It’s no secret that the IMF is not a fan of cryptocurrency…
Heck, it even threatened to withhold financing to El Salvador because of its Bitcoin legal tender bill and pressured Argentina to drop its crypto ambitions.
Well, the IMF recently released its global financial stability report and it was an incredibly in-depth study. It went over some of the biggest risks facing the world today – most of which relate to the ongoing Ukraine conflict and subsequent sanctions.
However, the IMF couldn’t do a report on financial “risks” without diving into crypto. While some may want to dismiss these risks on account of where they’re coming from, that would be imprudent.
That’s because there are some genuine concerns highlighted and it’s important for us not to be like the anti-crypto zealots we rail against.
So, in my video today, I break down this report and take a look at the most important sections. I analyse whether there are any merits to the IMF’s concerns and what they could mean for the crypto markets.
You can watch that video here.
📊 Main Portfolio 📊
Took a bit more profit on my APE & closed out of my YGG. I will be holding this in UST as dry powder. Although there appears to be some attractively priced cryptocurrencies, I think we are due for a pretty rough week.
When I make any portfolio changes, I will update all of you in my official Telegram channel.
ETH 33.02% | BTC 23.72% | SOL 7.81% | UST 6.66% | DOT 5.52% | ATOM 4.11% | RUNE 3.06% | LUNA 3.02% | APE 2.66% | NEAR 2.38% | ADA 1.52% | AR 1.42% | FTM 1.17% | MATIC 1.16% | HNT 1.13% | INJ 0.77% | LINK 0.60% | XDEFI 0.27%
🖼 NFT Portfolio 🖼
MAYC 95.53% | Meebit 4.47%
📈 Thoughts on Market 📈
I’ll give it to you straight: the crypto market isn’t looking too good at the moment, and though we’re not in a bear market yet (still higher lows on BTC), we’re fast approaching this possibility. This is simply because of the unholy combination of macro factors that’s crushing just about every asset market out there: lockdowns, supply chains, war, inflation, and now recession fears.
Investors are also anxiously waiting to see what the Federal Reserve will do in response to all of this news when it holds its press conference this Wednesday. If you believe the CME’s FedWatch Tool, it looks like the market currently expects the Fed to increase interest rates between 0.75-1%. If you believe consensus economist estimates. Either way, it’s safe to say that it’s anyone’s guess, and uncertainty = bad.
To make things worse, there are also a bunch of crypto-specific factors dragging down the crypto markets. The most important one was arguably the delay of all three crypto ETFs that were supposed to list on Australian stock exchanges last week. Had those listings happened, it could have resulted in lots of buying pressure for BTC and ETH, given that they’re all spot ETFs.
That said, we have seen some developments which could be very good for the crypto market in the long term. The most important example here is Fidelity, which will allow clients to invest in Bitcoin from their 401k retirement accounts. With a 20% maximum allocation, this means BTC could see up to 800 billion dollars of inflows this summer when the offering goes live.
We’re also seeing countries make significant steps towards adopting cryptocurrency on a national scale. The first is Panama, which recently signed a crypto bill that brings regulatory clarity to the industry, as well as zero taxes on capital gains. Brazil is coming close to passing a similar crypto bill, and the Central African Republic has officially made Bitcoin legal tender.
If that wasn’t crazy enough, the Swiss National Bank recently remarked that it might add BTC to its balance sheet in the future, though BTC currently doesn’t meet the bank’s standards of a reserve currency. If you watched my video about the decline of the US dollar, you’ll know this is something I predicted. If you ask me, it’s not a question of if, but when central banks buy BTC.
As amazing as all of this is, there’s another crypto specific factor that’s increasingly coming to the fore, and that’s the rapid rise of central bank digital currencies. In the last week alone, the Philippines, China, and Europe all announced significant developments on their CBDCs. This could be bad news for the crypto market. I’ll explain why in a video later this week. Stay tuned.
👨🏼🏫 Financial Literacy And Crypto 👨🏼🏫
I know I’m a bit late to the game, but I want to address a recent report by the Bank of Canada that claims crypto holders have a low level of financial literacy. What caught my eye about the report was this quote “Canadians who were young, male, employed, had a university degree, high household income and relatively low financial literacy were more likely to own Bitcoin.”
Call me crazy, but this seems a bit counterintuitive. If someone is young, employed, educated, and has a high income, how can they have low financial literacy? Either the Canadian education system is one of the worst in the world, or the methodology of the study is flawed. Obviously, it’s the latter: they only asked 6 multiple choice questions to test financial literacy. Not exactly ideal.
This begs the question of whether this is intentional or just incompetence, and history suggests that the Bank of Canada is trying to push a narrative when it comes to cryptocurrency. Case in point, it published an almost identical report in September 2020, which implied that only people with low financial literacy invest in cryptocurrency. You aren’t financially illiterate, are you, anon?
Jokes aside, there seems to be some truth to the statement. A great example is a survey from last summer which found that more than 1/5th of crypto investors in the UK basically have no idea what they’re buying. That’s definitely not a good sign, but it doesn’t necessarily translate to a lack of financial literacy. In fact, there’s evidence which suggests the opposite.
According to a 2021 report by Charles Schwab, 94% of people who first began investing in 2020 wanted to learn more about finance, and 90% intended to seek out information that will improve their investing skills. Even though this survey applied to stock investors, I reckon it’s the same or similar percentage among crypto investors, especially since there’s some retail overlap there.
Another relevant report that comes to mind is a report by the Bank for International Settlements that I covered in a video last year. The most important statistic is that over 50% of crypto investors become long term holders. You could argue that this could be due to a phenomenon such as the sunk cost fallacy, but I would argue this is evidence of education and awareness.
In sum, I suspect the Bank of Canada is trying to convince Canadians that holding crypto means they know nothing about finance. In truth, financial literacy is one of the cornerstones of cryptocurrency. While it’s true that brand new crypto investors may not know much about it, those who stick around learn a lot, and I suspect that’s why the Bank of Canada is on this crusade.
🤯 Governance Reimagined 🤯
Despite how revolutionary Web3 is, it does have its fair share of concerns. Some of these relate to the reliance on centralised points of failure, on governance control and a lack of well thought out, long-term economic incentives.
These are all fair criticisms.
That is why I was particularly excited to hear about Optimism’s latest governance initiative. Of course, most of the focus was on the launch of the upcoming OP token, which I talked about in this Telegram post. But, it was the governance and economic structure that came with the release that intrigued me the most.
They have dubbed it the “Optimism Collective” and it’s a new experiment in community funding and development focused around the principle of rewarding public goods. This is critical to Web3 infrastructure because their networks are by their very nature owned by the public.
The central point of the Collective’s structure is two “houses”. Firstly, you have the Token House which will allow general token holders to govern functions such as the distribution of project incentives, protocol upgrades and treasury funds. This is where most Defi governance protocols stop.
However, with the Citizens’ House, retroactive public goods funding can be voted on. The concept is quite revolutionary and Vitalik proposed it himself in an Optimism blog post last year. The TLDR of this is that it allows for the rewarding of public goods that benefit the ecosystem retroactively. This means that the Citizens’ House can reward those participants which have shown to provide a greater good to the overall community. This is quite an ingenious way of dealing with these rewards, as defined incentive structures can be quite hard to structure ex-ante.
On top of this, the Citizenship within the house will be granted by non-transferable NFTs that will be determined by both token holders and the foundation. These citizens within the house will also vote according to a quadratic mechanism that reduces the weight of large token holders. This deals with particular concerns around whales having outsized voting power.
Beyond governance, Optimism has also honed the economics such that they ensure the extensive revenue generated by the protocol creates an ecosystem-wide incentive for developers to build for the benefit of that public good. The stronger the public good, the more people who want to use it and the more revenue generated – a virtuous, value-accretive cycle.
The Optimism team also seems to have spent quite a bit of time designing the airdrop distribution. Only a small portion (5%) will be given retroactively and it is heavily focused on those addresses that have been active in the Optimism and Ethereum ecosystem. For example, a portion of the drop will also be given to anyone who has participated in any DAO votes from well known ETH protocols.
Moreover, they have allocated a further 14% of the supply to future airdrops – the metrics of which have not been determined yet. This has the added benefit of making it much harder to “game” the airdrop mechanism. It further incentivises honest network use for the collective good.
So, why am I telling you about this? No, I won’t be eligible for OP distribution and we have zero affiliation with the project.
I just thought it was a really unique way to structure a Web 3 ecosystem and I think that other projects should take notes. It will be interesting to see how this evolves over the coming 1-2 years.
🔥 Deal of The Week 🔥
We are constantly knocking on the doors of the biggest crypto exchanges and trying to get you an even better deal!
Well today, I am pleased to say that FTX and FTX US have agreed to put up one Bitcoin in a giveaway to you!
There is 0.5 BTC to be given away on FTX and 0.5 BTC on FTX US. Each prize will be 0.1 BTC each and will be split into five prizes on each version of the exchange.
To enter this FREE 1 BTC giveaway all you need to do is to:
- Sign up to FTX US or FTX using Coin Bureau’s link in the month of May.
- Trade $250
- Complete KYC level 2
Complete those steps and you’ll be entered into a lottery. Five lucky winners on FTX and five of FTX US will walk away with a cool 0.1 BTC each. That’s ten prizes in total – which will be credited to the winners FTX or FTX US accounts in June.
On top of that, everyone that signs up will get the following benefits:
- You won’t pay a cent on your first $30 in trading fees
- You’ll secure a 10% trading fee discount for life
So, even if you don’t get lucky then you’ll still have one of the best exchange deals out there.
If you want to enter this giveaway, then you can sign up right here 👇
🔮 Video Pipeline 🔮
- Top 10 Biggest Bubbles Ever
- Recession Fears: Are They Justified?
- A TradeFi Scandal For The Ages
- Cardano Update: Is ADA still worth it?
- Bitstamp Adoption Report: Shocking revelations!
- Cryptocurrencies Vs CBDCs: All you need to know
🏆 What’s New At CoinBureau.com This Week? 🏆
✅ Celsius Network Review: Crypto Lending Personified
✅ Want your Salary Paid in Crypto? Maybe you SHOULD!
✅ Solana Portals – User-first Metaverse Experience
That’s all for now. However, I want to thank you for supporting the Coin Bureau and we are looking forward to chatting to as many of you as possible at our event in London next week!
Guy your crypto guy