Dispatch #29: Crypto Starts Swimming up the Mainstream

In this patch of your weekly Dispatch:

• Crypto’s four mainstreaming moments this week
• Stocks and gold go down, Bitcoin goes up
• Another reason not to buy a Tesla with BTC

The Big Idea

We’re Going Mainstream From Multiple Angles

Usually, when mainstream moments happen, they happen one at a time. This week, we count no less than four separate crypto mainstreaming moments.

First, we gotta shout out the folks over at Saturday Night Live, who not only did a song about NFTs (to the tune of Eminem’s “Without Me”) but even did a pretty damn good job. Seriously, millions and millions more people have heard of an “NFT” now because of SNL.

Next, let’s look over to Visa. It used to be that Ethereum folks asked how the protocol could scale to reach Visa-sized TPS. Now, Visa is effectively becoming an Ethereum layer 2, allowing USDC on Ethereum as a settlement currency.

Speaking of buying things with crypto, PayPal lived up to its promise from last year and announced the roll out of its crypto checkout product, which will eventually allow more than 29 million merchants the ability to accept crypto natively from within the PayPal app.

Finally, because the institutional folks didn’t want to be left out, Goldman Sachs announced – completely contrary to their statements from about ten months ago that crypto wasn’t an asset class – that they would in fact be offering Bitcoin and crypto investment products in the upcoming quarter.

So, by our count that’s a cultural moment, two payments moments, and an institutional moment all in the span of a couple days. Not bad, team.

The Latest In…

Crypto Markets

Crypto showed some surprising resilience this week. While Treasury Yields rose and stocks and gold faltered, Bitcoin not only maintained but actually went up (Antoni explains some of the reasons further down). This is especially impressive given the $6B in notational derivatives that expired last Friday – the subject of last week’s data story. Many analysts, including yours truly, think we’re poised for another leg-up.

The Latest In…

Institutions

As if the Goldman Sachs news wasn’t big enough, around the middle of the week we caught wind of another giant’s first baby steps into crypto. That was, of course, BlackRock, the world’s biggest asset manager. Previously, senior execs at BlackRock had said that the financial firm was “dabbling” in Bitcoin. Turns out that means they were buying futures in January. Let’s see whether that dabbling turns into something more now.

The Latest In…

Regulation and Governance

First of all, it’s a bonanza for former government officials getting into crypto. Binance has added former FATF experts to their advisors. Coinbase has hooked up with a former SEC official ahead of their IPO. Finally, former SEC chair Jay Clayton is advising One River around Bitcoin. Cooler than all that, however, is the current Governor of Texas taking to Twitter to talk about why he wanted to help his state become the next crypto hub. Oh yeah, and the Mayor of Miami now has laser eyes on Twitter.

The Latest In…

NFTs

What goes up must come down, right? Bloomberg reported that in the weeks following the Beeple auction, the average daily NFT volume has fallen from more than $19M to just above $3M. Temporary lull or fundamental shift? We’ll have to wait and see. In the meantime, however, there is plenty of evidence that things are just getting started. The Weeknd is releasing an NFT collection, SnoopDogg is all over Twitter talking about them. And perhaps biggest of all, Dapper Labs, the company behind NBA Top Shot, just raised $305M at a $2.6B valuation.

The Latest In…

Reasons Not to Buy a Tesla with BTC

As we’ve kept saying, don’t sell your Bitcoin for any depreciating asset, even if it’s a car from the future. Adding to the reasons why you should HODL that BTC and take out a tax-efficient loan for that car instead is the revelation that Tesla privileges fiat over Bitcoin purchases in the event that a car turns out to have manufacturing defects. In short, Tesla has full discretion over how to pay you back – Bitcoin or dollars – so if your $50K Tesla is faulty and in the meantime BTC price falls by 25%, Tesla could refund you with $37,500 worth of Bitcoins, not a $50,000 check. Always read the small print.

The Week’s Most Interesting Data Story

Crypto Is Quickly Flippening Banks

Everyone knows crypto is growing. As it does, it offers a stronger and stronger alternative to the traditional financial system. What you might not know is that the value of the crypto industry is rapidly encroaching on that of traditional banking. As of March 31, 2021, crypto’s total market value was $1.813B. The total value of the S&P Composite 1500 Banks was $1.892B. The flippening is coming!

Hot Topics

What the Community Is Discussing

It has been an absolutely wild quarter. The end of March brings a bit of reflection.

In case you want more of a recap than a reflection…

The more popular the industry gets, the louder the critics become.

Our Take

@AntoniNexo This Week

• After flirting for a few days, Bitcoin and $60K touched base once again. Here’s what Antoni said of the inevitable encounter, as featured in Forbes and Cryptonews: “Bitcoin is showing resilience like no other asset as it enters the rally-inducing part of its four-year economic cycle. It’s totally uninterested in dollar action, Treasury Yields, tech stocks dropping, gold slipping, you name it. With PayPal allowing 29M merchants to accept crypto and Visa effectively becoming an Ethereum layer 2 by adding USDC as a settlement currency, I have no doubt that this bull run is far from over and that we are on track for further BTC support above $60K.”
• That Peter Schiff had changed his mind about Bitcoin was only an April Fools joke, so until that day arrives, we ain’t stopping arguing with the likes of him. A reminder from Coinfomania why Schiff is wrong and Bitcoin is a better version of gold, as per Antoni.
• Did you miss Antoni’s AMA last Friday? Fret not as we’ve summarized his most salient points in this blog post. #WhenBankingLicense? #WhenReferral? #WhyFixedTerms? #LotsMore.

What to Watch for Next Week:

• Is NFT price action really slowing down?
• Will BlackRock keep dabbling or is there more to its BTC interest?
• Can Texas become a crypto hub?