⚡️Weekly Crypto Newsletter 11.7.21
Enjoy industry highlights for the week.
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General News
House Sends Infrastructure Bill with Crypto Tax Provision to Biden
The House voted in favor of the bill with 218 ayes late Friday night which the Senate originally passed back in August. The bill now heads to Biden for signature. The bill will expand the definition of a broker for IRS purposes. Industry leaders in crypto are concerned about the definition of a broker for IRS purposes, because it captures entities like miners and other parities that don’t actually facilitate transactions.
Another provision included in the bill will amend Tax code section 6050I and expand KYC requirements to crypto transactions over $10k. This would require the recipients to verify the sender’s personal information and record their Social Security number, the nature of the transaction, and report the transaction to the government within 15 days.
Despite lobbying and pushback from the crypto industry the bill was passed in both body’s of congress without any amendments. Once passed the Treasury Department will have to explain how it plans to to interpret the bill and publish guidance spelling out how business entities or other entities will have to comply with it.
I don’t believe this is enough to stop the last stage of the market cycle, but it’ll definitely assist with ushering of the bear market. Prudent investors and DeFi farmers will to wait to see how much enforcement power regulators have before committing more capital to the market. Moreover, I’m confident the industry will collectively react with enhanced privacy measures aimed at curtailing regulators. During the bear market we’re likely to see a cat and mouse game between the regulators and the innovators.
Mt. Gox Getting Ready to Payout 141,686 BTC
According to documents filed with the court, the Japanese trustee holds 141,686 BTC and roughly the same amount of BCH due to the fork. The potential distribution following the release of these coins is making investors nervous. This is more BTC than MicroStrategy’s entire BTC holdings which at the most recent disclosure sat at 114,042. Although the exact date of release is unknown, most of the industry will be closely watching.
However the Co-founder & CEO of Switzerland-based BTC broker Relai said,
“I don‘t expect a majority of these coins to be sold, as many of the beneficiaries were into bitcoin very early on already – at least since 2014 – and therefore can be considered long-term believers and hodlers”
I’m sure we’ll have diverging views and it’ll be a hot topic until the BTC is distributed. My take is that leading up to the date we’ll see some market volatility but it will ultimately be a non-event. However, once we enter the bear market these Mt. Gox BTC will heavily weigh on the price.
Solana $100M Gaming Fund
On Friday, Solana Ventures, Lightspeed Venture Partners and derivatives exchange FTX announced the launch of a $100M GameFi ecosystem fund. The funds will be directed to gaming studios, technology companies and other projects “at the intersection of blockchain and gaming”. Lightspeed Venture Partners executive Amy Wu described gaming as
“a massive opportunity to “bring the next billion users to Web 3,” a broad concept that refers to a more decentralized internet.”
Lightspeed has already invested over $300M into late-stage gaming and cryptocurrencies companies including Epic Games, Wintermute, FTX and Offchain Labs.
Some estimate GameFi will generate over $100B over the next year and $200 in two years. GameFi has also helped “metaverse” gain some traction. This is where virtual reality, social media, and business are expected to exist in the future. As a result multiple investment funds have allocated capital to this emerging vertical, including Sanctor Capital and Huobi Group. They respectively raised $20M and $10M for funds.
OTC Action
Asia: Modest demand for ETH and DOGE. Strong demand for DOT, MANA, SOL, and ATOM.
Europe: Buyers mostly interested in ETH, SOL, and DOT.
Americas: Balanced two way flow with most buy interest for SOL, DOT, and ETH.
Altcoin Index: The index moved remains at 57 and looks ready for a big move up.
Crypto Fear & Greed Index:
Portfolio Update
Bought a few Shadowy Super Coder NFTs and sold half to get my original investment back. As a minter I’ll be eligible for future airdrops and as a holder I’ll be receiving 10,000 tokens from GenesysGo. They provide Solana devs with low cost Mainnet RPC resources and already have many projects using their service. Buying these NFTs is the closest you can get to participating in a seed round as an anon. Super high risk-reward move on my part. I also bought more FAB, ATLAS, POLIS, TOWER, and CATO this week. I expect metaverse and meme coin plays to continue to outperform the general market in the coming weeks. If you guys wanted to get these moves in real time make sure to join my private discord channels by becoming a Patreon.
I’ll likely begin cashing out towards the end of the month or in December. I do believe this rally could extend into Q1 but after two years of investing I’m ready to cash out. I’ll let some of my bags run, but I’ll likely cash out over 50% of my portfolio. We’re headed into the most explosive stage of market cycle where investors are likely to realize their biggest gains in a relatively short period of time. However, at some point the liquidity will be gone and you don’t want to be the last one holding the bag.
Token of the Week
Originally I invested in PAPER as a gaming NFT play. However, recently it’s being recognized as metaverse move. Also, the CEO of StarkWare is working with the project to help with scaling and fees on Ethereum. Dopewars intends to create a retro-style GTA metaverse on the blockchain. PAPER will be the metaverse’s native currency and will be used to buy digital turf and in-game items. Given the recent hype behind GameFi and metaverse I’ve decided to double down on my original investment. It’s still a very early stage project without much hype. Currently you can only buy it Uniswap.
Notable Tweets
