Dispatch #10: Meet the latest Bitcoin bull (drumroll, please) Stan Druckenmiller

In this patch of your weekly Dispatch:

• The latest billionaire to join team Bitcoin
• Ethereum’s crazy “accidental hard fork”
• A dust-up around crypto between Congressional Dems and the Comptroller of the Currency

The Big Idea

Meet the latest Bitcoin bull: Stan Druckenmiller

Stanley Druckenmiller is one of the most famous hedge fund investors of all time. He managed money for Soros from 1988 to 2000. He is the former president and chairman of Duquesne Capital. He has amassed a fortune of an estimated $4.4B.

And he is long Bitcoin.

Druckenmiller’s thoughts on Bitcoin were revealed in a CNBC appearance earlier this week. In it, he reiterated his comments from September about the likelihood of rising inflation. But this time, he added that, in addition to gold, he was in Bitcoin. He pointed to the fact that Bitcoin was an inflation hedge preferred by the deep pockets of the West Coast tech set, as well as millennials.

He even added that, as he put it, “if the gold bet works, the Bitcoin bet will probably work better.” It’s a hell of a vote of confidence for this asset, one that might soon remove the social and career risk barriers for funds on the fence.

Strap in, friends.

The Latest In…

DeFi

An unannounced hard fork? That’s what some are calling Wednesday’s turbulence on the Ethereum network and dusting off their Hard Fork Cafe t-shirts. Ethereum infrastructure provider Infura announced that it was experiencing an outage stemming from a problem with the Ethereum client Go Ethereum or Geth. Interestingly, while a seemingly big problem, the price of ETH didn’t move much in reaction, and by the afternoon, things were getting back to normal.

The Latest In…

Traditional Markets

The week got off to an absolutely rocking start when Pfizer and BioNTech announced that their COVID-19 vaccine trial was preventing 90% of infections – a number beyond the wildest dreams of scientists who have been hoping for 75% effectiveness. Both the S&P500 and Dow Jones Industrial Average hit all-time highs for a time. Markets in Europe also surged but had lost most of the momentum by the end of the week, remembering that the US is still seeing record (and growing) cases and that, even if a vaccine were available today, there would be serious economic damage to account for.

The Latest In…

Institutions

Nexonomics – Nexo’s series of upgrades aimed at boosting the utility and value of the NEXO Token and, with that, customer wealth – is running at full speed. With the third installment of the series, the company is launching its Loyalty program on December 9. Nexo Loyalty is a four-tier bonus system that progressively rewards users based on the amount of NEXO Tokens they hold, reducing borrowing rates and increasing savings yields. With that, Nexo is making sure that regardless of the size of their portfolios, its users stand on an equal footing when it comes to managing and earning on their assets.

The Latest In…

Central Bank Digital Currencies

Two pieces of news on opposite ends of the spectrum when it comes to CBDCs. The first is that Lebanon is planning a CBDC for 2021, hoping to restore confidence in the country’s formerly important but currently beleaguered banking sector. The second is that China is getting ready to upgrade DCEP trials to the capital of Beijing.

The Latest In…

Regulations

The crypto community was thrilled when one of its own – former Coinbase counsel Brian Brooks – was named Acting Comptroller of the Currency. But now Brooks is being yelled at by Congressional Democrats for spending too much time (as well as going it alone) on crypto during a pandemic. Hopefully, this leads to more open conversation and collaboration around crypto policy. More likely it shows what sort of barriers the industry faces heading into the next administration.

The Week’s Most Interesting Data Story

Bitcoin’s Big Move to Ethereum

As the price of Bitcoin has boomed and the macro narrative has been bolstered by big entrants like S. Drucks and a flurry of institutional activity, when crypto writes its 2020 memoir a big part of it will be the rise of DeFi. One of the best ways to understand that is to see just how much Bitcoin has become wrapped in Ethereum in order to be usable as a DeFi reserve asset. In October, despite decentralized exchange volume falling significantly, we still saw $360M in Bitcoin move over to Ethereum. DeFi has been showing some serious signs of life this week after its autumnal cool-off. If that continues, we expect to see this number continue to grow in the months to come.

Hot Topics

What the Community Is Discussing

As more and more corporations put Bitcoin on their balance sheet, the community is helping articulate exactly why that decision makes sense.

Want another indication of how Bitcoin is thriving? This week saw one of the highest active address days ever.

Expect much more conversation about how the potential new administration will be with regard to crypto in the coming weeks.

Our Take

@AntoniNexo This and Next Week

• Commenting on crypto lender Cred’s Chapter 11 filing a week after freezing customer funds, Antoni reiterated the pressing need for players in the industry to take the necessary precautions to guarantee the safety of their clients’ assets. “I am proud of the example Nexo sets in this respect. Unlike most of our competitors, we only lend funds on an over-collateralized basis. This ensures we protect both our clients’ assets and our business, making us sustainable in the long term and accountable for our footprint in the blockchain space.”
• What lies ahead for the crypto banking industry and stablecoins? This is the topic of a webcast co-organized by legal firm Grant Thornton and strategic advisory provider FS Vector and scheduled for November 16. Our very own Antoni Trenchev is among the panelists who will be discussing the challenges and opportunities for growth in the space. Make sure you register for the free webcast.

What to Watch for Next Week:

• Will traditional markets turn south on continued election questions?
• Will DeFi continue to regain its momentum?
• Will any more billionaire Bitcoiners come out of the closet?