Nothin' But A Dip

Over the past week, we saw what felt like a month’s worth of headlines.

Less than a week after BTC hit an all-time high of ~$69,000, alongside the U.S. reporting its highest inflation numbers in 30-plus years, and one of the biggest network upgrades to date (see story below) – BTC has started to stumble ~10%, resulting in some FUD, and as always, some investor confusion.

For reasons of the dip, publications are pointing to (1) a rebounding dollar, (2) a new phase in China's bid to destroy crypto mining operations, (3) a nutty U.S. Infrastructure Bill definition, (4) the SEC rejecting a BTC spot ETF, and (5), even a warning shot from Twitter's CFO.

Just like most dips or market corrections, it's hard to peg it to any one thing. But let's zoom out for a second. Despite the recent dip, BTC is trading -3% MTD. ETH, on the other hand, is actually +13% MTD. In other words, we've been through worse – way worse.

Zooming in, if you can’t handle this dip, you probably won’t make it to $100K anyway.

Tap Those Roots

Taproot, one of Bitcoin’s biggest network upgrades, went live this weekend.

Instead of writing all about its incredible impact on making transactions cheaper, more efficient, and more private (those details are here), we'd like to focus on setting the appropriate expectations, and what average crypto Joe's like us actually need to know.

Key Takeaways:

What changes right now? Unless you're a wallet or protocol developer, probably nothing. Taking advantage of these new features requires software to make use of it
The real work will be in designing wallets and protocols that build on top of Taproot to make use of its advantages
Over the long term, upgrades like Taproot and Lightning might effectively render altcoins redundant and unnecessary. If a given functionality can be implemented in Bitcoin, the most robust and secure network, it is only natural that it will
Taproot is going to be a boon for Bitcoin usability, but it's important to understand that these benefits aren't going to be immediate

To sum it up, the activation is a massive win, but it is only the beginning of a new chapter.

For the techies, this page is currently tracking wallets/protocols adopting it.

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DEEP DIVES

What's In Your Portfolio: Part II

Last week, the CoinSnacks team did a deep dive into the holdings of Messari's research team.

This week, Messari tracked down some of the top VC firms and hedge funds (53 to be exact) in crypto to quantify their liquid portfolios. Here's what they found:

The 53 funds hold 228 unique assets across various sectors
Excluding BTC and ETH, the top asset invested across the funds is Polkadot (DOT) with holdings in 21 of the 53 funds
The second most popular asset across the portfolios is a three-way tie for NEAR Protocol (NEAR), Terra (LUNA), and Oasis Network (ROSE).
Of the top invested assets, Solana (SOL) possesses the highest-circulating market capitalization (with BTC and ETH omitted)

Galaxy Digital Reports Impressive Q3 Earnings

Galaxy Digital (GLXY), the publicly listed crypto conglomerate helmed by Mike Novogratz, reported impressive Q3 earnings on Monday. In the last quarter the company has:

Increased estimated AUM to $3.2B, an increase of 707% YoY
Reported $650M AUM in Galaxy Interactive, the company's metaverse/gaming fund
Announced partnerships with Invesco and Alerian for ETFs and indexes
Reported that BitGo, the cryptocurrency custody provider which Galaxy Digital is acquiring, has seen its assets under custody (AUC) swell to over $64 billion
Expectations to be uplisted in the US by early 2022

For more, here's a thread from our go-to Galaxy analyst diving deeper into the companies six distinct business models. (Be sure to check out their private investment returns)

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REGULATORY FRONT

A Thorn In The U.S. Infrastructure Bill

This week, President Biden signed the hotly debated Infrastructure bill. It includes, depending on what you believe, much-needed improvements to physical infrastructure in the U.S. among other things.

But what’s missing? Clear language defining what crypto “brokers” are.

As written, the current language of the bill would require all "brokers" to report transactions to the IRS. Industry proponents are worried the definition is too broad, capturing entities such as miners and other parties that don’t actually facilitate transactions.

Another provision opposed by the crypto industry essentially requires recipients of transactions over $10,000 to verify the sender’s personal information and record their SSN, the nature of the transaction, and report the transaction to the government within 15 days.

The good news is that the bill doesn't come into effect until 2023. In other words, proponents have about a year to fix its definition... and efforts to make these changes are already taking place.

TWEET OF THE WEEK

Why The Dip, Popular Fund Holdings, & BTC Upgrades

Nothin' But A Dip

Tap Those Roots

What's In Your Portfolio: Part II

Galaxy Digital Reports Impressive Q3 Earnings

A Thorn In The U.S. Infrastructure Bill

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