This is a big year for the crypto industry. We’ve seen institutions flood en masse, Coinbase become the most important publicly-traded crypto company (more on that in a minute), and now, a glimmer of regulatory optimism? After years of Jay Clayton’s routine denials of Bitcoin ETFs and exclusive focus on ICO prosecution, we now officially have a SEC Chair who is deeply informed about the industry. 🙏
Gary Gensler was the former head of the CFTC and in between government stints actually taught a course on Bitcoin and Blockchain at MIT. Gensler was confirmed this week, and so perhaps it’s no accident that we saw Hester “Crypto Mom” Peirce reintroduce a version of her crypto ‘safe harbor’ proposal.
Gensler is no guarantee that a Bitcoin ETF will be approved, or that the Biden Admin will take some big pro crypto turn. But he’s certainly a lot more promising than the former leader.
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The Crypto Industry’s Takeover of Traditional Finance
We’re going to level with you. Coinbase’s public listing won the popular vote as this week’s big idea but since we covered it in Dispatch #30 and you’ve read all about it, we felt the need to give you, dear reader, something a little different. Still, let’s take a moment to talk about the significance of one of the stock market’s most anticipated public offerings coming from the crypto any industry. While the price of $COIN has been a little volatile, that’s to be expected. None of Coinbase’s shareholders had lockups given the direct listing approach, meaning there was a lot of selling this week (in addition to excited buying). What will be most interesting to see is how much (if at all) the $COIN narrative impacts the crypto market narrative going forward.
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In the run-up to its listing, we got some interesting tidbits about companies that work with Coinbase. One of the spicier notes was Coindesk’s discovery that Dan Loeb’s $17B Third Point hedge fund has exposure to crypto across at least five of their funds, custodied with Coinbase. While the SEC filings didn’t get specific about Third Point’s holdings, when Loeb retweeted the scoop, he said “Outed as a #hodlr” and gave himself laser eyes…so yeah maybe it’s kinda clear.
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To what extent do people see $COIN market moves as correlated positively or negatively with crypto market moves? It’s definitely clear that they were intertwined this week. In the hours before the Coinbase listing, Bitcoin, Ethereum, and our own NEXO Token all hit new all-time highs. Some of that was peeled back as Coinbase fell in the hours after its initial pop. Even more correlated, however, were exchange tokens. Binance’s BNB gained more than 100% in the month leading up to the listing (Antoni comments below), while FTX’s FTT was up 38% in the same period.
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Central Bank Digital Currencies
A few interesting developments from the world of CBDCs which seemed to have calmed down for a bit. While they may not be the banner headline story every week, we continue to see it as one of the more significant megatrends. A few interesting things:
The Bank of Japan has kicked off a year of experiments with a digital currency
In a knock to Facebook’s stablecoin efforts, Circle has stolen Former Libra Vice Chair Dante Disparte
Reports say that some within the Biden Administration are getting nervous about China’s CBDC
The Week’s Most Interesting Data Story
The Numbers That Show the Top’s Not In
To some, there are top signals everywhere you look. The relentless pace of asset price increases. The rapid move of every celebrity into NFTs. Exchanges buying the naming rights to major sports stadiums. Ultimately, however, tops show in the data, not just in sentiment. And top is not what the data suggests.
The first bit of data is that in the years leading up to 2021, the average number of days spent within 10% of a price top was 4.3. In other words, once a top was reached, people left quickly. We’ve now spent more than a month at that level.
What’s more, we’ve seen the construction of significant on-chain support. More than 1.9 million BTC moved in the $53-$60K consolidation zone around a $1T market cap. Over 245,000 BTC have moved above a new consolidation zone around $62.7K.
The point? Things are happening, but we don’t appear to be anywhere near done yet.
What the Community Is Discussing
One of the absolute best threads you’ll read on the state of Bitcoin. Get pumped.
While many have been focusing on Bitcoin, ETH has some year coming up.
Nic Carter, the FUD busting hero we need, not the hero we deserve.
Bitcoin could hit $100,000 in the next 12-18 months, Antoni said on "Bloomberg Surveillance Early Edition." Not bullish enough for you? Watch the interview or read the transcript here for Antoni’s take on BTC’s moves, where crypto is headed, and Nexo’s grand plans.
We spoke about the rallies of exchange tokens in the run-up to Coinbase’s listing and so did Antoni: “BNB had yet to replicate Bitcoin’s and Ether’s price appreciations of last year, so it is an alignment of quite a few positive set-ups for it to outperform. He added that some forecasts for the coin point to a price of almost $1,000.
"Coinbase's listing is for crypto what Google's IPO was for the internet," Antoni told Business Insider….and concluded in his famed prophetic manner speaking to Decrypt: “I have no doubt that this bull run is far from over.”
And jumping on the bandwagon, New York Post got into crypto, citing Antoni: “Coinbase listing on the Nasdaq is as bullish a signal as possible at this current stage.”
What to Watch for Next Week:
Can $COIN regain its starting price and would it be a signal for crypto markets?
Will artists be allowed to sell NFTs or will they just be canceled by the environmental set?
What’s the next hedge fund that will quietly make its way into the space?