One of the most heated debates of the past few weeks has been on Web 3. Some have claimed that it is merely the purview of Venture Capitalists and whales. That the tech is still quite centralised, slow and unable to reach mass adoption.
Well today, I am going to show you exactly why Web 3 is our best hope to break free from the centralised status quo. A reality where our data is harvested for profit by companies that will willingly pull our access at a moment’s notice.
Of course, there are valid concerns that need to be addressed about Web 3. Not only the standard ones but also others that have been raised. I will be talking about all of these in the video and what they could mean for the future of Web 3.
You can watch that video right here.
📊 Main Portfolio 📊
No changes to the portfolio this week folks. Pretty happy with the allocation and am waiting to see how things play out in the traditional markets over the coming weeks (see below IMF report).
The allocation is:
ETH 27.82% | BTC 19.60% | SOL 12.65% | DOT 11.55% | ATOM 7.48% | FTM 5.95% | HNT 2.94% | MATIC 2.49% | ADA 2.09% | RUNE 1.93% | INJ 1.20% | AR 1.13% | LINK 1.06% | USDC 0.97% | YGG 0.92% | XDEFI 0.23%
🖼 NFT Portfolio 🖼
MAYC 93.75% | Meebit 6.25%
📈 Thoughts on Market 📈
It’s been a tense week in the crypto market but it looks like it could have been a lot worse. This is because investors across the board were bracing for brutal inflation figures in the United States on Wednesday and while the figures were brutal, 7% was exactly what investors were expecting. Whether or not this has to do with the January adjustment to the CPI remains to be seen.
Not surprisingly, the crypto market rallied in response to the news and it’s a rally that had begun the day before. This might have something to do with all the bullish news that came out last week, the most significant of which is probably the rapid recovery of Bitcoin’s hashrate after miners in Kazakhstan came back online.
Another bullish sign is the balance of BTC on exchanges that continues to drop. As I’ve mentioned many times before, when BTC moves off exchanges then it means people are HODLing and not selling. Conversely, when BTC is moving on to exchanges then it means people are selling and not HODLing. More about on-chain analysis here.
With all this said, there is one thing going on in the crypto market that has me concerned, and that’s the death cross that BTC just painted on the daily chart. If you watched my first technical analysis tutorial, you’ll know a death cross is a sign of bad times to come. It also doesn’t help that we’ve definitively fallen below both the 128 and 200 day moving averages either.
The only reason why I’m not super concerned about these technical indicators is because of what I’m seeing on the monthly chart. Assuming we close this month at a loss, that will mark three months of red. This is the same decline we saw during the crash last spring, and if history repeats, February, March, and April will be green. These milestones could make it happen.
🔚 Growth vs. Value in Crypto 🔚
As you know, I love watching interviews with the founders of crypto projects as part of my research. Avalanche founder Emin Gun Sirer has been doing weekly AMAs (of sorts) on the official Avalanche YouTube channel and in one of these he discussed the notion of growth vs. value in investing, specifically in terms of cryptocurrency.
For those who don’t know, growth and value are two terms used to describe two broad categories of stocks. Growth stocks belong to companies that are expected to grow significantly in the future (e.g. Tesla). By contrast, value stocks belong to companies that are generating revenue today, and also giving dividends to shareholders (depending on your definition).
Whether investors are buying growth or value stocks depends heavily on interest rates. In a low interest rate environment, investors tend to favour growth stocks primarily because of the easy access their respective companies have to credit, regardless of revenue. When interest rates are high however, investors favour value stocks because credit is expensive and revenue is king.
When you apply this taxonomy to cryptocurrency, it’s pretty clear which coins and tokens fall into which category. At the extreme end of growth you have cryptocurrencies like Dogecoin whose potential is based on future promises. At the extreme end of value you have smart contract cryptocurrencies like Ethereum which generate revenue due their coins’ utility as digital oil.
It should come as no surprise then that smart contract cryptocurrencies have been rallying like crazy while the rest of the crypto market struggles. The Federal Reserve’s recent rhetoric around interest rates has spooked investors out of growth and into value both in cryptocurrency and the stock market. It will be interesting to see how long this rotation lasts given historical trends.
🕹 The IMF Said What?! 🕹
One of the most bullish indicators for me as to the potential of Bitcoin & cryptocurrency is when powerful opponents feel threatened. And, when it comes to powerful financial opponents, perhaps one of the largest has got to be the International Monetary Fund or IMF.
That’s because the IMF can be seen as the banker for countries. An international high yield lender that has been profiting off the global fiat system ever since the end of World War 2.
Hence, any sort of challenge from a decentralised technology like cryptocurrency is likely to upset them.
For example, in July of last year, the IMF released a blog post that came out and attacked the idea of using cryptocurrency as a legal tender. This report came about a month after El Salvador announced that they would be the first country to adopt Bitcoin as a legal tender.
The report basically claimed that having cryptocurrency as a legal tender “could harm macro-financial stability, financial integrity, consumer protection and the environment”. Of course, no hit piece on Bitcoin is complete without mentioning how it can be used to “launder ill-gotten money, fund terrorism, and evade taxes”.
Then, in October last year, they came out with their Global Financial Stability report. Unsurprisingly, some of the challenges that they foresaw were “Covid 19, Climate & Crypto”. You can see in the key highlights over here that the size of Crypto’s Market Cap is in the “Risks” category. That is perhaps one of the most disingenuous comparisons that I have seen but sadly expected.
They used all of these as a reason as to why countries should consider a universal response to cryptocurrency regulation. In a blog post of December last year, they claimed that the existence of all these cryptocurrency “risks” underscore why there is a need for international standards that are co-ordinated.
They even suggested a number of rules which could be implemented and, quite predictably, they suggested that the IMF’s Financial Stability Board should “develop a global framework comprising standards for regulation of crypto assets”
Then, just about a week ago they released a report that examined the historical correlation (i.e., relationship) between crypto assets and the stock markets. The analysis further confirmed the fact that crypto markets have become much more correlated with the equity markets.
Of course, this relationship has been known for some time and it is something I have covered on the channel ad nauseum. Investors place crypto in their “risk on” bucket which means that it is likely to react to many of the same global macro factors as Equity.
However, the IMF also did some analysis that claimed that this “crypto-equity” spillover is a risk to global financial markets. They said, “Increased crypto-stocks correlation raises the possibility of spillovers of investor sentiment between those asset classes. … A sharp decline in bitcoin prices can increase investor risk aversion and lead to a fall in investment in stock markets.”
Now, that’s a stretch even for the IMF. But, what it shows is that they increasingly see a risk of cryptocurrency to the financial system that they help to control. If it’s not a country’s fiscus, it’s the climate. If it’s not consumer protection, it’s financial contagion.
As I have made clear in my video today about Web 3, centralised powers benefit most when there is no challenge to the status quo. If that is challenged, they have to fight back.
🔥 Deals of The Week 🔥
🌎 Blockchain Domains: There has been a lot of attention on NFTs recently. But most of the NFTs with insane value right now have very little use cases. There is a lot of hype but not that much utility.
However, there is one category of NFTs that don’t only have a rarity component but also a strong utility and use case. Those are blockchain domains.
These can be used for accepting payments, personalising addresses and eventually they could power the decentralised web with a distributed domain name system.
Moreover, because of their unique qualities, these domains have become the new realm of online real estate for domain investors. If you will think back to the 1990s and early 2000’s, hot .com domains were all the rage and investors who got in early were handsomely rewarded.
If you were wondering where you can get your hands on those blockchain domains and are looking for a domain with potential, then you can hop over to Unstoppable Domains as they have the largest selection of crypto domain extensions.
Moreover, Unstoppable Domains has just launched on Polygon which means that you can mint those domains at a fraction of the cost with 0 gas fees! They have also released their Ethereum & Polygon sign in service which allows for a seamless web 3 connection – decentralised and permissionless!
👕 My Merch Store: Some of you might know that my merch store is one of the main ways that you guys can support me and the rest of the Coin Bureau team. All purchases there help us continue producing that crypto content you love.
I think I’ve created a cracking line of crypto t-shirts, hoodies, water bottles, beanies and more. However, I thought that I’d run a special promotion for my most loyal followers and give you guys an exclusive 10% discount for ALL orders from the store.
To get that all you need to do is to use the code CB2022 at checkout!
🔮 Video Pipeline 🔮
- Top Crypto Tax Tools 2022!
- Top NFT Issuers: Who Controls the NFT Game?
- Jerome Powell testimony: You won’t believe this!
- GameFi: Complete 101 Guide!
- The Flippening: What you need to know!
- Avalanche Update: Is there still potential?
- Ethereum: Where to for ETH in 2022??
🏆 What’s New At CoinBureau.com This Week? 🏆
✅ Kadena Deepdive! The Blockchain Trilemma solved?!
✅ GALA Games Review: Everything you NEED to Know
✅ Bitcoin and Inflation: Is it an Inflation Hedge?
✅ Heavyweight Bout of Crypto Exchanges: FTX vs Binance
That’s all for this week’s newsletter. However, I need to thank you for making me your personal crypto chap. I know there are many great crypto content creators out there and it really is a privilege that you have spent at least a bit of your time watching Coin Bureau vids!
You guys are what make the channel possible! Thanks again on behalf of everyone at the Bureau.
Guy your crypto guy