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 📖
This month let's add a new book that is very interesting and financial history of the world during the gold standard era from the 1920's and 1930s. I am reading this book because it is a great view into what a changing monetary system looked like during that era and the divergences that central banks had in an every man or woman for themselves period of transition. If you are reading along or listening drop me a note on Twitter or email!
Listen to: The Lords of Finance For Free with Audible. Link
💭✍🏼 Food For Thought 💭 ✍🏼
Well, this was one of the more eventful weeks in the last few years. I actually had to redo this edition a few times as things kept changing so quickly. I have decided to lead off this section with the single most important thing (in my opinion) to mark on your calendar for the next four (4) months and it starts on June 1, 2022. The Federal reserve will being "Quantitative Tightening". *imagine the sound of water draining from the bath tub*
"Quantitative Tightening" or QT which is the inverse of "Quantative Easing" or QE. If you don't know what that means, do not fret the article below is a good explainer. In short QE = adding money directly into the financial system for example, imagine you won a $100 million dollar lottery and got the entire amount as a bank wire the next day--this is an over simplified example of Quantitative Easing. Next, imagine the government came into your bank account and took all the money back the next week--this is Quantitative Tightening. Thus, adding money into the system makes everyone look like a winner and taking money out of the system will make it seem that chicken little was right--the sky is really falling. ➡️ Link
As I have been asking for a few weeks now, what will be the impact to markets and society broadly when "the people" realize that the "central bank giveth and taketh away"? ➡️ Link
As the "price of money" i.e. interest rates go up, the value of financial assets goes down as capital eventually flows into Bonds. In my personal opinion governments around the world care about the bond market because that is how governments funds themselves. ➡️ Link
I thought this story was particularly interesting given that China has (i) it's own separate and censored internet and (ii) has officially banned crypto. ➡️ Link
Terra has broken it's peg as a Stablecoin and is in major trouble. It is worth your time to understand what is happening and how it may or may not resolve itself. Needless to say I had no idea this would happen; however, you can note my general bearish tone over the last six months. You can read about the current status and any updates directly from Terra Luna's site. ➡️ Link
Wowsers... read the thread here ➡️ Link
International Organization of Securities Commissions (IOSCO) which is made up of the global securities regulators calls for global crypto regulations. I think this is coming, if you look at history--you get sweeping regulations only after a crash because there is no political will to impose regulations while markets (of any kind) are going up. Only after a crash does the public generally acquiesce to broad government controls. This is coming, in my opinion. ➡️ Link
💸 Companies and Deals I am Watching Closely 💸
1. Chainalysis, a blockchain data analytics and compliance firm, raised $170 million at an $8.6 billion valuation from GIC and others. - Link
2. Talos, a provider of institutional digital asset trading technology, raised $105 million in a Series B round led by General Atlantic, with new participation from Citi, Wells Fargo, Fidelity, A16Z, and others. - Link
3. Soluna, a developer of green data centers for crypto mining and other intense computing, raised $35 million from Spring Lane Capital. - Link
📖 Quote of the Week 📖:
“For every dark night, there's a brighter day.” - Tupac Shakur
📰 This Weeks Most Interesting Digital Asset News 📰:
1. Terra outlines stablecoin support measures as Luna slides below 10 cents - Link
2. Tether's market price slips below dollar parity amid ongoing stablecoin woes - Link
4. Germany outlines favorable tax guidelines, gains on BTC and ETH sold after a year tax-free - Link
5. Celsius pulled half a billion dollars out of Anchor Protocol amid Terra chaos - Link
📈 Top 10 Market Movements by Market Cap over the last 7 days 📉:
Bitcoin: Price OHLC
I have updated the chart for this week and gone back to 2021 and you can see what is obviously to everyone today. To be fair I did not see this top--I turned bearish during the December 6, 2021 newsletter when I say the Fed via the press make what I considered to be a major policy change (if true). So far, they are keeping their promise to slow everything down. I have no idea when they will relent but until then-- expect more pain.
You can see above that Bitcoin has not broken above the $48k amount in 2022. I continue to remain bearish short term but as I have previously stated that I am planning to take a hard look starting now in the May / June time frame.
Bitcoin: HODL Wave
The chart shows the bundle of all active supply age bands for Bitcoin, aka HODL waves. Each colored band shows the percentage of Bitcoin in existence that was last moved within the time period denoted in the legend. We still have more to go.
Bitcoin: Net Realized Profit/Loss Ratio
Net Realized Profit/Loss Ratio is the ratio between realized profit and realized loss. As you can see above the majority that have sold as at a loss on a "net" basis on the lows this prior week.
Ethereum: Price OHLC
OHLC is the Open, High, Low and Close price. ETH is still chopping around just like Bitcoin above and you can see here it is off the highs of the prior weeks and also down the the year of 2022.
Total Value Locked (USD) in DeFI
Last week, I called out the drop in TVL and asked was more to come? I had no idea the Luna blow was coming but you can check the deterioation in TVL week over week from 84 Billion to 75 Billion following by the Luna blowup and drop to 56 Billion today. Queue the regulators and investigations.
As a reminder TVL means "Total Value Locked". This refers to people taking ETH based tokens or other tokens and "locking" them in DeFI protocols to lend, generate yields and otherwise earn excess returns.
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Green Tea Tidbits:
The scientific name for green tea is Camellia Sinensis.
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