It’s closer than you think…
The Etheruem proof-of-stake merge has just passed a milestone with the final testnet before launch. This means that in a few months, we could see the network undergo its biggest upgrade ever!
This has naturally led to quite a bit of excitement as people try to understand the implications for network efficiency, as well as deflationary tokenomics.
Amidst this excitement however, there still remains a great deal of confusion over exactly what the merge will mean. From the perspective of the hodler, staker, miner and user.
There are also some wild price predictions out there, some of which are unrealistic and others more grounded in reality.
In my video today, I take a deep dive back into Ethereum. I analyse what the merge means for all of us and what it could bring in the way of additional adoption from the institutions. I also dive into a recent financial model that tried to establish a “fair” value for ETH post merge.
You can watch that right here.
📊 Main Portfolio 📊
I did some minor rebalancing in the portfolio this week. Took a bit of profit on APE, RUNE & sold a bit of FTM. Going to shift some of this into ETH and the rest will be held in UST. After my research into the Ethereum video, I wanted a bit more exposure to it.
I will keep you folks updated in my telegram channel with any other changes should they come through.
ETH 30.60% | BTC 22.68% | SOL 8.32% | DOT 6.92% | ATOM 5.31% | UST 4.28% | RUNE 4.24% | APE 3.63% | LUNA 2.77% | FTM 1.89% | ADA 1.80% | AR 1.76% | HNT 1.70% | MATIC 1.42% | INJ 1.05% | LINK 0.70% | YGG 0.60% | XDEFI 0.34%
🖼 NFT Portfolio 🖼
MAYC 93.88% | Meebit 6.12%
📈 Thoughts on Market 📈
Feeling bullish yet? The fear and greed index for crypto says not yet. Google Search trends for cryptocurrency are in the toilet too. Video views on the Coin Bureau YouTube channel aren’t looking too hot either, and we all know that’s the ultimate crypto market indicator. In all seriousness, plenty of signs are pointing to a bear market, so why is the crypto market pumping?
Well, we know that money is coming into the crypto market. That much is clear. Perhaps it’s the institutions (see next section). But then again, institutions don’t typically buy crypto on the spot market, they buy OTC. Institutional accumulation is occurring though, because crypto balances on exchanges continue to drop.
This leaves a few possibilities. The first is Terra, specifically the Luna Foundation Guard. Tweets by Terra co-founder Do Kwon suggest the LFG is looking to accumulate as much as 10 billion dollars of BTC, as reserves for Terra’s UST stablecoin. According to this Lunatic on Twitter, Terra already has 1.4 billion in stablecoins ready to go, and on-chain signals suggest the buys have begun.
The second possibility is El Salvador. As some of you may know, El Salvador is set to issue 1 billion dollars of Bitcoin bonds to fund the initial construction of Bitcoin City. Although reports initially suggested that the issuance of these ‘Volcano Bonds’ would be delayed until the summer or the autumn, Salvadoran president Nayib Bukele recently confirmed it’s all systems go.
The third possibility is investors in the United Arab Emirates. If you’ve been keeping up with my weekly crypto reviews, you’ll know that FTX and Binance were the first and second exchanges to secure digital asset exchanges licences in Dubai two weeks ago. Global search trends for cryptocurrency show there’s lots of interest in the UAE, and that means someone is buying.
Another place where search trends for crypto are up is Australia, and that’s because of crypto regulations the country is considering. What’s interesting is that one of these considerations involves requiring crypto exchanges to physically hold the crypto belonging to Australian users in Australia. This supposedly secure crypto custody could be incentivising investment.
The final contributing factor could be regular retail investors who are ready to take on more risk. I suspect this because Bitcoin’s correlation with the S&P 500 recently hit a 1.5 year high. As some of you may know, the S&P 500 is being propped up almost exclusively by speculative tech stocks like Tesla, which have also rallied and are arguably in the same risk category as BTC.
As amazing as the recent pump has been, it looks like we’re still stuck in the ascending wedge / ascending triangle pattern for BTC on the daily. I have a feeling that we won’t see a truly convincing recovery until the Bitcoin Conference in Miami, where big announcements will almost surely be made. Be sure to take note of the other big crypto conferences coming up this year including your very own Coin Bureau Conference.
🏢 Institutions are Knocking 🏢
Over the past 2 months, I have noticed a general easing of retail investor interest in cryptocurrencies. As prices have remained range-bound, impatient investors have decided to throw in the towel (or at least focus on other things).
However, something else that I have noticed is the absolutely insane level of adoption taking place. Yes, this is a trend that has been present for over two years now but it has picked up to an ever more frenetic pace of late.
Let’s dive into some of the most relevant examples which have happened in just the last two weeks:
- Goldman Sachs: The firm completed the first-of-its-kind OTC crypto transaction with Galaxy Digital. This was for a bitcoin non-deliverable option or NDO. The exact specifics of the trade are not known, but they are of less importance. What it does do is serve as a signal to other banks that they can be comfortable engaging in these kinds of trades.
Now that the “golden standard” of bulge bracket investment banks has broken this ground, other TradeFi firms aren’t going to waste any time. I should also point out that GS had updated its home-page to showcase the investment case for crypto – talk about confidence!
- Bridgewater: For those of you who have never heard of Bridgewater associates, it’s the largest hedge fund in the world. It is run by Ray Dalio who has become a legend in the Global Macro investing space. He has also not exactly been the biggest exponent of Bitcoin and crypto and has in the past said that it serves as neither a store of value, nor a medium of exchange.
However, last year he mentioned that he has personally invested in Bitcoin and just last week, Bridgewater disclosed that it would be backing its first crypto fund. While it’s likely to be a relatively small investment made through an external vehicle, it’s still a major step for the hedge fund. It’s another “signalling” event which is likely to encourage other funds to make the move, lest they get left in the dust.
- BlackRock: From the largest hedge fund in the world to the largest asset manager, BlackRock is an absolute behemoth in the TradeFi space. The firm has been taking baby steps into the crypto space over the past year – something that I have talked about regularly in the past. However, it’s the moves that the firm has made over the past week that have got everyone so excited.
In a letter to shareholders, CEO Larry Fink explained that BlackRock is seeing increasing interest in digital assets from its institutional clients. This is in sharp contrast to the comments he made last year about there being “very little” client demand for crypto. While the investor note did not disclose exactly what BlackRock was doing to service these clients, there have been clues. As I pointed out in this post in February, BlackRock may be looking to integrate crypto into its Aladdin technology platform. If this is the case, it could lead to an explosion of crypto volume / liquidity.
Apart from that, his investor note also talked about the advantages of crypto in a world that has been rocked by the disruptions of the Russian invasion and the resulting sanctions. This is exactly the argument I made in my video last weekend about the financial implications of sanctions and how they could benefit crypto.
These are only three of the most high-level examples over the past week. However, there is a lot more TradeFi adoption taking place under the surface – perhaps the topic of an upcoming video.
But until then, you can take the above as a sign that the market is shifting into a new phase of extreme accumulation.
💲 Crypto Tax Trends 💲
Before you yawn, consider this. How countries tax crypto will have a significant impact on the crypto market in the short and medium term. With the massive gains that were made last year, countries around the world are changing their tax policies to take a cut of some of those gains. By the way, if you still need to do your crypto taxes, check out my top tax tools video.
Now, as far as crypto taxes go, the country that’s been front and centre recently is India. Indian regulators have been wrestling with the crypto industry since late last year when a bill emerged that would see all privately issued cryptocurrencies banned. Indian regulators eventually softened their stance and eased off a total crypto ban, and now it’s clear why.
On Friday, the Indian government passed a controversial crypto tax bill that contains some pretty crazy conditions. For starters, a 30% capital gains tax on all cryptocurrencies, including NFTs. Every initial purchase of crypto (i.e. fiat to crypto transaction) will also bear a 1% tax charge. As a cherry on top, no capital losses will be allowed, nor any crypto related expenses for companies.
India’s crypto tax law is set to come into force on the 1st of April, and crypto holders and crypto companies are pretty pissed off. According to various posts in the r/cryptocurrency subreddit, Indian crypto holders are planning on cashing out on March 31st to take advantage of capital losses while they can. If true, expect to see some significant volatility in the crypto markets this week.
As far as crypto companies go, Indian crypto exchanges such as WazirX and Indian crypto projects like Polygon are warning that this crypto tax will lead to a brain drain. This is basically when talented / intelligent / educated / experienced people in developing countries emigrate to countries with more favourable conditions, depriving their home countries of their skills.
This is a bigger deal than you think, because there are lots of Indians doing gig work in the crypto space, at least according to Polygon’s co-founders. Under the recently passed law, the crypto income being earned by these individuals will also be taxed at 30%. This could lead to lots of people leaving the crypto industry, which is already short-staffed as it is; bad news for altcoins.
A similar situation is currently underway in the United States, specifically when it comes to how staking rewards are taxed. A Tezos staker named Josh Jarrett is suing the IRS over a tax refund he received on XTZ staking rewards, essentially demanding clarity over whether staking rewards are taxed when they’re received, or merely when they’re sold.
The IRS has of course attempted to dismiss the lawsuit, but this has only brought more attention to the case. Now crypto lobbying firms like Coin Centre and the Proof of Stake Alliance are backing Josh, and this could give him the firepower he needs to force an answer from the IRS. Make no mistake, if this mission is successful, proof of stake cryptos will become very attractive.
This just goes to show how important it is to keep up with headlines related to crypto tax. As dry as they may be, they give you a glimpse into the future of the crypto market and industry. More importantly, they inform you where the most crypto friendly countries are as far as gains go. If you’re wondering which countries these are, look no further than this video.
🔥 Deal of The Week 🔥
I have always believed that the safest way to store the bulk of your crypto position is by holding it in a hardware wallet. That way you don’t run the risk of an exchange being hacked and losing all your funds.
Personally, I use Trezor as my crypto hardware wallet of choice. But I appreciate that many of you might want to work out which is best for you. So, if that’s you then you’ll want to check out my video on the top five hardware wallets on the market right now!
So, with those crypto markets seemingly taking a turn for the better, now might be a good time to upgrade that crypto security.
🔮 Video Pipeline 🔮
- Cryptocurrencies that will survive the bear market
- The most annoying Things in the Crypto Space
- Polygon update: What next for MATIC?
- Institutional Adoption Upon Us!
- Bitcoin Legal Tender: Which Countries Are Next?
- IMF report: declining USD dominance – what does it mean?
- Bill Hwang: from billionaire to broke – what happened?
🏆 What’s New At CoinBureau.com This Week? 🏆
✅ SushiSwap (SUSHI): The ‘All You Can Eat’ DeFi Buffet
✅ Star Atlas: Next Generation Gaming Metaverse
That’s all for this update guys. However, I would just like to thank you for supporting the whole Coin Bureau team. As we are on the cusp of 2 million subscribers, it really is mind boggling how the channel has grown over the last year – but it’s all thanks to you!
Thanks for enabling us to do what we love full-time. We’ll certainly continue to raise the bar and increase the quality of the content that you love!
Guy your crypto guy