Here's What the Rich Are Doing!
Crypto has a habit of sometimes making you feel extremely wealthy and at other times making you feel, well, somewhat the opposite. But, have you ever wondered where you and your net worth stand in relation to the other 7,999,999,999 souls on this planet?
The global distribution of wealth may appear fairly obvious on the face of it, but is in fact a lot more nuanced and changeable than you might assume. Helpfully, for the past fourteen years, Credit Suisse has been producing its Global Wealth Report, which always contains fascinating insights on how money moves around from year to year. The latest edition of this report does not disappoint.
Leaving aside the irony of a wealth report being produced by a bank which recently had to be rescued by its biggest rival, Credit Suisse’s latest offering (now in partnership with UBS) contains some eye-opening findings. It shows how, post-pandemic, money has been flowing out of places like North America, Europe and China, and into more emerging regional economies, particularly South America.
But, as always, the most interesting part is always that which tells you how you’re doing in relation to everyone else. The facts and figures there may surprise you too. So, as you’ll have guessed, you can find out where you stand by watching today’s video. In it, we break down the latest Global Wealth Report and present you with its key findings.
With a crypto bull market somewhere on the horizon, now is as good a time as any to assess how wealthy you are - and how wealthy you plan to be in future.
You can watch today’s video here.
📈 Crypto Market Forecast 📈
In case you missed the news, yesterday was Chinese New Year - the beginning of the Year of the Wood Dragon. If history is any precedent, then BTC could rally by more than 10% over the next couple of weeks. For context, Chinese New Year festivities will last from yesterday until Saturday, February 24th. Between now and then, we could see a lot of volatility to the upside, particularly among altcoins (and possibly memecoins).
As we mentioned in our recent video, it’s possible that ETH could see gains of almost 20 percent over the next fourteen days. This wouldn’t be surprising given that Ethereum has its own upcoming catalysts: the Dencun upgrade (which was recently set for Wednesday, 13th March), and the pending spot Ethereum ETF applications, which are expected to be approved in May.
At the same time, we have a big macro factor to look forward to this week, and that’s the CPI print for January, which will be published on Tuesday, 13th February. If the December CPI print is anything to go by, the January CPI print could surprise to the upside. However, real-time inflation indicators suggest that it could surprise to the downside, due to the rapid decline in said indicators.
Depending on how this print comes in, it could cause long-term interest rates to rise or fall, per its effects on the 10-year yield. For reference, small-cap stocks have been highly correlated to yields since last autumn. It’s been a similar story for small-cap altcoins, though recently their price action appears to have been driven primarily by crypto-specific factors.
Besides ETFs and upgrades, some of the biggest crypto-specific factors have related to regulations, most of which have been negative. However, it appears that we could get a positive development on that front in the next couple of weeks. That’s because US politicians are reportedly on the brink of tabling a stablecoin bill which has been in the works for 18 months.
For those unfamiliar, this stablecoin bill would basically make stablecoin payments legal in the United States. If you watched our most recent Solana update, you’ll know the crypto project is actually trying to position itself as a payments platform. You’ll also know that Solana was once the official blockchain for USDC (back when the Centre Consortium was still a thing. RIP).
Obviously, this bill becoming law would likely be bullish for SOL, and it could end up being bullish for ETH too. That’s because after the Dencun upgrade, Ethereum’s layer 2s will effectively be as fast and as cheap as Solana. Take a second to consider that Vitalik himself has been pushing for payments on Ethereum’s layer 2s for almost two years now.
However, this all assumes that the stablecoin bill will be passed in a timely manner. To bring you up to speed, the Financial Stability Oversight Council or FSOC warned in late 2022 that it would step in to regulate stablecoins if congress doesn’t. You might have heard that the Treasury Department could declare stablecoins as systemically important in order to take control.
To be blunt, it’s unlikely that the stablecoin bill will become law anytime soon. That’s simply because there are bigger issues that lawmakers are trying to hash out in Congress. Meanwhile, anti-crypto regulators like the SEC continue to close in on the crypto industry, with Gary and his gang recently approving a new definition of dealer, which could give them authority over DeFi.
For what it’s worth, it seems that even these anti-crypto regulators have their hands full with other matters. The Treasury is busy trying to issue debt in a way that doesn’t blow up the bond market, and the SEC is busy trying to keep Wall Street off its back over other rules it recently passed. This means crypto could have a clear runway to rally, at least for the next few weeks!
Speaking of the SEC…
Not Dealeer's Choice
This week, the US SEC made another pathetic attempt at over-extending its authority.
On 6th February, the regulator announced that it had adopted rules to include “certain significant market participants as ‘dealers’ or ‘government securities dealers.’”
Notably, these rules, which were first proposed in March 2022, seek to expand the agency’s definition of "securities dealer" to include any person who "engages in a regular pattern of buying and selling securities that has the effect of providing liquidity to other market participants."
If it isn’t apparent already, this definition places liquidity providers (LPs) in DeFi markets in the line of fire.
The SEC has also expressly stated that the rules would apply to all securities markets, including what it describes as crypto asset securities. Unsurprisingly, crypto industry participants were not happy.
In fact, the rules faced severe criticism from the crypto community when they were first proposed almost two years ago. At the time, the DeFi Education Fund even sent a comment letter to the SEC, clearly explaining that the proposed rules would only serve to encumber innovation within the crypto industry, given the lack of legislation and clarity about characteristics that qualify a crypto asset as a security.
The comment letter seems to have fallen on deaf ears however, as the proposed rules passed without any substantial change.
Some have been quick to point out that the dealer definition only impacts LPs with over $50 million in assets – meaning that, for the most part, retail users of DeFi will likely not face any repercussions from this new rule.
However, the primary point of contention is that the SEC is attempting to strong-arm its way into gaining more regulatory authority. As the folks at the DeFi Education Fund explain in their comment letter, the new definition completely overhauls decades of precedent which have established the characteristics that qualify an entity as a ‘market maker.’ Instead, now the SEC is at liberty to go after anyone it views as a “de facto market maker or liquidity provider.”
Moreover, the rule in its current form also fails to address the more intricate details of AMM DeFi markets. For example, how would the regulator treat renounced or locked LPs? What if the LP isn’t making any money from the service?
The new rules are expected to take effect 60 days after being published to the Federal Registrar, and market participants will be given one year to comply. All without having any clarity on the nitty gritty.
Thankfully, the fight isn’t over just yet. As mentioned earlier, the rule only applies to LPs in AMM pools containing ‘crypto asset securities.’
Without the SEC being able to indisputably label digital assets such as cryptocurrencies as securities, it will be unable to claim regulatory power over DeFi markets. On that front, as Variant Fund CLO Jake Chervinsky puts it, the SEC is on a losing streak. For evidence of that, look no further than the outcome of its recent battles with Grayscale and Ripple.
Additionally, we have pro-crypto figures like SEC commissioner Hester Pierce on the crypto industry’s side. In fact, Peirce was one of the commissioners who opposed the recent dealer definition changes. She also questioned her SEC colleagues about the rule’s application to DeFi in a live streaming of the hearing.
Many experts believe that these rules will likely be challenged in federal court before they come into force, as they would dramatically impact not just the crypto markets but also the traditional securities market.
We will have to wait and see how the SEC responds.
🔥 Hot Deal of The Week 🔥
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🔮 Video Pipeline 🔮
* MCBDC’s: The new CBDC system and what it might mean!
* Avalanche update: Potential of AVAX in 2024!
* Crypto in Korea: Why are South Koreans so obsessed with crypto?
* Censorship Hearing: Secret government censorship plans
* Arthur Hayes Interview: Thoughts and insights from a crypto exchange OG
🏆 What's New at CoinBureau.com This Week? 🏆
* Cypherock Guide: How to Use Cypherock Wallet!
* How to Buy Solana in the US: SOL Buying Guide!
* Who is Using Crypto? A Look at the Accessibility of Crypto to the World
* M6 Labs: Market On The Move Again
* Web3’s Wild-themed Vendetta Games is the Latest Game Coming on Immutable zkEVM
* CoinTracking Supports Millions of Customers Simplify Their Crypto Taxes!
📖 Quote of the Week 📖
No matter the size of your portfolio, you have time. Time that can be used to learn about crypto and grow your holdings. And, while the whale may have a bigger portfolio than you, you both possess the same finite amount of time - a commodity that no one can buy more of.
“Everyday is a bank account, and time is our currency. No one is rich, no one is poor, we've got 24 hours each” - Christopher Rice
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.