Dispatch #61: The Convergence of Bitcoin & Macro

In this patch of your weekly Dispatch:

• Bitcoin hits a new ATH, then comes right back crashing
• Tim Cook outs himself as a HODLer
• Nexo makes major headway in broker-dealer licensing

The Big Idea

A New All-Time High, a Quick Wick Down

Listen. If you’ve been in Bitcoin for any time at all, you know this feeling. It’s the feeling of elation followed rapidly by gut-wrenching queasiness. The historic mascot of this field ain’t a roller coaster for nothing.

Anyway, if you didn’t have that feeling this week, you might not have been paying attention. Bitcoin surged to new all-time highs on Wednesday after the US released official inflation numbers for the previous month. Consumer prices went up 6.2% y/y in October – the biggest jump in more than 30 years. Within hours of the report, Bitcoin had hit unseen highs of nearly $69,000. Traders celebrated by piling into a new wave of levered longs.

Longs which would take only hours to be completely wiped out. So what happened?

Turns out inflation wasn’t the only story shaping the macro narrative. For months, western markets have been keeping a side eye on Evergrande, the massive Chinese real estate developer with more than $300B in liabilities (including $19B of foreign corporate bonds). If Evergrande were to fail, many have worried it would have a cascading effect.

Within hours of the inflation announcement, news broke that claimed that Evergrande was about to default on $148M in debt and formally start bankruptcy proceedings. While this didn’t happen, in the wake of the story traditional markets went completely risk off and that extended to the Bitcoin market as well.

Taken together, these events show fairly conclusively the extent to which Bitcoin has become a macro asset – both affecting and being affected by larger geopolitical and market events.

The Latest In…

Nexo

BIG news. We’re sure you’ve heard but let us toot our horn once again. On Tuesday, Nexo unveiled the acquisition of a stake in Financial Industry Regulatory Authority (FINRA) member and SEC-registered broker-dealer Texture Capital as part of the latter’s seed funding round.

This strategic investment greatly broadens Nexo’s compliance capabilities and opens up potential for the broker-dealer licensing needed to offer our Earn suite, Exchange product, and professional-orientated trading services to a wider range of US clients. In a nutshell, the deal could make Nexo the first-ever crypto lender to have a broker-dealer license. Read more about this milestone on our blog and on CoinDesk.

The Latest In…

Bitcoin

Last week we discussed the friendly competition between the mayors of Miami and New York City to make their city most desirable to the Bitcoin crowd. This week, both of them ratcheted the fight up. In NYC, Mayor Adams gave his blessing for a new city coin, NYCCoin, to mirror and match a similar token in Miami. Mayor Suarez, never one to rest on his laurels, announced that citizens who stake MiamiCoin will earn a Bitcoin yield. This truly is the type of competition we love to see.

The Latest In…

Layer 1 Battles

By any metric and measurement, Solana has had a phenomenal year. It’s one of the best-performing assets from a price perspective and it has attracted legions of devoted adherents. Many of those in that community, including a jolly Nexo bunch, traveled to Lisbon, Portugal this week for the first-ever Solana Breakpoint conference. In addition to the panel discussions, parties, and NFT galleries that you would expect, there were also some significant announcements. One of those came from Reddit co-founder and venture capitalist Alexis Ohanian, who announced a new $100M fund to invest in Solana projects disrupting social media. That’s quite some war chest to solve one of the juiciest problems out there.

The Latest In…

Nexonomics

Thanksgiving, Black Friday, Christmas. Family dinners. Gifts. ‘Tis the season.

Thanks to Nexonomics, there is an additional reason not to sell your crypto to buy presents for your loved ones and take advantage of the shopping season. Until the end of November, you can borrow against one or more of the 20+ cryptocurrencies we support as collateral on the Nexo platform and earn 0.5% in crypto rewards. Our promo will run until November 30, 2021 and your rewards will land in your Savings Wallet by December 7, 2021. All you need to know about this tax-efficient promo is in this blog post.

The Latest In…

NFTs

At this rate, Dispatch is going to have to change its name to the Weekly Metaverse.

• The Country Music Association partnered to create an NFT collection to coincide with its 55th annual award show, because of course it did.
• When South Korean gaming company NCSoft announced it was going to launch NFT games next year, its stock price popped 30%.
• Finally, on Bumble’s 3rd quarter earnings call, founder and CEO Whitney Wolfe Herd mentioned web3.0 and the metaverse, saying that they're looking for ways to integrate these new opportunities into their platform – particularly around their friend-finding service.

The Week’s Most Interesting Data Story

Don’t Miss Out on the DeFi Battle

As we already mentioned, Solana has been one of the hottest blockchains all year. A fair bit of that is how it enables a faster, cheaper system upon which to build dapps. Of course, Solana is not alone in trying to out-Ethereum Ethereum on DeFi. Avalanche, for example, has also had a fair bit of buzz. In the publicity department, Fantom has lagged behind the others. But in terms of real demonstrated DeFi interest, the story is a little different.

Over the last couple of months, Fantom has grown in terms of total value locked faster than anyone else, including Avalanche and Solana. Does that mean that the average person is missing something about Fantom? Maybe. And whatever the case, those usage numbers are too big to ignore.

Hot Topics

What the Community Is Discussing

Is this the single most encouraging crypto thread from a US politician ever?

The definition of ngmi.

The tokenize-the-world thesis is BACK, baby.

What to Watch for Next Week:

• Where does Bitcoin trend from here?
• Can Evergrande stay solvent?
• Is Elon Musk gonna pay his taxes or what?