This week in Crypto – Here are this week’s top headlines in crypto news.
- NFT friends visa and Budweiser show off their newly purchased NFT’s and Facebook’s digital currency wallet reveals its plans to support them, Why and What are they planning.
- Stable coins, protecting their groins. Paxos and circle, pivot, ahead of possible regulations, while tether beginners printing USDT the first time is their cause for concern.
- Bitcoin hash rate back on the rise, the bullish indicator, that no one is talking about, and how it could be setting the stage for the new all-time highs.
- Bitcoin futures ETFs are ready and set, GO will be in October. According to Bloomberg analysts but impatient institutions are already buying grayscales GBTC.
- infrastructure bill gets a date, and the wording is great. Here are a few things you should do with your crypto before it’s too late.
- Cuba adopts cryptocurrency. The island nation’s central bank has announced that crypto payments will be recognized and regulated, what we know so far.
- The Cardano Foundation’s concerning all Ada and native asset transactions will soon be closely tracked in the name compliance, the pros, and cons of this controversial move,
- and a closer look at the cause of last week’s crash in this week’s crypto market forecast.
Corporations Crazy for NFTs
Last week, Visa, revealed that it had purchased a crypto punk NFT for $150,000 in Eth. visas crypto department head kai Sheffield explained that their reasons for buying the crypto punk were quote to help our clients and partners understand the infrastructure requirements for a global brand to purchase store and leverage and NF T.
That’s one expensive show and tell if you ask me, but it has set the scene for future NFT investments and NFT use cases, which visa is looking to pursue on Ethereum.
If you’re wondering why crypto punks are so valuable. It’s basically because they were some of the first NFT’s to be minted on the Ethereum blockchain.
The unique value proposition of other NFT’s is not as clear, this seems to be the case with a beer rocket ship NFT Budweiser purchased for $25,000 on Eth on open c.
This NFT is now Budweiser his profile picture on Twitter, and its future decentralized website may be built on the beer.eth domain, which Budweiser also purchased the $96,000 in each.
In an interview with CoinDesk, a spokesperson for Budweiser his parent company said they were looking to build an NFT marketplace, with the help of serial Hustler, Gary Vaynerchuk.
I take this as a sign that we should expect to see more NFT shenanigans from Budweiser, going forward, which will inspire more entertaining headlines like this one.
Facebook was another big name that stuck its head into the NFT game last week, specifically, Facebook’s Novyi cryptocurrency wallet, which was originally designed for Facebook’s DM, AKA Libra cryptocurrency.
Facebook’s crypto project will know that it’s not all, it was cut out to be. And Facebook’s Novi wallet has been quote, ready to launch that over two years now.
Last I checked, Facebook’s DM was looking to participate in a digital dollar pilot in the United States back in April, and I have a feeling, they’ve noticed that they’re not the only ones on the CBDC block.
Stablecoins In The Spotlight
stable coin issuers, like circle and Paxos, seem to be positioning themselves to be the Federal Reserve’s CBDC protocols, but their growth has raised the eyebrows of many regulators
circle has been the fastest-growing of the two. And it revealed the assets backing, its USDC stable coin in July this year. Not surprisingly, a substantial portion of USDC was not backed by dollars but by corporate and government bonds, aka debt.
This prompted Coinbase to change the wording on its website with the promise that USDC was backed by dollars shortly afterward.
This is significant because Coinbase and circle formed the center Consortium, which governs USDC begging the question of why this wording, had not been changed sooner
in what might be a response to the criticism that followed, the circle, recently announced that starting from September USDC will be 100% backed by cash and short-term US Treasuries, aka government debt.
This is eerily similar to the setup which regulators pressured Facebook’s Libra to adopt, specifically, that all the fiat used to purchase Libra’s digital currencies, would be invested into government debt.
Anyways, those of you who read my post about the assets backing popular stable coins will remember that pack sauce posted a breakdown of its reserves. One day, after circle.
This time around, Paxos announced that it will be rebranding, its packs a stable coin to USDP to underscore the fact that packs are stable coins are backed entirely by cash and cash equivalents.
While Paxos sauce and circle with duking it out, tether decided to do its thing, by printing billions of USDT for the first time, weeks while remaining silent about its promises to audit the assets backing the 65 billion USDT in circulation.
Some are interpreting tethers USDT printing as good news for the crypto market, but I have a feeling that all it’s going to do is draw the ire of US regulators, like the SEC, which has already set its sniper scope on stable coins.
Another thing that’s been on the rise in the last few weeks is the bitcoins hash rate, which has tripled since the end of June.
For those unfamiliar, bitcoins hash rate is all the computing power connected to the Bitcoin Blockchain. For the sake of simplicity, the higher the hash rate, the more computers there is mining Bitcoin.
The reason why the bitcoins hash rate took such a massive nosedive in May, was because of China’s de facto cryptocurrency mining ban.
In that post, I predicted that we would see a strong shift of these miners away from China to other countries. Well, that appears to have happened, and the recent uptick in hash rate suggests they finished setting up shop in new regions.
Historically, bitcoins hash rate has correlated quite closely with its price. The fact that the bitcoins hash rate continues to rise even as prices fall, suggests that there are still more gains on the horizon for BTC.
The relatively low hash rate we continue to see has also contributed to the profits of crypto mining companies elsewhere around the world, which reported record numbers last quarter, and are unlikely to see similar numbers, this quarter.
As I mentioned in last week’s crypto review, many institutions are getting indirect exposure to crypto from investing in crypto mining company stock, and this impressive growth could attract more dollars to actual coins and tokens on institutions.
Bitcoin ETF In October?
The cryptocurrency exchange-traded funds we offer are in fact just the thing that institutions are looking for. ETFs operate like index funds, based on the asset prices they represent.
ETFs are well regulated, which is why legacy investors prefer them. In general, ETFs are backed by assets, and their issuers buy and sell the assets behind the scenes, according to demand.
As a result, cryptocurrency ETFs are illegal in the United States, but they are legal in Canada. It seems likely that US Crypto ETFs will be backed by futures or numbers on some computers somewhere, i.e. paper or numbers circulating.
Since grayscale GBTC does not deal in crypto, it is probably Morgan Stanley’s choice.
Morgan Stanley has invested heavily in GBTC! It is the first time that an investor has invested money in GBTC. For reasons I will not elaborate on here, they do not track prices as well as ETFs.
However, Bloomberg analysts predict that the number of ETFs for Bitcoin and Etherium is likely to increase this fall despite the fact that ETFs provide direct exposure to the respective cryptos.
As I researched, I suspect these ETFs will go live between mid-September and mid-October, suggesting that this is the peak of this bull market.
Infrastructure Bill Set
Part of the reason why I believe the crypto market will start to crash at the end of September has to do with the infrastructure bill, which could be passed around that time.
Now, I know I’ve been talking a lot about the infrastructure bill lately, but it’s something that could mess up the cryptocurrency market for a very long time. This is again because of that damn crypto tax clause, which requires all so-called brokers to collect KYC from users for tax purposes.
Though regulators have promised to be gentle with how they apply this definition, I am not want to trust regulators, much less the politicians who slip unrelated stuff like this crypto clause into infrastructure bills.
Right now, the tentative date for the infrastructure building pass is September 27. After that, It just needs to be signed by the President, and it will become law And then, the wolves will hop into the ship.
In terms of what you should do with your crypto around that time, the most important thing is that you make sure you’re keeping it all in your non-custodial cryptocurrency wallet.
Now, while I can’t give you any financial advice, I can tell you that I’ll personally be keeping my gains away from centralized stable coins. When the bell tolls in late September.
That’s because circle Paxos and tether of all frozen tokens before and if regulators come out and demand they do so they won’t hesitate to comply.
though there aren’t some robust decentralized stable coins like terras UST it’s possible they too could find themselves being swept up in the storm. Also, make sure you’ve completed KYC on a cryptocurrency exchange you trust that supports all the cryptocurrency you hold.
Exchanges will certainly be front and center for regulators and the last thing you want is to be locked out of your account, or find yourself in a position where you’re unable to sell your coins or tokens.
I also happen to have a post about the top regulated cryptocurrency exchanges and you can find it up here.
Cuba Embraces Crypto
Between now and the end of September, however, we’re likely to see a lot of announcements that will be insanely bullish for the crypto market.
One of these is going to be Cuba’s adoption of cryptocurrency payments, which is the central bank has announced will be sanctioned in the weeks ahead.
Now the details about what exactly Cuba is planning with crypto payments are still up in the air, but its central bank specified that citizens will be allowed to use crypto payments for quote reasons of socio-economic interest.
This excludes any illegal activities and Cuban regulators will be keeping a close eye on any individuals or institutions, using cryptocurrencies, to make sure they’re not up to any funny business.
To me, Cuba’s move sounds close to making cryptocurrency legal tender. In this case, Cuba would become the second country to legalize cryptocurrency as payment. There is, of course, El Salvador first.
Cuba’s motivation for embracing cryptocurrency payments is not all that different from El Salvador’s namely a reliance on the US dollar and economic issues relating to US sanctions.
Cuban citizens have already actively been using cryptocurrencies since 2019 to bypass and various economic sanctions, so it’s logical that the Cuban government would seek to bring cryptocurrencies under its wing.
The only problem is that this could cause a stir among global regulators in the United States and elsewhere who very much want to see those sanctions respected for whatever reason, this could potentially lead to a crackdown on peer-to-peer cryptocurrency transactions.
Cardano & Compliance
Cardano Foundation announced a partnership last week. Follow the Financial Action Task Force guidelines, six AMLD and other international and domestic regulations, as well as the FATF guidelines.
If you are wondering why this partnership is troubling, I highly recommend you take the time to read my post regarding the FATF’s plans for cryptocurrencies in October of 2021
According to the FATF, all individuals and institutions must use your cryptocurrency to complete KYC, or paperwork.
Until the FATF releases their final recommendations, nobody knows exactly what their guidelines will cover. October was my deadline.
Until they meet KYC requirements, the FATF may use Cardano holders as a pawn in their effort to prevent them from accessing their wallets. As far as cryptocurrencies are concerned, the FATF seems to have this as its ultimate goal.
As someone who holds a significant amount of ADA, I don’t wish to have to log in through KYC to Daedalus every time I log into the platform.
Although I don’t predict that it will get to that point, at the moment, it seems like Cardano is just using Coin Firm in the same way other cryptocurrencies use blockchain tracking tools to figure out where the coins are relative to one another.
As long as the compliance doesn’t violate cryptocurrency values, this partnership will reassure institutions about investing in ADA. My support is unwavering.
The Cardano hard fork of the testnet for smart contracts should happen later this week, so keep an eye out for that.
You can read my most recent post about Cardano if you aren’t familiar with what the project is doing.
Turning to the crypto market, I’m sure you all felt that dip late last week, and you might be wondering what caused it. Well, it was a combination of factors, the main one being the billions of dollars of BTC options, which expire on the last Friday of every month.
Without getting too technical, an option gives you the right but not the obligation to buy or sell an asset at a predetermined price at a later point in time
a call option is the right to buy an asset at a predetermined price later on, whereas a put option is the right to sell an asset at a predetermined price later on. The format is bullish, and the latter is bearish.
Now, more often than not big investors who are bearish on Bitcoin and have lots of put options will push the price of BTC down as much as they can, at the end of each month to maximize profits more, so the story goes, this is sometimes termed banging the clothes.
Many believe this is why BTC tends to dip at the end of each month and tends to peak in the middle of the month options expire is weren’t the only thing making the markets want either.
The fact that politicians voted to reject any further amendments to the infrastructure bill, put a dent in the crypto market too. Then there was the Jackson Hole symposium, which is where central bankers get together to talk about money printing.
Lots of investors were worried about what the Fed would say about tapering, aka, reducing the number of government bonds it’s buying, aka the amount of money it’s printing.
There are of course other world events that have markets on edge, which I won’t discuss here.
Now, as I’m filming this week’s crypto news review a bit earlier than usual, this weekly winner list is going to be a bit different, rather than show you the ones which have gained the most in the last week and where they might be headed next, I’m going to pick a handful of Cryptos that look like they’re about to pump.
- My first pick here is polka dot and this is for two reasons.
First, the dot is one of the only large-cap cryptocurrencies that hasn’t popped yet. And second, polka dot should be announcing its para chain slot auctions and Dana, and if that announcement comes this week, DOT will likely move up a few percentage points in response.
- My second pick is an avalanche, and this is primarily because of its massive defined incentive program titled avalanche rush, which is so far I tracked it Ave curve finance, and more recently, sushi swap. I have a feeling that we’re going to see more high-profile defy deployments on avalanche, In the next few weeks, and once they go live. This could easily take AVAX to new all-time highs.
- My third pick is Cardano, and that’s because ADA could rise on the news of a successful smart contract test net hard fork, which is scheduled for September the first, even without this announcement, Ada is looking bullish as hell on the price charts, I reckon it’s going to keep pumping until smart contracts go live, and probably well beyond that.
- My fourth pick is Solana, and that’s because it’s starting to see some serious retail and institutional adoption sol price chart is also printing a pattern, which I will refer to simply as the topless. This is basically when the price pump retraces a bit and pumps, again, to where the previous pump ended this topless letter P this is an integral part of many bullish price patterns in technical analysis, and it’s one that I’ve successfully traded in recent weeks as well.
- My final pick is Arweave, and that’s because Arweave stores all of Solana’s blockchain data, the greater the demand for sol, the greater the demand for the AR coin, which is why their price action is almost identical. Now, if you want to learn more about Arweave, I recently did a deep dive into the project, which you can also find on the home page.