As we enter the last quarter of the year, market watchers will be hoping for history to repeat itself as the biggest bellwether of crypto, Bitcoin, has closed October in profit seven out of nine times since 2013. However, the last few weeks have seen headwinds continue to challenge the market and contain the exuberance of previous months.
The biggest headlines again came from China with further crypto bans on seemingly anything but possession of the assets themselves, combined with growing fears of contagion from the ominous news surrounding Evergrande, one of China’s largest real estate developers (rumoured to be worth approximately 2% of the country’s GDP). The news from the East has taken on a more depressing tone in recent weeks. Thus far the crypto market has shown some reassuring resilience to these headlines, as asset prices remain comfortably off their July lows when Bitcoin touched $30,000. This could point to signs that institutional investors will buy any weakness in these markets. In addition, some institutions such as Société Générale are even dipping their toes in the DeFi waters as they plan to apply for a $20m MakerDAO loan using a bond token as collateral.
In other positive news showing financial markets’ continued adoption of the power of blockchains, Visa announced a plan to build a Layer 2 hub for payment and settlement of various stablecoins and central bank digital currencies (CBDCs). The market size of this ‘universal payments channel’ (UPC) is difficult to comprehend and could truly revolutionize many of the legacy systems and processes in use today.
Finally, Twitter announced support for ‘tipping’ in Bitcoin through its platform, with plans for further crypto adoption in supporting authentication for NFTs. Allowing NFT owners to receive a verified check mark as official owners of that profile avatar might make them feel a little more smug and justified in spending millions of dollars on that JPEG of a cartoon ape 😉
- China has banned all crypto transactions in the country, and declared that all crypto transactions are illegal. It also bans many websites with crypto content. However, it does not prohibit the ownership of crypto assets. This ban provides a big opportunity for other countries, especially for U.S. miners and crypto operators.
- Fed Chair Powell clarifies earlier statements and says he has no intention of banning crypto.
- MetaMask, an Ethereum wallet, hit 10 million users in August 2021. New users are becoming more familiar with the crypto space and potentially interacting with a variety of blockchains. The growth in interest for the underlying technology is often followed by speculation on market assets.
- The largest public North American bitcoin mining firms have mined over 10,000 BTC so far this year. The miners have added almost all the bitcoin mined to their treasuries, which totaled to nearly 18,000 BTC as of August, and has more than four-folded year to date.
- Junk-bond investors gave cryptocurrencies their biggest endorsement yet as Coinbase sold 2 billion of debt. The demand was high, with at least $7 billion worth of orders pouring in. Coinbase is the second crypto-related junk bond issuer in the U.S. market, following MicroStrategy Inc., the software developer that issued bonds to fund the purchase of Bitcoin.
- Ukraine is the latest country to legalize bitcoin. In a nearly unanimous vote, the Ukrainian Parliament adopted a law that legalizes and regulates cryptocurrency. This news followed Cuba’s central bank’s approval on cryptocurrencies; it will be regulated for the island nation. Evidently, Panama is next in line.
- Belarus president Lukashenko calls on the state to mine cryptocurrency. Belarus has lots of abandoned industrial sites that could be used to generate revenue through cryptocurrency mining, the Belarusian president said.
- Bitcoin mining hardware manufacturing giant Bitmain is set to boost its joint mining capacity in North America. It will host 56,000 bitcoin miners in Georgia State via joint mining deal.
- The Bank of International Settlements (BIS) Innovation Hub is working with the central banks of Australia, Malaysia, Singapore and South Africa to test the efficacy of wholesale central bank digital currencies (CBDC) in cross-border settlements.
- Mastercard buys CipherTrace to boost crypto security and compliance. Payment services company Mastercard has acquired blockchain analytics firm CipherTrace to bolster its own cyber security tools and better comply with crypto regulatory guidelines.
- The world’s largest money manager, Blockrock, joined Goldman Sachs and Citigroup on a distributed-ledger system operated by Axoni, a financial-technology company that provides a network to help large firms match and reconcile post-trade data on stock swaps.
- Former CFTC Chair Giancarlo is putting out a book titled “CryptoDad: The Fight for the Future of Money.” Giancarlo noted that he is “seeing the greatest danger to America’s future in Washington’s focus on the past.” This book is scheduled to release on October 26, 2021.
- VISA unveils plans for Layer 2 hub for stablecoins and CBDCs.
- SocGen looks to DeFi experiments with MakerDAO loan.
- You can now get paid in bitcoin to use Twitter! The social media company enables a tipping function to allow users to tip their favorite content creators.
- SEC Chairman Gary Gensler on Crypto, SPACs, and Robinhood – Wall Street’s top cop wants to police new finance with old rules, according to an interview by New York Magazine. He also joins Washington Post Live on Tuesday, Sept. 21 to discuss the cryptocurrency landscape and the growth in digital trading platforms.
- DAOs may be the future of work, but don’t bet on them as the next asset class, by Andrew Thurman, Coindesk Research.
- El Salvador is the first one, and more countries will adopt bitcoin. Check out the discussion on The Rise of Bitcoin Nations with Dan Held, by What Bitcoin Did podcast.
- Uncovering the intrinsic value of crypto assets – the fundamental investment thesis that supports crypto allocation, by Christian Hsieh.
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