A weekly newsletter on actionable digital asset market insights and practical observations with a smidgen of greentea 🍵 insights
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📖 Book of the Month 📖
I am starting on this new book on January 9, 2022 and listed it in my newsletter there. If you are interesting in understanding history to get a sense of where the world may be going, I think you will enjoy reading this book (or listening) along with me!
Listen to this book for free with Audible The Changing World Order
💭✍🏼 Food For Thought 💭 ✍🏼
Lael Brainards Pre-Released Speech to the Senate Banking Committee - Link
IMF Publication Cryptic Connections, this is a great note on the cross asset correlations being observed between and all risk assets generally. In sum, traditional investors have come to crypto and brought all their baggage with them. Thank you for coming out, good night. - Link
A direct quote from Lael Brainard's Senate Banking Committee Speech on January 13, 2022 (the full speech is in the link above).
How does the Fed control monetary policy? Answer: Lowering and Raising Rates. Will they raise rates and break something? I have no idea but I also do not want to live through their "learning curve" with my money. More cash on hand please.
💸 Companies and Deals I am Watching Closely 💸
- NEAR Protocol Raises $150 million - Link
📖 Quote of the Week 📖:
“How did you go bankrupt? Two ways. Gradually, then suddenly.” ― Ernest Hemingway, The Sun Also Rises
📰 This Weeks Most Interesting Digital Asset News 📰:
1. A group of FDIC insured US banks has formed under the name USDF Consortium mint stablecoins amongst its members - Link
2. House Bill Would Bar the Fed from offering a Retail CBDC account - Link
3. Gemini acquires BITRIA, a digital asset portfolio management platform - Link
4. PayPal Explores Launching It's Own Stablecoin - Link
📈 Top 10 Market Movements by Market Cap over the last 7 days 📉:
Bitcoin: Price OHLC
This is the OHLC chart for Bitcoin which shows the Open, High, Low and Closing price. In the chart above I have pulled the year over year chart from 01 January 2021 to date. As you can see above the BTC price is at a mid-point and cross roads for some people. Specifically, if you are relatively new to Bitcoin and bought in 2021 you are more likely to have bought a top and potentially be at break even of slightly below. Versus longer term holders that would have entered at much lower prices. I think this will matter given the broader macro factors that are now at play. See above and my last four (4) newsletters where I have been calling this out on purpose yet in a subtle manner. Nothing is an absolute. However; as I have said above, I want to have cash on hand to be able to act opportunistically and broadly at this time. The possible shift in the central bank's stance is a major X factor that I am not sure people fully account for. If the Fed follows through on their actions coupled with a generation of investor (mostly Gen Z and Millennial) that has discovered investing in 2020---they are likely in for this generations Dot Com moment, among other things, in my opinion. Keep your head on a swivel!
Bitcoin: 90D Coin Days Destroyed (CDD-90)
Coin Days Destroyed (CDD) looks at Bitcoin spent (or destroyed). This signifies coins that are not be hodled but being spent. This specific metrics looks at CDD on a smoother 90 basis for the year to date from 01 January 2021 to lower the noisy readings and you can see that at a broad level there have been higher levels of hodling versus taking profits. On the let side, you can see that during the first quarter of 2021 the 90CDD was high relative to today because many participants were taking profits and making sales, i.e. destroying coin days.
Bitcoin: Entity-Adjusted Dormancy Flow
Entity-adjusted Dormancy Flow is the ratio of the current market capitalization and the annualized dormancy value (measured in USD). Entity-adjusted Dormancy Flow can be used to time market lows and assess whether the bull market remains in relatively normal conditions. It helps confirm whether Bitcoin is in a bullish or bearish primary trend. Given my bearish tone (in case you did not notice), I have pulled the chart going back to the 2017 rise and crash (yes, I was here then too but not writing a newsletter). I think this metric may be useful for you to get a sense of how Bitcoin might behave if we see a further sell off given all my Fed/Macro talk above. If this metric holds and there were to be a further drawdown you could see Bitcoin touch the bottom of the green channel which would place its price closer to $20k. Don't worry, if that happens I would be putting out an emergency note and personally I would be buying at least a nibble for long term holding not trading. I do not think that is highly probable but then again, you could say the same thing about the last two (2) years.
Total Value Locked (USD) in DeFI
An update to last week's DeFI chart. I like DeFI and what you can do with it and I have used it over the years since the early protocols in 2019. I am noodling over doing something bigger in DeFI but for now just watching and waiting, I say this as someone with structured products experience that began their career looking at collaterlized debt obligations, collateralized loan obligations and synthetic versions of the same. Yes, I know about all the curve wars and whales, etc. My biggest concern is the collateral mismatches that I can see overtly in some projects but that are generally not apparent unless you really look deeply (and I have). Further, I have reservations about how some parts of this sector will handle a shift in the global liquidity regime of central banks. I get that Bitcoin will sell off but that will be because in a real panic everything sells off. For DeFI and certain structured products parts of the ecosystem, I am noodling over what is likely to break in this two and half year old ecosystem if we get a violent swing in fund flows (or hard risk off) from one group of assets to another.
No ETH charts this week but it is still being burned and that is still supporting it's price. The project should hurry up with this merge or they are risking being gobbled up by the hounds that are other projects nipping at their heels.
Products I Personally Use and Support
Green Tea Tidbits:
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Disclaimer:
This Newsletter does not provide, and no portion of this content purports to be, individualized or specific investment advice and I do not provide investment advice. All information provided herein is general in nature and is made without regard to individual levels of sophistication or investment experience, investment preferences, objectives or risk parameters and without regard to the suitability of the content for individuals or entities who may access it.
No information provided herein, should be construed as an offer to sell, or a solicitation of an offer to buy any security or investment vehicle, nor should it be construed as tailored or specific to you, or any reader or consumer thereof. You understand and agree that the content does not constitute specific recommendations of any particular investment, security, portfolio, transaction or strategy, nor does it recommend any specific course of action is suitable for any specific person or entity or group of persons or entities.
The content herein is based upon information from sources believed to be reliable and I am not responsible for errors, inaccuracies or omissions of information; nor is it responsible for the accuracy or authenticity of the information upon which I rely. For informational purposes only. Do your own research.
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