regulatory news we have heard in the industry in years. This ruling will be a key milestone in the development and integration of cryptocurrency around the world.
This standing also points to an ingenious plan by the United States to make up ground in the race towards Central Bank Digital Currencies and retain their global dollar-dominance. Allowing banks to use USD Stablecoins for transactions allows the banking industry to piggy-back on the innovation of the private sector that created them. Most stablecoins on the market are pegged to the US dollar because it is currently the world's reserve currency. Using this pre-built infrastructure, the United States can leap into title contention in the race to a CBDC.
Most of the developed world already is/or has plans to develop their own central bank digital currency. China is a major contender in this space as they have already started to pilot their CBDC's across the country. Being first to market on a global scale in the CBDC race can have major implications. The country that wins will have the ability to imprint its ideals on the rest of the world.
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"Ethereum = Bitcoin, Same Same.. But Different" |
Last Tuesday, Founder of Global Macro Investor & Real Vision, Raoul Pal leaked part of his GMI research early on Twitter. On Jan 6th, Raoul released a thread that makes the case that ETH and BITCOIN are both the same investments. While this statement may outrage diehard crypto-enthusiasts, he argues that they should be both simply be valued based on Metcalf's Law.
Metcalf's Law explains the value of network-based businesses as the number of users, squared. If you understand Metcalf's Law, you'll understand that the value of networks grows exponentially as more people join. This is why social media titans like Facebook & Twitter are so hard to compete with.
In the same context, Bitcoin is the social network of money. And they are themselves new forms of money, the value of the money grows exponentially as new users join the network. Likewise, the value of Ethereum grows exponentially as new users join the Ethereum network. Raoul posts a series of charts his team produced mapping the price of both Bitcoin and Ethereum to their number of active addresses, the correlations are striking!
If this hypothesis is correct, we should expect Ethereum to make higher multiples of return than Bitcoin this cycle, because Ethereum is earlier on its path to mass adoption. Ethereum also has the potential to become much more viral than Bitcoin because of all the network of applications and smart contracts already built on top of it. There is also the fact that Ethereum is still growing in price much faster than Bitcoin since its existence.
It is clear that Bitcoin has taken over the spotlight in the early part of 2019, but there is a long year ahead.
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Morgan Stanley Acquires 10.9% of Bitcoin-Laden MicroStrategy |
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The financial giant, Morgan Stanley, has purchased 650,000 shares in MicroStrategy boosting its total to 792,627 and bringing its total ownership in the company to 10.9%.
Prior to its large investment into the leading cryptocurrency, MicroStrategy was a relatively little known business intelligence, mobile software, and cloud-based services firm. The companies shares actually fell 13% from Jan. 2, 2020, through Aug. 10, 2020. However, since its first bitcoin purchase on Aug 11, 2020, the shares have grown exponentially 330%: rising from $123.80 to $549.57.
MicroStrategy now has over 70,470 Bitcoin, worth more than $1.596 billion in its treasury reserve. Their most recent large purchase came after a $650 Million debt financing round, a bold move nonetheless. Another interesting fact, Michael Saylor said in a tweet that MicroStrategy has spent $1.125 billion on bitcoin to date, at an average price of $15,964 per bitcoin - not bad for a late 2020 purchase compared to its current price.
Now to ask why the purchase Morgan? Well for starters, MicroStrategy's shares are largely tracking the price of bitcoin. Therefore, it's hard for one to not assume that this is a strategic move on the institutional giant's part. Morgan Stanley will be looking to benefit from bitcoin's historic run without actually having to become a HODLer.
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Bitcoin's Tear Continues Past $40,000 |
Bitcoin has been on an absolute tear since March. As we can see by the three support lines on the daily candle chart, the "angles of attack" have been getting steeper and steeper as they approach new all-time highs. While the price is temporarily holding near $40,000, we might still see a blow-off top before this parabolic move is over. Knowing that its coming is one thing, being able to time it is another challenge entirely.
It's easy to look at the Bitcoin chart and think that it is already in bubble territory. However, it's important to note, that even though the price has gone up so dramatically, it may still be undervalued. With a total supply of only 21,000,000, there is simply not enough Bitcoin to go around for all the new entrants waking up to this market. Those institutions who buy, are aggressively buying up dips, and many plan to hold for the long term. As we can see last week, there was a 20% dip that was almost entirely bought up within the span of two days. Bitcoin is changing hands from the impatient to the patient. It will be interesting to see how high this could go before we see a larger correction.
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Which section of the Newsletter is most interesting to you?
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Crypto Market Cap passes $1 Trillion - Alts to Make the
Next Move
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First of all, thank you to all of you who voted on the content last week, we saw upwards of 60% vote for Alt-Coin Dominance to remain the content of choice in this section.
Last week was one for the ages, on Jan 6th, the total cryptocurrency market cap passed $1 Trillion! This is a milestone achievement, $1T can sometimes be a psychological hurdle of institutional investment. Many money managers do not want to risk their client's money in small market cap assets. $1 Trillion brings with it an added level of validation for the crypto market as a whole.
While the path to $1 Trillion was a group effort, Bitcoin really did most of the heavy lifting. Bitcoin now boasts a $740 Billion market cap, roughly 69% of the entire industry. As new applications emerge and the hype cycle starts to shift into decentralized applications and DeFi, we believe the alt-coin market will truly being to shine later this year. Dominance has already broken above the descending line of resistance and now looks to chart course for the ascending resistance at 33.2%. If we break through the ascending resistance, all signs point to a new altcoin season.
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Polkadot is a third-generation smart contract platform built by ex-CTO of Ethereum, Gavin Wood. It claims to be on track to deliver the most robust platform for security, scalability, and innovation in the crypto space. With a focus on blockchain interoperability, Polkadot does not seek to replace Ethereum, but instead to complement it by providing developers the opportunity to build on a scalable blockchain while still interoperating with ERC20 (Ethereum) contracts.
DOT has been sliding vs Ethereum in value since September. After a short spike in the last three days of 2020, DOT has come back down to test the descending line of support. As interest flows into the Alt-coin space, and Polkadot begins to deliver on the operational promises they have seeded, DOT has the potential to fly as processing power begins to offload from Ethereum to Polkadot.
Check out the tradingview here.
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Chainlink is the leading oracle solution in the cryptocurrency space. An oracle is a mechanism that can bring real-world data, on-chain. It is the hallmark application that initiated a Cambrian explosion of decentralized finance applications and will be crucial in building out future applications in the blockchain space such as insurance, betting markets, and news verification services.
LINK is still drastically undervalued based on regulatory concerns following the SEC lawsuit on Ripple. Many speculated that LINK would be the next entity to be regulated, however, nothing has materialized and the outgoing US administration only has 10 days left in office. This fear has wayed down the market and may act to sling-shot the price of LINK once these concerns subside.
See the tradingview here.
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NEAR's mission is to enable community-driven innovation to benefit people around the world; providing a decentralized application platform putting the power of Open Finance and the Open Web in users hands. As a member of NEAR's product team, you will shape the direction of our core platform and tooling. Successful applicants for this role will have significant experience working with and managing developer tools, a strong engineering background, and an obsessive focus on the use.
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Product Manager, Developer
💲 93-190k
🌐 San Francisco, CA
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Intelligent is a technical recruiter and they are currently hiring for a high paying Blockchain Engineering position. Intelligent has various blockchain jobs on their site, so don't be shy. For this specific position you would contribute to the development and specification of the token model, by implementing, testing, and auditing Solidity smart contracts on Ethereum.
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Blockchain Engineer
💲 150-180k
🌐 United States (Remote)
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None of the content or opinions expressed in this newsletter should be consider financial advice. We highly recommend that you do your own research before investing in any project within or outside the cryptocurrency space. |
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