Dispatch #42: George Soros and Steve Cohen Come to Crypto

In this patch of your weekly Dispatch:

• Soros and Steve Cohen join the crypto fray
• Cardano makes a long-anticipated appearance on Nexo
• Did Grayscale’s buying shift cause the bear turn?

The Big Idea

A New Round of Hedge Funders?

The Bitcoin bull cycle that started last year was driven in large part by the entrance into the space of institutional investors. In particular, hedge fund legends like Paul Tudor Jones and Stan Druckenmiller inspired many others to reexamine the space.

While the institutional Bitcoin front has been relatively quiet, this week saw two legends join the fray. According to TheStreet, sources say Soros Fund Management CIO Dawn Fitzpatrick has authorized the trading of Bitcoin. Earlier this year she spoke to Bloomberg about why they were increasingly interested in Bitcoin, so this move seems only natural.

Point72, the $22B hedge fund of Steve Cohen, has also intimated throughout this year that it planned to get more involved. Now the firm is out actively recruiting a head of crypto. I wonder if Travis Kling, the founder of Ikigai Asset Management and former Point72-er is interested?

While some are worried about an influx of short-term-minded traders, from our vantage point this is just another signal that the space is becoming un-ignorable for macro investors. At long last.

The Latest In…

Regulation

The US House Financial Services Committee held a hearing this week called “America on “FIRE”: Will the Crypto Frenzy Lead to Financial Independence and Early Retirement or Financial Ruin?” The title doesn’t really leave much to the imagination, does it? Interestingly, a lot of the focus was on if and in what way crypto could pose a systemic risk to the rest of the system. For anyone who thought that DeFi was somehow going to go unnoticed by regulators, this hearing would disabuse them of that notion. It feels like a new phase of regulatory discussion is here. Perhaps that’s a good thing?

The Latest In…

Nexo x Cardano

The rumors are true: Cardano’s ADA is now available on Nexo! Over the last week, there’s been talk among the community about the potential addition of Cardano’s ADA to the Nexo platform which turned into a poll on Antoni’s Twitter where our community was pretty vocal. We are glad to finally be able to say: you can now buy, earn up to 8% p.a., and borrow against your ADA. We are so happy about our partnership with IOHK, one of the organizations behind the Cardano system, and are looking forward to the full ADA integration on Nexo.

The Latest In…

Mining

It’s been about a month since China started cracking down on Bitcoin mining and, man oh man, the great hashrate migration is really real this time. Hut8 and Terawulf have ordered $44M and $100M of mining equipment, respectively. Blockware has raised $25M to expand its mining operations in the newly mining-friendly Kentucky. Argo got itself a big fat loan to expand mining operations in Texas. As the Ron Paul GIF says, “it’s all happening!” Meanwhile, in the wake of a 50% reduction in hashrate, the difficulty adjusted ~27% this week - the most in history.

The Latest In…

NFTs

There is no denying that some of the NFT craze has died down but is making room for less trendiness and more meaningfulness. The extraordinary prices that people were paying seem to have come back down to earth a little. The total number of transactions and total transaction volume are also down. But that doesn’t mean that the most unique NFTs aren’t still attracting a ton of attention. An NFT of the original source code of the World Wide Web was sold for $5.4М with the proceeds going to initiatives by web inventor Tim Berners-Lee. Talk about being part of history twice over.

The Week’s Most Interesting Data Story

The Real Force Behind the Market Switch?

Much ink has been spilled (including by us!) trying to ascertain what caused Bitcoin’s rough Q2. The recent regulatory beef with Binance likely hasn’t helped. But ever-savvy analyst Lyn Alden shared another theory. In Q42020 and Q12021, the Grayscale Bitcoin Trust was buying Bitcoin at a huge rate. The demand for this was driven by the fact that GBTC was trading at a premium to BTC based on the way the instrument is designed. Eventually, that premium turned to a discount and Grayscale stopped buying, stealing away from the market one of the biggest sources of demand that had shaped the runup. Pretty interesting stuff.

Hot Topics

What the Community Is Discussing

The Bitcoin Mining Council has put out its first research, concluding that 56% of Bitcoin mining is currently done with renewable energy.

It feels a lot like the community is positioning DAOs to be one of the next big hype areas.

Bullishness in the futures markets. Prolonged negative funding = Bullish.

Our Take

@AntoniNexo This Week

• In our June AMA, Antoni talks about the NEXO Token’s liquidity, the company’s various tools aimed at withstanding market volatility, and the highly coveted referral program – expect more details on the latter veeeery soon.
• And over at Yahoo Finance’s Crypto Corner, Antoni joined co-hosts Akiko Fujita and Zack Guzman to explain the ins and outs of crypto lending and why Nexo is safer than your average bank. Watch the full interview here.

What to Watch for Next Week:

• Will mainstream media publish the Bitcoin Mining Council’s findings?
• Will more major financial institutions announce a move into BTC?
• Will the US regulatory landscape continue to heat up?