It’s been almost 3 months since we had that launch of those Bitcoin ETFs. At the time, there was a lot of excitement around them. This led to a hype-driven rally in ETF demand which seems to have petered out now.
There is a pretty obvious reason for this. These ETFs were never really fit for purpose. As I explained when they were initially launched, Futures based ETFs are a substandard way to gain exposure to an underlying asset.
When they were launched, there was no way for one to realistically estimate just how much these would underperform the spot market. However, after at least three months of public trading, we have some solid data.
Today, I take a deep dive back into those ETFs. I analyse some data around their price performance and cost. I also examine exactly where the ETF applications are now and where they could be going.
I still maintain that we are likely to see a spot instrument in 2022 – however, that is contingent on a few factors that people need to be paying attention to.
All covered in my video which you can watch here.
📊 Portfolio Update 📊
No changes to the portfolio this week folks. I’m currently happy with the general allocation and don’t think that there are any really attractive opportunities at this time.
Having said that, I am looking to allocate a portion of my portfolio to GameFi / Metaverse plays – either as NFTs or utility tokens. There are a number of exciting projects I am exploring and I have an upcoming video on Metaverse land which was a blast to work on.
I will of course keep you fully updated with my moves in my Telegram Channel.
ETH 32.42% | BTC 23.05% | SOL 12.61% | DOT 9.89% | ATOM 4.32% | PAXG 2.84% | FTM 2.77% | HNT 2.61% | RUNE 2.12% | ADA 2.06% | MATIC 1.72% | INJ 1.56% | AR 0.97% | LINK 0.83% | XDEFI 0.22%
📈 Thoughts on Market 📈
In last week’s crypto review I mentioned that we would probably drop down to around 46k this week, and once again my prediction came true. The question is what comes next?
Before I get into that I want to dispel all the FUD that’s been flying around about this bull market being over.
I’ll start by saying that there’s no predicting where prices will go next, and everything you read here could be subject to change. That said, there’s a couple of indicators that suggest that this is nothing more than a huge fake out before the final run up. The first indicator is the balance of BTC on exchanges, which recently fell to a three year low.
As I’ve mentioned many times before, when BTC balances on exchanges are dropping, it means people are, on average, buying and holding, and not selling. Logically, if this was the end of the bull run, we wouldn’t see this kind of dip buying behavior. The second indicator is Bitcoin dominance, which briefly dropped below 40% last week.
When the crypto market is crashing, there’s a tendency for investors to move their altcoin gains into BTC. This is because BTC is seen as the “safe haven” in the crypto market. Bitcoin dominance plays a role in the crypto fear and greed index, where a higher Bitcoin dominance means more fear.
What’s interesting is that Bitcoin dominance is dropping while the crypto market drops, despite the fact that we (retail investors) are obviously feeling fearful at the moment. This suggests that the smart money knows that a big move is coming for altcoins, and given that Ethereum dominance is rising as Bitcoin dominance falls, it looks like the smart money is betting on ETH.
Besides the introduction of Proof of Stake, the speculation that a futures backed Ethereum ETF could be coming is probably what’s causing this effect. The recent introduction of micro Ether futures by the CME group is evidence that there is huge demand for an Ethereum futures ETF, and I reckon the institutions are going to get what they want.
I’m not sure when an Ethereum futures ETF will come, but one thing’s for sure: all of the FUD and macro factors that kept the crypto market down last week are in the past (be it options expiries or Evergrande default fears; more about that in tomorrow’s crypto review). From where I’m standing, it looks like we’re going to have a green week, but don’t expect any fireworks.
The only thing I see on the horizon that could drag the market down are the fears of an accelerated taper by the Federal Reserve in response to the record inflation reported on Friday for the United States. Judging by how the stock market reacted to this news though (it went up), I think everyone knows that the Federal Reserve can’t risk doing that just yet.
🤔 Solana Woes 🤔
As you guys can see, I hold a decent portion of my portfolio in SOL. However, it’s important for one to constantly test their investment thesis, especially when negative news comes to light.
As I’m sure you’ve all heard by now, it sounds like Solana suffered another DDoS attack that may or may not have temporarily taken down it’s blockchain. For those unfamiliar, DDoS stands for Distributed Denial of Dervice, and it essentially involves spamming a website, server, or in this case a blockchain, with requests, messages, or transactions until it goes down.
Assuming Solana did in fact go down, it would be the third outage Solana has experienced since its main net launched in March last year. The previous outage occurred in September, and it looks like the same person who took down Solana also took down Ethereum’s Arbitrum, and even tried to take down Ethereum – though this attempt was unsuccessful.
If you’re familiar with Solana or watched my most recent Solana update, you’ll know that Solana is somewhat centralized. This is because Solana’s blockchain consists of clusters of up to 150 validator nodes, and some believe that the actual size of Solana’s clusters is much smaller than that. This is one of the reasons why Solana can handle up to 50 thousand transactions per second, and another reason is Solana’s proof of stake consensus mechanism.
In contrast to most other PoS cryptocurrencies, Solana uses a technology called Proof of History which basically timestamps transactions. Note that PoH is NOT a consensus mechanism. It’s just a part of Solana’s PoS consensus.
Anyways, this timestamping of transactions basically lets validator nodes crank out as many transactions as their computers allow them to since these transactions can be easily ordered when they’re added to a block after the fact. It’s a bit more complicated than this, but let’s roll with it to keep things simple.
The only problem with this approach is that timestamping transactions before they’re actually put into a block makes it possible for someone to attack the validator who is supposed to put that transaction into a block. When you combine this with the relatively small number of validators in a Solana cluster, it makes such an attack that much more doable, as explained in this thread.
Does this mean that Solana is a scam or a “bad faith creation” as some have implied? No. Besides the fact that all of this stuff is clearly detailed in Solana’s documentation, Solana itself is still technically in beta. There’s still lots of development that needs to be done, and I’m sure these are just one of many issues that still need to be addressed behind the scenes prior to alpha.
More importantly, Solana is backed by some of the biggest names in cryptocurrency, and SOL seems to be a favorite among institutional investors. As I mentioned in my video about the most funded crypto projects post ICO, Solana raised more than half a billion dollars from institutional investors in the first half of this year alone, and it has raised millions more since then.
So, who’s right? The handful of religious anti-Solana investors screaming FUD when something goes wrong with Solana, or the institutions who are pouring hundreds of millions of dollars into Solana? You tell me.
If I had my tinfoil hat, I’d tell you that FUD is exactly what the institutions buying Grayscale’s recently released Solana trust want.
Having said all of this, centralisation woes is not something that only blockchains have to deal with…
🏢 Our Centralised World 🏢
Sometimes, something happens that just makes me realise how damn centralised internet infrastructure is. This week it was the widespread outages that we saw at AWS. This was massive and didn’t only severely impact Amazon but also all the millions of devices and services that rely on AWS’ hosting infrastructure.
Some of those services that were interrupted also included the likes of Coinbase, Robinhood and Binance.us. This of course impacted on the ability of their users to, quite ironically, buy decentralised assets.
Yes, these are centralised exchanges, but the outage even impacted decentralised exchanges. These include the likes of dYdX that went down due to the outage. This is despite the fact that all transactions are handled on a decentralised blockchain. That’s because nearly all Defi protocols do rely on some form of centralised internet infrastructure in some form or another.
This is something that I have talked about in the past – specifically as it relates to Uniswap. Centralisation of internet infrastructure is not only a risk when it comes to points of failure, but also points of pressure.
As long as Web 3.0 Dapps have to rely on the DNS system or front-end hosting, they are susceptible to these large providers in the space.
That is why for the Defi revolution to be truly decentralised, we have to also back those projects and initiatives that are decentralising storage. There are quite a few projects out there that do this but some well known examples include:
- Arweave: Platform that is trying to develop a platform of immutable and infinite storage. The protocol matches people who have hard drive space with those that are looking to store said data. Arweave’s platform is actually where Solana stores it’s blockchain data and I have covered the project in depth in a video.
- Filecoin: Decentralised storage protocol that is built on the back of IPFS. This project completed one of the largest ICOs back in 2017 and had its mainnet go live towards the end of last year. FIL has been a pretty poor performer in general but that does not detract from the amazing potential of IPFS.
- Sia: Distributed cloud storage network that acts as a secure and trustless marketplace for storage. This is one of the oldest blockchain storage plays out there and has fallen out of favour of late – but a pioneer nonetheless.
- ENS: While not a “storage” solution, the Ethereum Name Service (and similar blockchain based domains) could be the future solution for the centralised DNS system. There are a number of native blockchains that already support human readable addresses. If these could be combined with decentralised storage solutions for hosting, it’s a decentralisation bonanza.
I am of course under no illusions that these data solutions are anywhere close to being fit for purpose at a mass scale. It is still a few years before we could start seeing dApps using decentralised hosting or domains.
But the point is that there are potential solutions underway that could free us from these modern day data Robber Barons.
🔥 Deals of The Week 🔥
🤖 Optimize Your Trading: Let’s face it, those crypto markets have been pretty choppy recently. However, now might be a good time to backtest that trading strategy you are using. Do that, and you can be more confident that it’s a winning strategy and capture more of those rewards on the next leg up in the markets.
Also, I can tell you firsthand that automating your trading strategy is going to help you take advantage of even more opportunities in the market.
You can do all this with automated crypto trading tools. But which one do I use? Well, you can watch my dedicated video telling you everything you need to know about trading bots! However, if you don’t have 25 minutes spare to watch that vid, then I don’t mind telling you that I personally use 3Commas.
Even better you can try out 3Commas for FREE and get a 50% discount should you choose to go ahead with a subscription!
👉 Try out 3Commas for FREE & Get 50% OFF!
🎅 Christmas Is Coming: I know that finding that perfect gift for that crypto nutcase can be tricky. However, I’d like to think that I have a thing or two in my merch store that they’d love. Also, any orders go towards supporting the channel and helping my team and I produce even more top-notch crypto content!
Here are my top crypto Xmas gift picks:
- Ho Ho HODL T-shirt – $30
- Crypto Xmas Black T-shirt – $30
- CoinBureau Beanie – $20
- BTC Word Game Black Sweatshirt – $65
- Metal CoinBureau Water Bottle – $35
🔮 Video Pipeline 🔮
- Top 5 Crypto Podcasts
- WEF Cryptocurrency report: What Are They Planning?
- Top 5 Virtual Land Ecosystems
- Gala Games: is the hype real?
- Messari crypto report: The Complete Overview
- Crypto CEOs testimonies: My Take
- The Inflation Fraud
🏆 What’s New At CoinBureau.com This Week? 🏆
✅ How To Create a Crypto Portfolio That Can Survive a Bear Market
✅ Utility NFTs: NFTs with Real Muscle
✅ What is Web 3.0 and Why it Has Insane Potential
✅ Top 10 Crypto Research Tools: Where To Do Your Own Research?
That’s about all I have time for this newsletter. It’s been a truly crazy year for the whole Coin Bureau team.
I am even more excited about what 2022 has in store and the new projects we’ll be embarking upon. One of those will be a NEW crypto podcast in collaboration with iHeart Radio!
I’m particularly excited about that, as I see great potential to reach even more people and play a small role to get them into the cryptoverse.
Thanks again for all the support and we intend to end 2021 with a bang!
Guy your crypto guy