Crypto Investor Briefing – June 2022

Crypto Investor Briefing

June 2022 

The global economy is going through a challenging time. The financial markets have provided quantifiable evidence of this, indicating higher inflation numbers and lower asset prices every month since the beginning of the year. The crypto economy also suffered a severe downturn when its total value plummeted by 56%, or $1.6 trillion, from its recent high in November 2021.

A bear market is a good time for investors to distinguish long-term market signals from short-term market noises. A recent Federal Reserve study measuring the economic health of U.S. consumers provides a useful insight on the real utility for crypto assets. This is the first time the Fed included crypto ownership and adoption in its survey questions. 

Interesting facts from the survey: 

  • 12% of U.S. adults held cryptocurrency in 2021.
  • Individuals are mostly holding the asset as an investment, not for financial transactions.
  • Those who held crypto for investment purposes were disproportionately high-income individuals; 46% of investors had an annual income of $100,000 or more, while 29% had an income under $50,000.
  • 99% of crypto investors have a traditional bank account. 
  • Only 3% of respondents had used crypto for purchases or money transfers; among them, 13% did not have a bank account. 

This survey result shows crypto is more or less an emerging investment asset class, while the use for DeFi, smart contracts, or remittance applications has been minimal. We may conclude that many of the current crypto narratives are largely market noise. More crypto demand is driven by institutional investors who tend to have a longer-term investment horizon than retail investors. While crypto certainly opens up an alternative access to financial markets for everyone, proper risk management and educated investment decision making remain crucial for individual investors that are in it for the long run. 


Christian Hsieh

CEO, Tokenomy  

TerraUSD (UST), an algorithm stablecoin that once reached a market capitalization of $18 billion, collapsed overnight at the beginning of May. It also wiped out LUNA, the Terra blockchain native token that was supposed to stabilize TerraUSD, from a market capitalization of $40 billion to nothing. Read the full story here

El Salvador hosted a financial inclusion event in May, bringing representatives from 44 countries to experience using BTC at Bitcoin Beach. In July 1944, 44 countries met to determine the Bretton Woods financial system. Once again, 44 countries came together to learn a new system in El Salvador.

China is back on the Bitcoin mining map. New data on global Bitcoin mining released by the Cambridge Centre for Alternative Finance (CCAF) confirms the growing dominance of the US and reveals a surprising resurgence of China. From September 2021 to January 2022, the U.S. (37.84%) has been at the forefront of Bitcoin mining, followed by China (21.11%), Kazakhstan (13.22%), Canada (6.48%), Russia (4.66%), and other remote locations. 

market news

With the collapse of TerraUSD (UST) and the depletion of all of Luna Foundation’s $3 billion Bitcoin reserves, top USD stablecoin issuers have announced transparency reports regarding their reserve status. Tether (USDT) has cut commercial paper holdings by 50% and will hold U.S. Treasury instead. Circle (USDC) declared that the reserve is held entirely in cash and short-dated U.S. government obligations, consisting of U.S. Treasuries with maturities of 3 months or less. 

European Central Bank survey found one-in-ten households in Eurozone population centers now own cryptocurrency. The survey covered six areas: the Netherlands, Spain, Italy, Belgium, France and Germany. The report also mentioned that demand from institutional investors in Europe had also risen, citing a survey conducted by Fidelity Digital Assets that showed 56% of European institutional investors had some level of exposure to digital assets, up from 45% in 2020.

Singapore’s stricter regulatory environment may be the reason for Three Arrow Capital’s move to Dubai. The well-known crypto trading and venture capital firm is the latest crypto giant to eye the Middle East as the regulatory climate in Singapore appears to have soured.

Germany’s federal finance ministry issued guidance on the income tax treatment of crypto, the first nationwide instructions on topics including mining, staking, lending, hard forks and airdrops. The guidance indicated that selling BTC and ETH after holding them for one year will be tax free. Moreover, the one-year holding period to be exempt from taxes applies even to cryptocurrencies that have been lent out or used for staking.

The Bank of Israel wrapped up a public consultation on its central bank digital currency (CBDC), announcing that the results indicate support for continued research and were overall positive. Meanwhile, India’s Central Bank is concerned that widespread crypto adoption could lead to “dollarization” of the Indian economy, which would be against India’s sovereign interest.  

Coinbase becomes the first crypto company to join the Fortune 500 list. It also took out the first Bitcoin-backed loan from Goldman Sachs. The largest American crypto exchange was revealed to have taken this loan as a way to deepen ties between the crypto and traditional finance worlds.

Binance is in talks for regulatory approval in Germany, CEO Changpeng Zhao (CZ) said at an event in Hamburg. The firm recently registered as a digital asset service provider with the Autorité des Marchés Financiers (AMF) in France, on the back of approvals to operate in Bahrain, Abu Dhabi and Dubai.

Global private bank LGT opens Bitcoin and Ethereum trading, partnering with Swiss crypto bank Seba to offer custody and trading services. This news comes on the back of Argentina’s largest two private banks, Banco Galicia and Brubank, announcing that they will allow clients to execute crypto transactions. This reaffirms the ongoing trend of global banks and asset managers adopting investment services for cryptocurrencies.

Up to 100,000 Cubans are using cryptocurrencies in everyday life to avoid the punishing sanctions and central government ineptitude that have crippled the island’s economy. This adoption has only occurred since the introduction of mobile Internet access three years ago. 

Tether enters Latin America with Mexican Peso-pegged stablecoin (MXNT). The token will initially be supported on Ethereum, Tron and Polygon networks, joining the company’s other pegged coins – USDT, EURT, and CHNT. The company cited the region’s multibillion-dollar remittances business and difficulties in transferring money as a “unique opportunity”.

The famous crypto skeptic Nouriel Roubini announces plans for a tokenized dollar alternative. In an interview with Bloomberg, Roubini says that the tokenized dollar replacement aims to take advantage of growing concerns over inflation and the dwindling dominance of the US currency globally. This coin would be backed by real assets

Bored Apes’ virtual land sale frenzy raised $320 million, crashing Ethereum’s network as users scrambled for NFT deeds to 55,000 plots in Otherside, Yuga Lab’s planned metaverse game and the latest extension of the Bored Ape franchise. Transaction costs skyrocketed after the sale went live reaching 2 ETH ($6,000) just to mint one Otherdeed NFT.

Meta trademark filing hints at plans for a crypto payments platform, according to records submitted to the United States Patent and Trademark Office (USPTO). The company filed five applications for its namesake to be used in a platform called “Meta Pay,” an “online social networking service for investors allowing financial trades and exchange of digital currency, virtual currency, cryptocurrency, digital and blockchain assets, digitized assets, digital tokens, crypto tokens and utility tokens.”

Robinhood plans “Web 3” crypto wallet for DeFi traders and NFT buyers by the end of 2022, teasing the idea at the Permissionless conference in Palm Beach, Florida. Users of the entirely separate wallet will be able to lend, stake, yield-farm and buy NFTs, with testing beginning in the summer and a waitlist now open. This is in direct competition with Coinbase’s own offering. Both trading giants are making it easier for their crypto-trading users to deploy assets into DeFi without leaving their wallet ecosystems, which could lead to new investors into the space.

How Yuga Labs became a $4 Billion NFT juggernaut in a year: this article dives into the story behind the company that owns Bored Ape Yacht Club (BAYC) and its many spinoffs (Mutant Ape Yacht Club, Bored Ape Kennel Club, and recently, Otherdeed), and its meteoric rise to an NFT giant from its beginnings in February 2021. 

“Decentralized Society: Finding Web 3’s Soul,” is a paper by Glen Weyl, a researcher at Microsoft; Puja Ahluwalia Ohlhaver, a strategist at Flashbots; and Vitalik Buterin, the co-creator of Ethereum. By using Web 3’s building blocks to represent social identity, the ecosystem can overcome its current limitations and bring about a decentralized society.

‘Built to fail’? Why TerraUSD’s growth is giving finance experts nightmares

The Terra/Luna blockchain was growing at a blinding pace and collapsed suddenly. Some critics had already predicted its fate just one month ago. Here is an opinion piece by Coindesk’s David Morris, and a comparison between the Fed’s and Terra’s monetary policy by Kyla Scanlon. 

The UST Depeg: The Good, the Bad, and the Ugly: an insight piece by Treehouse Finance with a post-mortem of the event, ramifications for the crypto industry, and potential implications for the development of stablecoins.

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