With much excitement built up since the beginning of this year, the crypto market took a dive in the month of May. For newer investors in the space, they might be distracted and confused by the market noise and outsized volatility. For crypto old timers, it is a time to reflect on what they truly believe and the fundamental changes that this decentralized payment system will inevitably bring to traditional finance.
Tokenomy was invited by a large bank last month to host an education session on crypto assets with 70+ financial advisors. During the Q&A discussion, we found that the interest in this emerging asset class is exceptionally high, but the unconventional nature of this technology doesn’t seem too intuitive even to the most sophisticated investors and advisors. We discussed that high volatility in a decentralized free market is a feature, not a bug; and energy consumption for bitcoin mining is a distinguished security mechanism, not merely an environmental concern. However, with a few tweets from a charismatic figure like Elon Musk, the FUD (fear, uncertainty, and doubt) sentiment quickly triggered panic selling actions globally, which shows that this young asset class has a long way before reaching its maturity.
For long-term investors, looking beyond the price volatility to evaluate the current macro environment and assess how this new technology will transform the financial industry is the smart approach. I am a big fan of stepping back and looking at the broader ocean, not just the shore waves, when making investment decisions. There is so much to learn from this intellectually stimulating industry, and there is no better time to start this journey when the market seems to be in turmoil ⏤ one may realize that this is actually an opportunity.
- Speaking at the Consensus Conference by Coindesk, billionaire hedge fund investor Ray Dalio declared that he has some bitcoin, and prefers bitcoin than bonds.
- Bitcoin and all other cryptocurrency prices crashed significantly, but experts say that it is a healthy and normal correction. Many fund managers say that they remain long term bullish for this asset class.
- Facebook’s stablecoin project Diem moves from Switzerland to the U.S., to launch U.S. dollar-pegged digital currency. The project, previously known as Libra, faces fierce opposition from global policymakers, but the regulatory environment in the U.S. has been progressive for the crypto industry.
- MicroStrategy CFO Says Tech Companies Have an ‘Imperative’ to Hold BTC “If you’re not putting any of [your corporate treasury] into bitcoin, I don’t think you’re doing your fiduciary responsibility”. Since August 2020, Microstrategy has purchased $2.3 billion worth of bitcoin.
- Singapore’s DBS Private Bank started Asia’s first bank-backed trust solution for cryptocurrencies as demand for digital assets increases.
- Swiss Bank UBS Group is planning to offer crypto to top customers; and Citigroup is also considering launching crypto trading, custody, and financing services.
- Moneygram allows bitcoin buying in its 12,000 retail network, MoneyGram has teamed up with cryptocurrency exchange Coinme on a crypto buy and sell feature in the U.S.
- Federal Reserve Chairman Jerome Powell has issued a notice to the digital-token market: The Fed is ramping up efforts to develop a digital dollar that could compete against privately issued “stablecoins” now gaining popularity for payments.
- Tesla not taking bitcoin as payment due to climate concerns on crypto mining operations, this news release coincides with the broader crypto market crash, however, the company claims it have not sold any bitcoin they purchased.
- Latin American e-commerce giant MercadoLibre discloses treasury bitcoin buy. The firm becomes the latest publicly traded company to add bitcoin to its balance sheet. This is a list of companies that already have bitcoin on their balance sheet.
- Tiger Global and Coatue back Bitso in a $250 million Series C. Bitso is the largest crypto exchange in Mexico, and among the largest crypto and financial technology firms in Latin America. The company doubled its user base in less than four months from 1 million to 2 million during 2021.
- China cracks down on mining operations. Crypto miners in China have halted all or part of their China operations after Beijing intensified a crackdown on bitcoin mining and trading, sending crypto markets sharply down over the weekend.
- DeFi is a popular topic and the total value of digital assets locked in DeFi protocols exceeds $80 billion as of May 2021. The Wharton School published a research paper on DeFi covering six key DeFi categories – stablecoins, exchange, credit, derivatives, insurance, and asset management – that seek to disintermediate traditional financial services.
- Bitcoin vs. the Petrodollar: Which Is More Environmentally Friendly? with Alex Gladstein and James McGinness – Laura Shin, Unchained
- The most popular decentralized exchange, Uniswap, hit $36 billion in trading volume in April 2021, compared to Coinbase volume of $110 billion. WSJ takes you on a journey on how Uniswap is founded and where it is heading in the future.
- ARK Investment analysts took a look at bitcoin mining and concluded that the crypto mining activity generates more carbon-free electricity from renewable resources than what other critics claimed.
- Goldman Sachs research dives into macro developments that are top of mind for investors, executives, and policymakers. In the latest issue, it reports on how cryptocurrencies have become an investment asset class.
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Crypto Investor Briefing is a Tokenomy newsletter, the content is for informational purpose only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.