⚡️Weekly Crypto Newsletter 8.1.21
Enjoy industry highlights for the week.
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General News
Germany’s Institutional Funds Can Hold Up to 20% in Crypto
On Monday a new law takes into effect in Germany, allowing large funds to allocate up to 20% into Bitcoin and other crypto assets. These intuitional investors currently manage about $2.1T. According to Tim Kreutzmann, an expert on crypto at Germany’s fund industry body, most funds will experiment with crypto at very low allocations. He doesn’t believe they’ll get close to 20% for at least five years. In fact, most asset managers in the country have yet to come off zero.
Cryptos in the Cross Hairs of Washington
A provision in the new infrastructure package would require cryptocurrency brokers and investors to provide more disclosure about their transactions to the IRS. Although, it does imply the industry is here to stay since congress is looking for ways to generate additional revenue for federal government.
It’s estimated the government could raise over $28B over next decade with the addition of these news law. However, it only accounts for a small fraction of the $550B needed for the proposed infrastructure plan. The Biden administration also intended to put crypto under increased IRS scrutiny in hopes of narrowing the $7T tax gap.
In order to crack down on tax cheats the Treasury requires additional funding which the Senate infrastructure package doesn’t include. This would make it nearly impossible for the already strapped agency to go after tax evaders. A preliminary draft obtained from the Senate legislation has broader language than the Treasury Department’s proposal. The new plan would apply to taxpayers who bought crypto assets from brokers and then transferred them to another broker. It would also apply to businesses that received over $10K in crypto assets. Some crypto brokers already report their transactions to the IRS but most don’t due ambiguous reporting laws.
Goldman Sachs Applies for Defi ETF
Investment giant Goldman Sachs has filed an application with the SEC for an ETF that would offer exposure to public companies in decentralized finance and blockchain around the globe. At least 80% of the fund will offer exposure through securities, stocks, and depository receipts. The filling asserts the index seeks to offer exposure to firms aligned with two key narratives: “the implementation of blockchain technology” and “the digitalization of finance”.
As of July 23, the top stocks in the index will be Nokia, Facebook, Google, Accenture, and Fujitsu. Unfortunately the index will only include regulated companies on the stock exchange, with a marketcap of $500M, and that have a daily volume of at least $500M.
Uniswap Says It’s Talking w/ PayPal, Robhinhood, and Others
In a deleted video from the EthCC conference, Uniswap’s growth lead said the team was looking to expand into consumer finance.
“We’re trying to put Uniswap and the rest of DeFi right there in those applications so that we can bring the dream of open, 100% uptime liquidity to the whole world. PayPal wants to talk to us, E*Trade wants to talk to us, Stripe wants to talk to us,” said Ashleigh Schap (Growth Lead).
Neither Uniswap, EthCC, Paypal, ETrade, or Stripe confirmed or denied this after the conference. However, the founder of Uniswap Hayden Adams tweeted the following after the conference.
Partnerships with payments giants may not be confirmed. However, we do know they are working with fintech companies to mesh both DeFi and CeFi in hopes of offering a larger variety of services. It could be the precursor to collaborations with more established players in legacy finance.
OTC Action
Asia: Two way flow was essentially non-existant.
Europe: Very little volume to close the week.
Americas: This was the slowest session in weeks.
Altcoin Index: The index is very close to bouncing out of bitcoin season. This means altcoin season is around the corner.
Crypto Fear & Greed Index: Since we hit a low a couple weeks back, the index has repeatedly hit new weekly highs.
My Outlook: The GBTC premium is coming out of negative territory which is a positive sign for the market. It appears the ‘B Word’ conference was a sentiment shifting event. BTC and alts began their rally the night before the conference aired. Moreover, despite some of the recent negative crypto coverage regarding regulations, the market has continued to rally. In my view, this is very bullish and sets the stage for the final leg up. In the early stages of this wave I plan to make a few moves to optimized my returns. Once I hit my targets, I’ll begin cashing out in increments.
Portfolio Update
I bought the following microcap NFT plays on Unsiwap:
DOKI, ISLA, KOMBAT, SCT, ECO
I bought the following on the Binance Smart Chain:
DPET, MBOX, DND, FEVR, MIST, and NFTB
I also increased my XLM position for a swing trade. On Aave I had most my loans backed by WBTC and decided to switch my collateral to ETH.
Token of the Week
NFTX has created to be a liquidity platform for non fungible NFT tokens. Currently you can place your NFTs for sale on the open market. However, this process requires a counter party to purchase the NFT. Until there’s a buyer the NFT is essentially rendered illiquid. To resolve this problem NFTX has created a platform to pool NFTs and fractionally represent them with ERC20 tokens (vToken). This provides the following benefits:
vTokens can be staked to earn yield
provides better price discovery for NFT projects
instant liquidity
increased liquidity for investors and speculators
They already support most the popular NFT brands and likely to add more in the future.
You can also provide liquidity to one of the vToken pools and earn liquidity mining incentives. This isn’t a bad way to play the NFT mania. You’ll get 50% exposure to a vToken, 50% exposure to ETH, and earn a generous yield. Don’t forget you’ll also earn pools fees from every trade.
Since the protocol doesn’t have a token, I’ll select the hottest NFT projects vToken as the crypto asset of the week. PUNK is this weeks token of the week. Obviously buying a Punk NFT would have been much more profitable, but this isn’t a bad way to capitalize on the hype.
Notable Tweets
