Last week we saw one of the most controversial IPOs of this year. I am of course talking about that of Robinhood, the “Free” trading app that has taken the market by storm.
It’s perhaps also one of the most vilified brokers out there on account of the shenanigans that they were involved in with trade stoppages at the beginning of the year.
However, despite how egregious these were, I think they pale into comparison when you look at Robinhood’s underlying business model. This broker is robbing from the common man and giving to the rich hedge funders – the anti Robin Hood.
This is not just a practice that is exclusive to Robinhood. Nearly all of the free brokers on Wall Street use the same business practices. Business practices that are used by sophisticated market makers to get an edge on the rest of us.
So, I thought it was high time that I did a video that exposed these business practices and explained exactly how they work against you. I also have a few thoughts on whether we could see additional regulation on these practices and why I think that the opaqueness of these business practices are long term bullish for crypto & Defi.
You can watch that right here
📊 Portfolio Update 📊
Took a bit of profit on some of my alt positions in the recent rally. This includes YFI, LINK, REN & LIT. Going to be holding the proceeds from this sale in a 50/50 split between USDC & PAXG. The reasoning for allocation to the latter is given in a video I did two weeks ago.
There were no new purchases this week although I am considering picking up either MATIC, AAVE or LUNA. I will be letting you guys know all about that in an upcoming video on top coin picks later this week. Jump into my insider telegram channel for up to date info on that.
ETH 33.96% | BTC 29.26% | ADA 6.77% | SOL 6.27% | USDC 5.85% | PAXG 4.33% | DOT 3.60% | INJ 2.56% | RUNE 2.28% | YFI 1.72% | ATOM 1.43% | LINK 1.42% | REN 0.30% | LIT 0.27%
❓ Reddit AMA ❓
Did you guys know that one of the fastest growing subreddits on Reddit is the r/cryptocurrency one? I mean, it’s not entirely unexpected given how much interest there has been in this space. I am also a regular visitor of that subreddit. It’s a great way for me to get a sense of sentiment from the rest of the community.
So, I thought that it was only fitting that I engaged with the community there. As such, I will be doing a two hour AMA on the cryptocurrency subreddit this coming week!
🗓️ Date: August 12th
⏰ Time: 4PM UK time (11AM EST)
📍 Place: r/cryptocurrency
So I hope you pop that in your calendar and think up some interesting questions in the meantime. The AMA will be pinned at the top of the sub Reddit two hours before the AMA – so keep an eye out for that!
I look forward to seeing you there and answering as many questions as possible.
🗞 This Horrible Bill 🗞
For those of you who have been following me for the past 2 months, you will have seen me warn about potential incoming regulation and enforcement. However, never did I think that we would see such egregious overreach as has been presented in this infrastructure bill.
Just so you understand the lay of the land, a seemingly innocuous infrastructure bill has been weaponised to attack the crypto industry. Deliberately vague wording has been inserted as an amendment that could be interpreted very broadly.
The amendment would require all crypto “brokers” to submit tax information on those people that are using them to trade crypto. However, given how broadly brokers are defined, this could also have meant nodes, miners and defi developers.
After finding out about this, I was shocked. How can laws be made like this on a whim? Then after a bit of research into the US legislative process, I learned that it is a pretty common tactic. For example, part of the reason that the US has such a big surveillance state right now is due to all the overzealous amendments to the Patriot Act.
Apparently, when it came to this recent amendment, the person behind the lobbying to include it was (surprise, surprise), Janet Yellen. If you recall in my video I did last week on the Fed, she was looking for ways to choke the crypto industry. So she used this bill as a reason to.
Now the bill has gone through a number of iterations. Long story short, the amendment in its current form has included both Proof of Work miners and Proof of Stake validators as being exempt. However, it says nothing about all the other consensus mechanisms out there. Moreover, it has no wording in there to protect Defi developers from the reporting standard.
So, in its current form, this is what the amendment means:
Anyone who builds a Defi dapp or other protocol that facilitates an exchange (think DEX) could be viewed as a “broker” in this law. They would need to submit tax info on their users (which they obviously can’t do).
Moreover, it means that any validator on a consensus mechanism that is not PoS or PoW will fall into the same “broker” category. There are numerous other consensus mechanisms! And what about those that don’t exist yet? Will they still innovate?
This is a terrible amendment to an already bloated and overreaching bill. It’s unconscionable to me that such far reaching regulation can be made on the fly with a bit of wording in an amendment. No debates. No discussion. No collaboration.
The final vote could extend to Tuesday and I will of course keep you guys updated in my Telegram channel.
Irrespective of what happens with this vote, the whole process has me even more bullish. Here is why:
So, despite the buzz around the bill, I am still hopeful for the future. Moreover, the world is global. Crypto innovation can happen anywhere. It would just be a pity if US lawmakers stifled that in the US.
🔥 Feel The Burn 🔥
The Ethereum London upgrade took place this week, and it went off without a hitch. At block 12,965,000, the fork took place and with it came EIP 1559.
I must admit, I was actually quite apprehensive prior to the upgrade and decided to get out of the office and grab some fresh air on the actual time it went live.
However, it’s amazing how smoothly the upgrade went. Transactions kept processing, blocks kept propagating and miners kept hashing. From the first block, the base fee burn mechanism started working its magic. As of this moment, we have burned around 13.5k ETH and the amount burned is about 36% of all that has been issued.
So, in other words, the ETH inflation rate has fallen by about 36%. If we were to assume a pre upgrade inflation rate of c. 4.2%, it has dropped to about 3.0%. It’s not deflationary or “ultra sound money” yet but that is mainly because we are still on ETH 1.0.
And that’s what makes me so bullish. It’s what this means for the 2.0 upgrades. What this has shown me is just how well the actual hardfork went. For example, it was the first time that all blocks were mined on the upgraded chain. Moreover, the testnet simulations of block capacity were amazingly accurate.
While the runup prior to the fork may have been a “buy the news” rally, the event did not lead to a dump. Market participants saw how well it was handled and immediately turned their attention to the PoS merge that will be happening either later this year or early next.
Once Ethereum reaches the level of scaling that is envisioned by ETH 2.0, there is a possibility that the burn rate could exceed the block reward (i.e. deflationary).
When it comes to fees, some users may have been disappointed to see that there wasn’t a massive drop post fork. However, it was always known that the impact on user fees would be more around gas predictability.
That is another reason why everyone is so excited about ETH 2.0. The PoS consensus will increase scalability and hence reduce the fees.
So, I’m damn excited for what could happen with ETH in the next year and I will be doing a post London video for you folks in the next few weeks.
🔝 Top Newbie Tips 🔝
If you panic sold in the past few weeks, I can understand how you feel. As reported by CoinTelegraph, panic selling is one of the biggest mistakes you can make in crypto and it’s one that we’ve all made at some point or another (including me).
The way I personally protect myself from this is to make sure I always take profits on the way up and re-invest gradually on the way down. It does minimise my returns compared to if I had sold the top and bought the dip, but doing this consistently is damn near impossible to do. There are so many idiosyncratic factors impacting not just crypto but the broader financial markets.
On a related note, the only thing worse than panic selling is selling too early. This is going to be very tempting to do in the weeks ahead especially if your portfolio is currently in the red. If you don’t plan on selling at the break even point, there are many other people who are likely planning to do this.
What that means is that your favorite cryptos could see significant resistance at or around the significant price points where most people previously bought (at the top, for example). This means that you’ll need to be a bit patient if you’re trying to turn a profit over the next few weeks.
Another thing I’ve noticed recently is that people are starting to make insane predictions about what’s going to happen next in the crypto market. While I personally do think we will be heading higher before the year is over, the idea that crypto will go up only from here on out is a bit of a pipe dream.
Besides the fact that nothing can go up forever, continuing to go up into 2022 would violate just about every asset pricing model. Not only that, but there is a well established 4 year cycle of crypto prices. And, while history never fully repeats itself, it usually rhymes.
Don’t get me wrong, I’m extremely happy that the markets are on the uptrend again. But, it’s very important to manage your expectations.
So much of this comes down to being aware that a cryptocurrency’s market cap is the best measure of how high it could go, not its price. Always factor this into your calculation when making predictions about cryptocurrency prices.
🔥 Deals of The Week 🔥
Let’s face it, those crypto markets seem to be cranking up the heat – in a good way! With that sort of action going on, now has never been a better time to keep on top of your portfolio and to ensure your crypto is safe!
If that sounds like something you should be taking more seriously, then I have two crypto tools you’ll want to look at!
🔒 Trezor: The worst nightmare for any crypto holder is picking the right crypto, see it hitting life changing value and then discovering that your crypto has been stolen. If that’s a nightmare you want to avoid then, you’ll want to consider getting yourself the best crypto security that money can buy – in other words, a crypto hardware wallet!
Yes, I have already done a dedicated video comparing the top hardware wallets on the market right now.
However, if you don’t have 24 minutes to spend on watching that, then you’ll probably be wondering which hardware wallet I personally use? Well, that would be Trezor!
These wallets can store over 1,000 cryptos. So, the chances are that almost everything in your portfolio will be supported by this wallet.
Sure, you can get the slightly more pricey Trezor Model T, but I myself prefer to buy more than one Trezor One and spread that risk. This is something you may also want to consider if you have sizable amounts of crypto stored.
🤖 Portfolio Automation: Now that crypto is popping off, many of you are probably wanting to dollar cost average into the markets or maybe the market surge has meant your portfolio is overweight in one particular holding? Yes, you can do all that manually, but it is a chore!
So, if you value your time then you might want to look for a tool that will automate all that for you? If that’s you then you’ll want to take a look at Shrimply!
On top of that, it also offers spot trading, portfolio tracking, strategy automation, backtesting and much more!
I’ve also been able to negotiate a special discount for your guys too. If you sign up to a Shrimply subscription, you’ll get a whooping 30% OFF!
🗞️ Crypto News Focus 🗞️
– Elizabeth Warren Is Silly – Claims that crypto markets might need a bailout someday without proper regulation.
– Spanish Crypto Adoption – Spain considers allowing mortgage payments in crypto.
– EIP-1559 Upgrade – Ethereum is now burning $10,000 every minute after EIP-1559 update!
🔮 Video Pipeline 🔮
🏆 What’s New At CoinBureau.com This Week? 🏆
✅ Shrimpy Review: Automated Crypto Portfolio Management
✅ Fractionalised NFTs: Making Non-Fungible Tokens Affordable
✅ Blockchain Insurance Protocols: Protecting your Crypto Funds
✅ dYdX: Decentralised Margin Trading Protocol
✅ Thorstarter: The Beginning of DeFi 2.0?
That’s all for this week’s newsletter. However, I need to thank you for making me your personal crypto guy. I know there are many great crypto content creators out there and it really is a privilege that you have spent at least a bit of your time watching Coin Bureau vids!
You guys are what make the channel possible!
I look forward to answering questions from the community in my Reddit AMA this coming week and I hope to see you there!
Guy your crypto guy
Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.