Could we be on the cusp of the next mega crypto trade?
That’s the question that was recently asked by the folks over at Pantera Capital. Their February investor letter may have been lost in the noise of geo-politics over the past two weeks.
That’s unfortunate, as I found it to be one of the most compelling cases yet for a great reversal of crypto prices. A massive rally where people could benefit from a mega trade.
If you missed that blockchain letter, then my video today is essential viewing. I take you through all of the most important points and break down the analysis with my own commentary.
I also share my own thoughts on where the market is going and how recent geopolitical events are likely to play out for the crypto markets.
You can watch that right here.
📊 Main Portfolio 📊
Few changes to the portfolio this week. Sold off a bit of DOT & MATIC. I bought a bit more RUNE (more on that below) and left the rest in UST.
I am also considering adding a bit more Arweave to my portfolio. It came up in my Livestream on Friday and I have been planning to do an update video since a few weeks ago.
Updated portfolio is:
ETH 30.38% | BTC 24.17% | SOL 8.85% | DOT 7.81% | ATOM 6.61% | FTM 3.78% | UST 3.63% | LUNA 3.13% | RUNE 2.67% | HNT 1.87% | ADA 1.65% | MATIC 1.58% | INJ 1.24% | AR 0.87% | LINK 0.74% | YGG 0.72% | XDEFI 0.29%
🖼 NFT Portfolio 🖼
MAYC 96.73% | Meebit 3.27%
📈 Thoughts on Market 📈
As expected, it was another volatile week in the crypto market. Everything was looking good on Monday and Tuesday, but come Wednesday everything started to crash. What’s interesting is that the crypto market started crashing at 10am CET on the dot, which is when Federal Reserve Chairman Jerome Powell began his first round of testimony about the state of the US economy.
On Thursday at 10am CET, Jerome began his second round of testimony. Lo and behold, the crypto market crashed again and so did the S&P 500 Stock Market Index. Then came Friday, which saw the release of the jobs report for February at 8:30am. Like clockwork, the crypto market and stock market crashed because the report found significant job growth in the month before.
If you’re wondering why the markets would crash on that kind of news, the answer is the Federal Reserve. Its mandate is to ensure “maximum employment” and “stable prices” through monetary policy. With maximum employment seemingly taking place, this means the Federal Reserve will focus more on stable prices through raising interest rates.
I’ll be talking more about the effects the Fed is having on the crypto market when I cover what Jerome said during his two testimonies later this week. Right now I want to alert you of an interesting phenomenon we saw in the crypto market late last week as it crashed. As some of you may have noticed, BTC dominance was trending upwards over the last 2 weeks.
Although BTC dominance is still trending upwards, when the crypto market crashed, BTC dominance saw a sudden dip. This suggests most of the money that left the crypto market late last week was people selling off their BTC rather than altcoins. This is strange because BTC dominance tends to spike rather than fall when prices drop since BTC is safe relative to altcoins.
On-chain analysis supports this theory too – the BTC balances on exchanges have ticked up slightly over the last week or so, indicating that BTC holders were selling. This begs the question of why all that BTC was sold, and though I certainly can’t say for sure, I do have a few theories. One thing is for sure; it’s not all the retail that FOMO’d in at the top. They’ve already sold.
This leaves a few possibilities. The most likely seems to be that some Russian citizens are starting to sell their crypto because of how much crypto exchanges are being pressured to ban them due to the ongoing war in Ukraine. This could be undoing a lot of the buying pressure that was initially coming from Russians when the sanctions started settling in and the Ruble fell.
The second possibility relates to the first, and that’s the selling of donated cryptocurrency by the Ukrainian government for other assets to help fight against Russian aggression. The Ukrainian government has received over 50 million dollars in donations over the last week, and with crypto balances on exchanges being as low as they are, this could be all it takes to move markets.
The third possibility is likewise a part of the former two, and that’s concerns around the Russia-Ukraine conflict, specifically the narrative that cryptocurrency could be used to evade sanctions and the crackdown on the industry that could result because of this. I explained why this wouldn’t work in last week’s newsletter. TLDR: “sounds good, doesn’t work”. Even though it doesn’t work though, it’s pretty clear that governments and regulators are going to use that excuse as a means to apply pressure to hosted cryptocurrency service providers.
In fact, this is something that I talked about extensively last year…
🔐 Not Your Keys, Not Your Coins 🔐
After falling down the rabbit hole of the Financial Action Task Force last August, I knew it was only a matter of time before regulators around the world started coming for self-custodial crypto wallets. In other words, before they moved to absorb crypto into the same financial system it was designed to replace.
I predicted that the first jurisdictions to enforce regulations against the self-custody of crypto would be the ones with the strictest regulations, and my prediction recently came true. South Korean cryptocurrency exchange Upbit has announced that it will be blocking all withdrawals to personal wallet addresses, leaving only domestic exchanges and other platforms with KYC.
While we have yet to see the same sort of regulations being pushed in other countries, some of you may recall the recent debacle involving Trezor over a tool that allowed users to connect their personal identities to their crypto wallet addresses. As many of you will know, crypto wallets are supposed to be pseudonymous because privacy is necessary for true financial freedom.
Trezor removed the controversial tool after pushback from the crypto community, but I see it as one of the first warning shots of an upcoming war for self-custody in cryptocurrency. I have a feeling that the battleground for this will be in the United States, because of some of the comments certain politicians made about crypto wallets during Jerome’s testimony.
This concerning trend to do away with self-custody in cryptocurrency is part of why I’m so bullish on crypto projects like Thorchain. Thorchain makes it possible to seamlessly trade different cryptocurrencies between blockchains the same way you would on a centralised exchange, except everything is completely decentralised. You can learn more about the project here.
Now, even though crypto projects like Thorchain will eventually be able to address all the cross-chain aspects to cryptocurrency, this unfortunately won’t be enough to mitigate the incoming crackdown on self custody. That’s because getting in and out of the crypto ecosystem requires interacting with a centralised exchange of some kind, and that’s a big problem.
If you’re wondering why, look no further than what happened in Canada. The government instructed all cryptocurrency exchanges to freeze transactions coming from crypto wallets belonging to protestors, and as Kraken CEO Jesse Powell explained, they have no choice but to comply. As I mentioned earlier, we are seeing a similar situation unfold with Russian citizens.
Now, whatever you think about the protests in Canada or the war in Ukraine, one thing is clear: the government should not be allowed to have this amount of power, even if it’s being used in a way that everyone agrees to be just. That’s because it’s only a matter of time before someone bad gets behind the wheel, and then crypto will be the same as central bank digital currencies.
The good news is that everyone is starting to realise this, but the bad news is that nobody knows what to do about it, at least not yet. For what it’s worth, there’s still lots of time before we see any significant moves against self custody in most countries.
In the meantime it’s important we tackle another important problem, and that’s the points of centralisation within cryptocurrency itself – and that brings me onto my next topic…
🧐 Decentralised Web3 (Sort of) 🧐
This week, something happened that had me really worried about the truly permissionless and decentralised nature of Web3. One was the ban of Iranian IPs by Opensea and the other was the block of Venezuelan IPs by Metamask – actions that go against the spirit of decentralised, permissionless networks.
So, what happened?
Well, when it comes to Opensea, Iranian users reported that they were unable to access their accounts. It was later confirmed by Opensea that they had started to block users from those countries that had been sanctioned by the US, of which Iran is one. Essentially, a “decentralised” marketplace was censoring anonymous users based on the location of their IP addresses.
This quite rightly caused an uproar in the Web3 community, but you also can’t really blame Opensea. It’s a US-based company and assisting with sanctions violation is a crime – with pretty severe penalties. Let’s not forget that BitMEX was hit with massive penalties on the grounds that it was providing its platform to Iranian traders.
But, what this does show is that Web3 is not as decentralised as you think. Moreover, who determines the criteria for censoring IPs? Today it was innocent Iranian collectors, tomorrow it may be citizens in Russia or Belarus?
But this is perhaps less concerning than the blockage of Metamask services for those Venezuelans.
It was also reported that users in that country were unable to access Metamask. This turned out to be a mistake on the part of Infura, the default infrastructure provider that Metamask uses to access the Ethereum blockchain. Infura also confirmed this in a tweet but also revealed that it was in fact involved in geo-blocking certain IPs.
This is concerning. It shows that even though the Ethereum blockchain is decentralised, if there are centralised gatekeepers, they can still make it difficult for you to access that blockchain. And while it may just be the sanctions list right now, what’s to stop overzealous regulators from casting the dragnet wider?
The simple workaround in this case was of course just to manually edit the RPC endpoints on Metamask. But it still leaves the question of a reliance on such a centralised service.
Thousands of Ethereum dApps and wallets use Infura as the default solution to connect to the blockchain. Not only do they run the risks that user IPs are blocked, but they also have to trust that the information coming from the company is 100% accurate. This episode reminded me of that really interesting blog post by the Founder of Signal around the centralisation of Web3.
In that post, he specifically mentioned the centralisation of Infura or Alchemy and how many dApps rely on it. He also talked about the backend architecture of Opensea and how it integrates with web wallets. He expanded on the concerns of how much these wallets rely on Opensea’s representation of an NFT.
So, Web3 definitely does have centralised points that when pressured, can impact on our ability to use the network.
And speaking of which, there were also recent reports of a lawsuit which accused Consensys (the owner of Metamask & Infura) of selling an “influential” stake of the aforementioned products to JP Morgan. The lawsuit alleges, quite simply, that JP Morgan owns a sizable stake in the IP of these two products.
Now I will stress of course that these are just accusations. But it would be quite an ironic twist if one of the poster boys of traditional finance could one day actually have a say in the development of these products.
This is a court case that we should no be keeping a close eye on.
🎉 Coin Bureau Event! 🎉
I’m excited to announce that tickets for the inaugural Coin Bureau conference are now on sale!
🗓️ 7th May 2022
📍 London: De Vere Grand Connaught Rooms
📢 Guy, Crypto Busy, DeFi Dad, Coin Club, Digital Asset News, Maren Altman
💰 £5 ($6.7) per ticket
This conference gives you the opportunity to meet Guy and the rest of the Coin Bureau team in person. A chance to mingle with content creators and fellow crypto fanatics!
Each session includes:
- Fireside chat with Guy and LunarCrush
- A discussion about all things crypto with Guy and other crypto YouTubers
- Metaverse/DeFi discussion
- A play-to-earn live tournament with £5,000 up for grabs in each session!
- Networking opportunities and drinks!
I should point out that this event has been fully funded by our sponsors and team Coin Bureau. We view it as an amazing opportunity to meet our community and wanted to keep the ticket price as low as possible. In fact, we aren’t even making money with the ticket sales. That’s because the way we have structured it, you get the ticket value back and then some.
Not only will the ticket get you access to the event, but you’ll also get the following in return:
- A drinks voucher worth £5 – yep that’s your ticket money back straight away!
- Mystery swag bags – the top prize will land a lucky person $1,000 in cash or crypto. We are also giving away experiences like lunch with Guy and Macey and a personal tour around the Coin Bureau office!
- Chance to win £10,000 in our play-to-earn tournaments.
👉 Learn more about the Coin Bureau Event & grab your ticket now!
Be warned: there is limited availability.
🎙 Coin Bureau Podcast 🎙
Don’t forget about my podcast with iHeartRadio! There are now three full episodes up and they go through essential topics for understanding crypto. The concept of money, digital money and blockchain technology!
Subscribe to my podcast on:
🔥 Deal of The Week 🔥
There is nothing better than earning passive interest on your crypto holdings. That’s because the rates of interest on lending protocols like Nexo can be as high as 18%!
However, today I have a little something special for you guys…
That would be an exclusive deal that the Coin Bureau team has managed to secure – exclusively for you good people!
So, if you want access to those top-notch interest rates, then you can now get $150 in FREE Bitcoin if you deposit more than $1.5k. That’s a deal you will find nowhere else!
👉 Sign up to Nexo – Earn up to 18% interest, get daily interest payments + get up to $150 in FREE Bitcoin!
🔮 Video Pipeline 🔮
- Flow blockchain: Why this NFT chain could be a big deal?
- Best ways to avoid NFT scams: All you need to know!
- Conflict & Crypto: Where Do we Go From Here?
- Thorchain update: All you need to know!
- When fiat fails: The story of fiat failures in the 20th century!
- Jerome Powell testimony: what does it mean for you?
- Cosmos tutorial and hot ecosystem projects
- Fractional NFTs: Why You Shouldn’t Touch Them!
🏆 What’s New At CoinBureau.com This Week? 🏆
✅ Icon (ICX) Review: Potentially undervalued?
✅ Top Blockchain Conferences 2022: Where to get industry insight?
✅ Metaverse 101: A Beginners Guide to the Metaverse
✅ SafeMoon Review: Ponzi scheme or legitimate project?
That’s all for now. But I do want to thank you guys as always for making Team Coin Bureau a reality. We know full well that without your support that none of this would be possible.
I and the rest of the team at Coin Bureau HQ are really looking forward to personally meeting as many of you as we can at our event in London! So be sure to secure your ticket.
Guy your crypto guy