What A Week! The State of Crypto Report
Ripple's (partial) victory over the SEC on Thursday was a welcome boost to the crypto industry's morale. But, it's not the only reason to be bullish on the sector's long-term prospects.
Bear market or no bear market, the adoption of crypto, blockchain and web3 technology is on the rise and big corporations are leading the charge. A recent report by Coinbase and The Block has found that just over half of the Fortune 100 companies in the United States have begun integrating these technologies into their operations and more are sure to follow.
The State of Crypto report has dug deep into the data from Fortune 100 and Fortune 500 companies to assess just how much progress is being made in the adoption of crypto and related technologies. The results make for heartening reading, but why read the report when you can enjoy our summary of it instead?
In today's video, we unpack the principal findings from this report and give you the key facts and figures. While frustration over the attitude of US regulators remains, there are plenty of reasons to be cheerful.
You can watch that video here.
📈 Crypto Market Forecast 📈
We’re so back, but we’ll get to that later. Right now, it’s time to talk about the future. There have also been some interesting regulatory developments in the UAE, where Dubai recently suspended BitOasis’s exchange licence. This is bullish or bearish depending on your perspective. It’s bullish because it means the UAE is enforcing its regulations, but it’s bearish because it suggests that other crypto exchanges could soon suffer the same fate.
The elephant in the room is Binance, which has been facing regulatory scrutiny around the world, and could be facing it in the UAE too. The good news is that there hasn’t been another big enforcement action (e.g. from the US Department of Justice), and this possibility has been priced in. Even so, BNB has been looking weak. The fact that it’s going to undergo an upgrade that allows the blockchain to be frozen in case of an emergency is concerning, to say the least.
Another interesting development has been Vanguard’s accumulation of Bitcoin mining stocks. This is likely a consequence of rising BTC prices and miner profits, though one can’t help but wonder whether it’s good for asset managers to be holding large stakes in the biggest Bitcoin miners. Some of you will know that BlackRock also holds large stakes in Bitcoin miners. It’s conceivable that they’re hoping they can influence Bitcoin in this way. Don’t worry, it won’t work.
Speaking of crypto stocks, it’s interesting that Ark Invest recently sold shares in Coinbase. This could likewise be a standard profit-taking activity, but the fact that crypto grandma (Cathie Wood) hasn’t sold any Coinbase stock in almost a year could be evidence that she thinks bad news is coming. If this is the case, it’s possible that her position has changed following the outcome of the SEC’s case against Ripple. There’s no question - that development is extremely bullish for US exchanges.
The real question though is whether the ruling is going to result in another alt season. Not surprisingly, the cryptos that the SEC claimed to be securities in other lawsuits pumped the hardest after the outcome. However, it appears that Bitcoin dominance won’t be going much lower, at least in the short term. It seems that 50% is a key support/resistance level. This assumes that technical analysis is appropriate for Bitcoin dominance, which is up for debate.
For the sake of debate, let’s assume that it’s not appropriate to do TA on Bitcoin dominance. In this case there’s still something missing, and that’s the ‘marginal buyer’ that Ben Cowen talks about when discussing altcoins. In short, for there to be a real alt season, there need to be lots of retail investors willing to buy your bags, since they’re the ones who tend to dabble in alts. Judging by Google Search trends, this marginal buyer is nowhere to be found (for now).
It’s a different story for Bitcoin, however. As most of you will know, BTC has seen lots of institutional interest in recent weeks, thanks in large part to BlackRock filing for a spot Bitcoin ETF. And, this spot Bitcoin ETF fever is starting to find its way into Europe. A Dutch asset manager now intends on launching a proper spot Bitcoin ETF later this month.
And of course, so long as BTC continues to rally, altcoins will follow suit, regardless of whether they enter a full-scale season or not. ETH is looking particularly interesting - it’s about 5% away from the Bollinger Band moving average on the monthly. It’s possible that ETH has been secretly leading the market, or at least providing a clearer picture of what’s going on. If this is the case, then we may not see a correction until ETH has had that 5% rally. More about that tomorrow.
Right, now it’s time to talk about XRP.
📝 Ripple Case: The Fine Print 📝
This week, we had what seems like (at least on crypto Twitter) one of the biggest wins for crypto in a long time.
Judge Analisa Torres, presiding over the SEC vs Ripple Labs lawsuit, passed a summary judgement on some of the issues in the case.
Specifically, she ruled that the institutional sales of XRP by Ripple (i.e., the direct selling of XRP to VCs, hedge funds, executives, etc.) qualified as securities transactions, while the “programmatic sales” and “other distributions” of XRP did not qualify as securities transactions.
To put it simply, if you bought XRP from Ripple directly, instead of the open market, your purchase was part of a security transaction that needed to be registered with the SEC, as it satisfied all four prongs of the Howey test.
On the other hand, the XRP “programmatically” sold by Ripple through the use of crypto exchanges or trading algorithms were not securities, as these transactions supposedly fail the third prong (expectation of profit) of the Howey test.
Judge Torres stated that in programmatic sales of XRP, neither Ripple nor the purchaser was aware of who the assets were being sold to or bought from. This supposedly creates a “blind” that removes the buyer's expectations of profit arising from the efforts of Ripple.
As for those “other distributions” of XRP, such as the use of XRP in payments to employees and other service providers, Judge Torres ruled them as not securities, as they supposedly fail the first prong (investment of money) of the Howey Test.
Barring the decision on the “institutional sales” of XRP, the other decisions were exactly what Ripple and the broader crypto market have been looking for since the moment the lawsuit was filed by the SEC back in 2020.
No wonder crypto Twitter is buzzing with excitement. But, don’t place those 100x leverage longs on the future of XRP just yet.
To quote American writer James Hervey Johnson, “Intelligent men do not decide any subject until they have carefully examined both or all sides of it.”
So, how strong is this judgement really? Sadly, it's not as watertight as we would like. There are two reasons why.
The first is that Judge Torres’s decision on the matter is only a partial summary (i.e. she did not pass a ruling on all the legal issues present in the case). This means certain issues and questions in the lawsuit still need to go to trial to be decided.
Also, the rulings in the summary judgement come from a District Court, which means both parties can still file an appeal on them before a higher court. Remember that Ripple’s programmatic sales only constitute a small percentage of its total XRP sales. As for the SEC, it has to contest the court’s rulings on the “programmatic sales” because, if left uncontested, they could be taken as an admission of the SEC’s stance on the issue in future cases.
So be in no doubt, both the SEC and Ripple are preparing to file an appeal on Judge Torres's decision.
Secondly, some lawyers argue that Judge Torres’s findings seem to be in direct conflict with some of the logic used by her peers in other similar cases, such as the Telegram case. They state that this makes the findings probably erroneous and vulnerable to challenge on appeal.
In a recent op-ed, Brown Rudnick partner Preston Byrne stated that Judge Torres’s decision on the programmatic sales falls down, due to the stance taken by her peer Judge Kevin P. Castel in the Telegram case. Judge Castel had ruled that purchasers’ expectations of profits were always linked to the efforts of Telegram and not the efforts of intermediaries who were selling Telegram SAFT contracts.
As for Judge Torres’s ruling on the “other distributions” of XRP, Byrne argues that an “investment of money” for Howey Test purposes need not actually include the transfer of funds. He states that the purchaser only needs to give up some “tangible and definable consideration in return for an interest that had substantially the characteristics of the security.”
Of course, no one likes a party pooper. But we’d rather see you informed than ignorant anon.
📊 Personal Portfolio 📊
BTC 37.54% | ETH 31.61% | USDC 16.70% | USDT 6.68% | USD 3.38% | ATOM 2.86% | DOT 1.23%
🔥 Deal of The Week 🔥
The recent rally in the markets must no doubt have lifted your spirits and your portfolio. However, nothing is more soul crushing than to see your portfolio reach crazy valuations, only to discover that you didn’t take the best precautions to keep your crypto safe.
One of the safest ways to do this is through a hardware wallet. But, which is the best one to get? Well, there are three popular wallets that the team at Coin Bureau HQ use:
🔮 Video Pipeline 🔮
- World Bank, Bill Gates, and CBDCs: What is the verdict?
- What Ripple’s Victory Means For Crypto?
- Alex Mashinksy Charged! What it Means For Celsius!
- China Crypto Shakeup: Time to panic?
- US Government Dumping BTC? Good or bad news?
🏆 What's New At CoinBureau.com This Week? 🏆
📖 Quote of the Week 📖
The Ripple case showed us that sometimes, even the most formidable opponents can be defeated when up against indomitable will. One can only hope that Coinbase and Grayscale have a similar fighting spirit.
“It’s not the size of the dog in the fight, it’s the size of the fight in the dog” - Mark Twain
Team Coin Bureau
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.
Guy is one of the founding members and face of the Coin Bureau. Like many of us, he is just an average joe who became “crypto curious” back in 2013. After recognising the potential of blockchain technology, Guy set off on a mission to create crypto educational content, working with others to start the Coin Bureau website and released our first video on YouTube in 2019. You can learn more about him in his Who is Guy? blogpost.