⚡️Weekly Crypto Newsletter 8.8.21
Enjoy industry highlights for the week.
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General News
Fidelity Executive: Two Things Are Becoming Obvious
According to Fidelity Digital Assets President Tom Jesop, there are currently two emerging themes that will bring crypto mainstream. He said the following during an interview with Yahoo:
“What's apparent are two things — this is seen as its own unique asset class with its own fundamental drivers, which differ from other financial assets. We see clients digging into those issues, really understanding not only the technology, but the application of those assets in their portfolios. And maybe most importantly, what we're seeing is continued purchase interest over a longer period of time.”
In a recent survey Fidelity found that around 70% of respondents intend to have an allocation to digital assets over the next five years. This includes the following groups:
family offices
hedge funds
traditional institutions
He mentioned three factors causing some hesitation amongst potential investors.
volatility
understanding fundamental frameworks for selecting assets
regulations
Despite many in the crypto community up in arms about the newly proposed crypto legislation in the infrastructure bill, I believe regulatory clarity may increase capital inflows into the crypto market. Many of these investors want to know their boundaries before committing large amounts of capital. Once they learn which crypto assets are off limits, they can begin deploying additional money into the market.
Binanace Smart Chain Takes Lead in NFT Gaming Craze
After Axie’s success we’ve seen NFT game take off on other chains like BSC. Although many projects on BSC have been accused of inflating user and transaction data with bots, we clearly see a surge in activity. Most the quality projects were already building months before this mania started. However, after seeing Axie pull in $200M in revenue they began moving faster. A few projects I follow have increased marketing, moved up deadlines for their roadmaps, started hiring more staff, and are looking to raise capital from investors. Provided we’re in the early stages of a hype cycle I’m sure quality teams won’t have any trouble raising capital. For instance, Dragonary, a NFT gaming project on BSC, was aiming to raise $600K. They were over 90x oversubscribed!
Previously BSC had flipped Ethereum on the number of transactions due to the success of DeFi protocols like PancakeSwap. This time their success came from games like CryptoBlades and DefiPet.
Much like we saw users pile into BSC because they were priced out on Ethereum, I suspect we’ll witness something similar in this new hype cycle. Many people who stand to gain the most from these games reside in third world countries. BSC is very accessible and the transactions are much cheaper than Ethereum. Once success stories begin circulating on social media we’ll see a new wave of gamers enter the market. They’ll experiment with different games until they figure out which ones are the most profitable. This will help families financially if more lockdowns are imposed due to the delta variant.
Senators Propose Exemptions to Crypto Tax Reporting
The original amendment introduced last Thursday would exclude cryptocurrency miners who are involved in validating transactions and companies selling key hardware or software wallets. The initial updated version would broaden the exemption beyond just proof-of-work validators, but this recent second revision only exempts proof-of-work and proof-of-stake validators. The Senate is expected to vote on both this amendment and a competing amendment that would exempt a broader swath of non-broker entities from the provision.
The DeFi chads are upset with both amendments because they don’t exempt protocol developers.
Personally I’m not bothered by any of this. This will catalyze the movement of capital out of legacy finance into decentralized finance. Additionally, it’ll force protocol developers to move with haste towards progressive decentralization. It’ll be nearly impossible for governments to shutdown DeFi protocols if they can’t hold a single person or entity accountable. Lastly, it may lead to more capital being locked in DeFi protocols indefinitely. Users can earn yield, make investments, and occasionally use an off-ramp to make purchases. Ultimately many may end up using Defi over their banks.
OTC Action
Asia: Very little market interest across all assets.
Europe: Outside of modest BTC interest, traders were reducing their DOT exposure.
Americas: Average BTC and ETH buying activity early in the week followed by abnormal demand for BCH and LTC.
Altcoin Index: The index bounced into altcoin season territory and appears to be coiling for a big move up.
Crypto Fear & Greed Index: The index jumped again, hitting 74 this week.
My Outlook: The market is looking a little frothy and I wouldn’t be surprised to see a respectable pull back in the next couple weeks. However, I remain bullish for the remainder of the year. Outside of a black swan event the market has clearly hit its mid cycle bottom. Between August and September we should see most market participants flip bullish. After this occurs we’ll see explosive moves up. You’re going to see your portfolio balloon to new highs and you’ll find it hard to take profits. Make sure you formulate a cash out plan and stick to it because many tokens could take years to reclaim their previous highs.
Portfolio Update
This week I participated in the Dragonary Initial Ape Offering (IAO) on ApeSwap.
Portfolio Update
The token sale was oversubscribed by 90x, but I managed to secure a bag. The token sale price was 1 cent and the token is currently trading for 25 cents. I took some of my profits and deposited them in the CYT-BNB pool. This way I can hedge with BNB exposure and earn a fat yield of 300% APR. I also bought a few packs from the Dragonary game and will hold a few CYT tokens. Unlike other games on BSC, Dragonary has a doxed team and a quality game with potential.
I entered a swing trade on VET and took profits on other bags that went up 25-50% within a week. I’ll likely keep the recent profits I took in stables since I have ample exposure to crypto. I want to keep some dry powder on the side in case we get a brief pull back.
Token of the Week
This automated market maker (AMM) on BSC is top notch. I believe it could end up being the SushiSwap of the BSC network. They have a quality team and offer awesome features. For example they make it really easy to track your farming gains.
They also host initial dex offerings but they refer to them as initial ape offerings (IAO). Compared to PancakeSwap they have a lower emission rate of 11 tokens per block. 75% of the emissions go to the farms and the remaining 25% go to the pools. All of the trading fees are used to buyback and burn BANANA tokens.
It appears they’ve mobilized to take advantage of the NFT gaming hype. They’ve incentivized numerous new pools for gaming tokens. Moreover, they are starting to host IAO’s for these gaming projects. Their most recent IAO, as I mentioned earlier, was over 90x oversubscribed. I have a feeling this new initiative could help them gain an edge on PancakeSwap. After observing their moves I decided to place a large bet on the team. I bought some BANANA tokens and staked them in the pool. They’ve gone up over 3x and I’m currently earn over 100% APR.
