As you know, the crypto markets are not isolated from the broader economy. And, right now, one of the biggest risks we face going into winter is an energy crisis.
Global energy prices are skyrocketing faster than a hopium filled sh!tcoin. Not only that, but given the lack of available energy supply, there is a legitimate concern that power may have to be rationed.
What does this have to do with Bitcoin?
Well, miners are competing for all that energy that is now in short supply. Miners who are already facing increasing costs on account of competition and the aforementioned energy prices.
However, even if these miners could fit the bill for sky high electricity costs, they would be the last in line if there ever was a situation in which energy had to be rationed. Public perception is not on their side.
This is exactly what I explore in my video today. The hidden risks of reliance on a fragile global electricity supply chain. Of course, with every risk comes opportunity and I cover that as well.
You can watch that video here.
📊 Portfolio Update 📊
Took a bit of profit on my ETH, BTC, SOL & ADA. Will be keeping half of this in USDC as dry powder but am going to use some to pick up some DOT & RUNE.
As I mentioned last week, DOT is exciting because of those upcoming PLOs and the demand they could drive for DOT. When it comes to RUNE, Thorchain is finally back online and I am quite optimistic about its potential to transform cross-chain DeFi liquidity. I will be doing a ThorChain update video so keep your eyes peeled for that!
My updated portfolio is the following:
ETH 26.00% | BTC 22.10% | SOL 12.18% | DOT 11.24% | USDC 5.56% | PAXG 3.85% | ATOM 3.26% | UST 3.15% | RUNE 3.07% | ADA 2.82% | INJ 1.86% | HNT 1.62% | MATIC 1.13% | LINK 1.10% | AR 1.06%
📈 Thoughts on Market 📈
In last week’s crypto review, I predicted that Bitcoin would hit 67k before correcting, and it looks like I was right! Right now we appear to be holding strong around the 61k mark, but I do think we will drift down to 54-55k.
This is because the last week of the month tends to be the most bearish for Bitcoin due to options expiries. As I have mentioned before, these expiry days impact the spot market due to a combination of whale manipulation and market maker rebalancing.
Moving over to Ethereum though, the price is painting a different picture. It looks like ETH is forming a bull flag that’s scheduled to break later this week, and this happens to coincide with Ethereum’s upcoming Altair upgrade which is scheduled for October 27th (Wednesday). It’s worth pointing out that this upgrade isn’t for Ethereum 1.0, but for Ethereum 2.0.
According to Ethereum developer Tim Beiko, Ethereum’s Altair upgrade will do the following:
- Make it possible for validators on the Beacon chain to run light nodes
- Increase slashing penalties for stakers
- Prepare the Beacon Chain for the merge with Ethereum which will transition its blockchain from proof of work to proof of stake. This merge is currently scheduled to happen early next year.
But back to ETH’s price though. It looks like the hype around Altair could push ETH up to around 4700$, or at least that’s what the aforementioned bull flag suggests. The crypto market winds are blowing in the right direction too as Bitcoin dominance declines. This means money is moving into altcoins, and that means it’s the perfect time to construct your ultimate altcoin exit strategy.
To be clear, I’m not saying it’s time to sell. Besides the fact that I don’t give financial advice, there are multiple signs which suggest we’re on the cusp of another epic rally. Most of these signs can be seen on chain, and the two most relevant that come to mind are the percentage of BTC on exchanges and the percentage of BTC held by whales (those with 1-10k BTC).
When it comes to exchange balances of BTC, these have been dropping like a rock despite the new all time highs we saw last week.
What this means is that people aren’t selling the new highs – they’re HODLing. As for the BTC whales, they’re continuing to accumulate, albeit at a slower pace than they did in the past. Keep a close eye on what they do, because they have the power to move the crypto market.
And, speaking of those whales, there is one investor class that has so far been ignored but could radically alter the crypto markets..
💰 Interesting New Trend 💰
While I have long been covering the adoption of Bitcoin by traditional financial institutions like Banks, Hedge Funds and Mutual Funds, there is one investor class that has remained on the sidelines.
And that was pension funds…
The reason why is because these funds are tasked with a very important goal of preserving capital for people’s retirement. Hence, they would only really be investing in assets they are certain could preserve the future value of these retirement savings. Their asset allocation is generally to more “safe” investments such as bonds, blue chip equities etc.
However, ever since the past few months, an increasing number of Pension Funds have been allocating funds to Bitcoin & Cryptocurrencies. Here is a list of some of the most recent examples:
- In Virginia, a couple of Pension funds have been investing in crypto funds. These include funds such as Morgan Creek Asset Management, Blockchain Capital & Parataxis Capital Management
- Canada’s second largest pension fund, CDPQ (with $300bn AuM), recently co-led that Celsius funding round. Celsius is perhaps one of the largest crypto lending platforms on the market. I should also note that this is despite the regulatory scrutiny lending services are under.
- One of Australia’s largest Pension funds, QIC (with $69bn AuM), told the financial times that they are open to investing in cryptocurrencies in the future.
- A Houston Pension fund for city Firefighters has invested in Bitcoin and Ethereum through the NYDIG. What was so interesting about this was the fact that they “didn’t want synthetic exposure”. Their CIO also said “We decided to go directly to the token. As more and more institutional adoptions happen, there will be more and more dynamics that develop for supply and demand. And having physical assets — actual tokens — gives us in the future the possibility of income generation potential”
These are only some of the most recent examples out there and I am sure that you will find many more cases of private and government pension funds dipping their toes into crypto.
So, why is this important?
Well, because Pension funds are some of the largest asset managers in the world. The total AuM of global pension funds stands at an eye-watering $35 Trillion. If even a small fraction of this made its way into cryptocurrency investments, the buying pressure could drive valuations over the moon.
I also happen to think that the launch of these ETFs will give all of these pension funds a more readily accessible opportunity to get exposure to Bitcoin. The price impact will of course depend on whether we will see any spot backed futures instruments being launched. Of course, it’s great to see that the CIO of the Houston Firefighters fund appreciates the difference between synthetic and spot exposure.
That aside, what I find really interesting about this is the fact that pension funds are viewing cryptocurrencies as a sound investment. We in the crypto space know why it’s such an appealing asset class, but Pension Funds have to view risk and reward through a different lense.
However, it seems increasingly clear that in an era of high inflation and meagre returns, they can’t afford not to get involved in Bitcoin and other cryptocurrencies. As JP Morgan pointed out, inflation is a more compelling narrative than the ETFs.
So, keep an eye on what’s happening in the pension fund space. It is the $35 Trillion gorilla in the room..
🔝 Top Newbie Tips 🔝
Now that the crypto market is back to breaking all time highs, you know what that means: FOMO, scammers, hackers, and a whole lot of volatility.
Starting with FOMO, there’s a famous saying I always tell myself when I see an altcoin I feel like I just have to invest in: “haste makes waste”. If you’re rushing in to buy an alt because of its price action, chances are you’re about to buy the local top, or worse, the cycle top. What comes up, must come down, so wait until it comes down, and decide then if it’s a good buy. NFA, of course.
Next, the scammers. Google’s threat analysis group has announced that hackers are hijacking large YouTube accounts to run their fake crypto livestream giveaways. As you all know, I keep the Coin Bureau under lock and key, so much so that I once locked myself out (and some of you might know that too haha). However, the same can’t be said for other accounts, so be on the lookout for anything fishy from your favorite YouTubers, and report it as soon as you see it.
Then, the hackers. It looks like CoinMarketCap was recently hacked, and over 3 million emails were leaked. CoinMarketCap claims that no passwords were leaked, but I have my doubts given that it seems like they weren’t even aware of the hack until it had been posted to this website. Pro tip: never ever use the same email/password combination on any website, because that’s apparently how most hacks happen.
Finally, volatility. If you have the time, go to your favorite exchange, pull up the price of BTC or ETH on the daily, and scroll all the way back to the top of the last bull market. Prices spiked or dropped by more than 10 percent per day as we approached the top, and it’s going to be the same story this time around.
In theory there should be less volatility now that there’s more adoption, but I wouldn’t count on it. IMO, it’s going to be a very bumpy ride to the moon.
🔥 Deals of The Week 🔥
🌴 Hot NFTs: Yes, some of you are probably happy with your core crypto portfolios and are looking to branch out into more exotic crypto assets.
One of these more punchy assets I have exposure to are blockchain domains, which are issued as NFTs. As you guys know, I’m a fan of those NFTs that provide utility and that is exactly what these do. They basically allow you to replace your crypto addresses with easy to communicate names like coinbureau.crypto!
The reason that I think it’s such an attractive asset class is because it’s combining the current craze of NFTs with the domaining craze of the early 2000s.
I actually did a video all about the potential of blockchain domains and would certainly recommend that you watch that!
But where can you pick up those NFT blockchain domains?
😊 The Easy Way To Get Into Crypto: One of the biggest challenges getting into crypto for those new to it is finding an attractive fiat gateway. This is especially the case for those of us based out here in Europe.
The easiest solution I have found for all that has got to be the Swissborg App. I actually use it for myself to cashout crypto to my bank account and those withdrawals sometimes hit in just minutes!
25 crypto assets are available for trading here. That includes blue chips like Bitcoin and Ethereum, as well as more punchy plays like Audius.
If you are impartial to crypto lending, then you can also do that over here and you can get rates of up to 10.5% interest in just a few taps!
Even better, when you sign up and deposit more than €50, you’ll get up to €100 FREE!
👉 Sign Up To Swissborg & Get Up To €100 FREE
🗞️ Crypto News Focus 🗞️
I am going to retire the crypto news focus here in the email newsletter. That is mainly because I have recently started my daily crypto news flash in my official Telegram Insiders Channel. On top of that, we have also started a daily news service on coinbureau.com so feel free to pop over there and catch some news that may have flown under your radar!
🔮 Video Pipeline 🔮
- Could You Have Predicted the ETF Launch?
- Coinbase Pro Vs FTX: Which is best?
- Thorchain update: Still worth it?
- Worldcoin: The all seeing eye?
- Crypto custody: What’s the best method?
- Insider Trading at the Fed
🏆 What’s New At CoinBureau.com This Week? 🏆
✅ Beyond Digital Collectibles: 6 Other Use Cases For NFTs
That’s about all I have time for this newsletter. However, I want to thank you for continuing to support the work of my team at the Coin Bureau.
Be sure that we are all working relentlessly to continue bringing you the best crypto content we can!
Anyhow, I hope you have a relaxing Sunday and that you learn a thing or two from my latest vid!
Guy your crypto guy