Dispatch #45: Elon, Jack & Cathie Chat Bitcoin at ‘The B Word’

In this patch of your weekly Dispatch:

• Elon shows up at a Bitcoin conference
• A fascinating DeFi community debate
• Safer credit lines with Nexo’s Unlock Fixed Terms

The Big Idea

The B Word

When Cathie Wood hosts a Bitcoin event for institutions with folks like Jack Dorsey, you pay attention. When Cathie Wood hosts a Bitcoin event for institutions with folks like Jack Dorsey and Elon Musk decides to show up, you REALLY pay attention.

This week’s ‘The B Word’ virtual conference had some truly great content. There were discussions and presentations on Bitcoin’s energy profile, where Bitcoin fits in the macro landscape, Bitcoin as a tool for economic empowerment, why Bitcoin makes sense as corporate investment, and much, much more.

But without a doubt, the big show was a conversation between Wood, Dorsey, and Elon. There were a few notable parts. Wood gave a compelling argument for why Bitcoin mattered in the context of deflation, not just inflation. Dorsey reiterated Square’s commitment to helping improve Bitcoin design – particularly around self-custody.

Elon, of course, had a few juicy nuggets as well. First, he revealed that he held BTC, ETH, and DOGE in his portfolio. It was the first time he discussed owning ETH (although he said that Bitcoin was much bigger than the other two). He also revealed that SpaceX owns Bitcoin as well. This was something that had been speculated but never confirmed. Finally, he said that at the current trajectory around renewable energy usage for mining, Tesla would likely begin accepting Bitcoin again.

Crypto Twitter was, of course, locked in fierce debates about the whole thing. Was it just another annoying Elon show or a net positive for the space? Ultimately, that’s in the eye of the beholder. What do you think?

The Latest In…

Markets

It was a bit of a weird one in markets this week. Things started QUITE badly. Stocks saw a significant rout on Monday around concerns of the COVID-19 Delta Variant and crypto seemed to follow, with Tuesday being the first time BTC had closed lower than $30,000 since New Year’s Day. By the middle of the week, things had turned around significantly. Some said the rise was due to Elon anticipation (better than Elon fatigue, for sure). Some pointed to monster fundraising rounds for OpenSea and FTX as signs of confidence. Still, others highlighted the flurry of institutional news (more on that below). We wonder how much it has to do with the simple fact that despite all the FUD, we keep chugging along.

The Latest In…

DeFi

A fascinating conversation has been playing out in the world of SushiSwap. The community around the decentralized exchange has been locked in a fierce debate about whether to sell a portion of the community’s tokens to venture capital firms. The debate is not only if to sell, but on what terms? How long is the lockup? Will they be able to buy at a discount? The process has shown just how dramatically the rise of DAOs and decentralized networks could change the funding process. VCs that want to participate are now actively pitching the community on why they should be allowed to invest. Some firms within the community have even come in with counter-proposals, saying that investors like them should pay a premium on current prices. Fundraising may never be the same.

The Latest In…

Stablecoins

There was a LOT of intrigue and activity around stablecoins this week. Circle lived up to their public commitment from CEO Jeremy Allaire a few weeks ago and gave a full accounting of their reserves. The picture painted was much clearer than the attestation Tether gave a while back and set something of a new standard for others to follow. Paxos quickly followed suit and Tether, while not revealing more information, did do a 30-minute interview with a CNBC internet program discussing their reserves. All of this was made more dramatic by comments earlier in the week by SEC Chair Gary Gensler that some stablecoins may constitute securities. Let the game of compliance begin!

The Latest In…

Nexo’s Credit Lines

Our product team has come up with the Unlock Fixed Terms feature – a brand new solution to further protect your assets from liquidation. When you enable this new opt-in and all your FLEX Terms are already transferred from the Savings Wallet to the Credit Line Wallet, the system will automatically start unlocking Fixed Terms and collateralizing these assets to prevent automatic repayments. As a result, you can easily maintain a healthy LTV during market volatility and minimize the risk of liquidation by having assets automatically transferred to your Credit Line Wallet. Stress-free crypto-backed credit lines at their best.

The Latest In…

Institutions

For a time where institutions aren’t supposed to be that interested in crypto there sure was some interesting news. First, BNY Mellon joined State Street and four other unknown banks in backing a new exchange that sort of looks to us like a Hulu for crypto trading, in that it’s a consortium of existing players spinning it up. A Goldman Sachs survey showed the interest in crypto among family offices to be significant, with 15% already investing and 45% interested. JPMorgan became the first bank to give crypto access to all its wealth management clients. Oh, and Stellar wants to buy MoneyGram. Damn!

The Week’s Most Interesting Data Story

Is Bitcoin Cycle Theory Dead?

Bitcoin is an asset that has a distinct cycle defined by the every four-year supply issuance halvings. One of the ways that some folks try to get a sense of where Bitcoin is headed is to watch patterns of growth and retreat in the period following a halving. This has lead to some famous theories – the most notable being Plan B’s S2F model. Interestingly, however, some are wondering if the pattern is breaking down. As you can see in the chart below, Bitcoin is now trading outside the range of both the first and the second halving. Should Bitcoin continue its trajectory down, it would add more fuel to the fire saying that these theories shouldn’t guide our expectations. That isn’t all bad news, however. For those of you worrying about protracted, multi-year bear markets now, never fear. Some analysts have argued that Bitcoin has matured to the point where cycles are unlikely to stay in this larger four-year paradigm and that there are likely to be much more frequent shorter cycles. The reality is that no one knows for sure, and Bitcoin just loves to surprise us.

Hot Topics

What the Community Is Discussing

Need more signs of crypto getting institutionalized? Just look at all these M&A deals.

A great thread on running a successful Lightning network node.

Check out what bulls have been up to.

What to Watch for Next Week:

• Can Bitcoin break back into the S2F range?
• With Ethereans embrace Elon now that they know he holds ETH?
• Is Amazon dipping its toes into crypto?