All Been Crypto — Week 26 Nov 2021
Price wise a relatively muted week for BTC with Alts outperforming and dominance dropping below 40%. We continued to see Metaverse names like MANA/SAND to record strong gains and see multiple headlines on NFTs going further mainstream. El Salvador did it again announcing ‘Volcano Bonds’ and a no tax bitcoin city. As a third article I’ve picked the twitter fight between Elon Musk and the CEO of Binance CZ which was fun to watch. On the regulatory side we saw eToro give in to unlist ADA and Hilary warning about the risks of crypto destabilizing the Dollar. Enjoy reading and of course the weekend!
HEADLINES:
EL Salvador announced Bitcoin Bonds and Bitcoin City
Bukele is good at marketing and has just come up with another headline, a planned free port style City with no taxes and infrastructure to attract crypto native companies. He plans to start fund this project by issuing 1bn bitcoin backed ‘volcano bonds’, the idea is simple but very clever. They issue 1bn USD bond and use half of the proceeds to buy BTC which should appreciate in value vs USD. Following a lock-up period of five years, El Salvador will start to sell its cryptocurrency holdings and pay an added dividend to bond holders. $500 million of the proceeds to buy bitcoin and locking it up for five years, El Salvador is hoping that by taking so much of the cryptocurrency out of circulation for so long it helps contribute to bitcoin’s price appreciation. The planned coupon of 6.5% is less than half of where the current 10y El Salvador govt is trading and that’s where a lot of critique came in. I’m watching the success here closely because we have already seen other developing countries try mimic El Salvador and if proven successful some say this could become another page in the playbook. To put this into the broader context of capital raising though (remember Marathon Digital raised 500ml via a convertible note last week) we could also see this as being opportunistic on raising money from traditional Fixed Income/Equity institutional investors who are all very eager getting crypto exposure but cant directly access yet (because of mandate, compliance, regulation, ect…) so these proxy instruments still have a market but my sense is with increasing adoption and regulatory guidance this window might be closing soon.
NFT named word of the year 2021
So much going on with NFTs, on the adoption side with big names like Adidas dropping in the Metaverse, trading volumes continue to blow out and prices and floors for pfp (profile pic) collections continue to rise. To get a good sense where we are heading of course watch OpenSea the major player where you (if you have already) probably bought your first NFT. They announced a collaboration with Christies to offer NFT Art Collection and also recently completed integration with Adobe to verify originality of NFTs. This is important as ownership then can be verified quickly and creation is also smoother. One very interesting angle on NFTs though is that it seems to be currently focusing on jpgs while the range of digital art is of course much wider (audio, video, more complex content). And there are not just open centralized exchanges like OpenSea but also networks like Secret where transactors can stay anonymous and the NFT only gets revealed after purchase. That’s how Quentin Tarantino tried to sell unseen material from Pulp Fiction and got sued by ultimate owners Miramax. My expectation is that just like with Defi we will also see an emergence of dex NFT market places that offer anonymity and censorship resistance.
Musk and CZ battle on DOGE
This one had to be in the weekly just because its Elon, CZ and DOGE all in one tweet, can you imagine the bot activity around this one. It was also interesting to see the debate unfold, and you can in some way also see geopolitics flowing into this — let’s call it friendly banter. In a Nutshell Binance suspended dogecoin withdrawals on November 11 because of a glitch after a network update. They said it would resume withdrawals once the problem had been resolved, but that the suspension could last until November 29. CZ said he was pretty certain” that it was an issue with the latest doge wallet and then later retweeted a thread from the devs while at the same time slashing out on Tesla’s latest recall. Basically anyone in crypto following these two on twitter and Elon’s Doge tweets have historically moved the market, however the effect is clearly fading, might be to do with other Dog Meme coins gaining popularity?
QUOTES:
As an industry, and as a government, we need to acknowledge this [BTC and crypto] is not a fad
The Australian Finance Services Minister — Jane Hume
What looks like a very interesting and somewhat exotic effort to literally mine new coins in order to trade with them has the potential for undermining currencies, for undermining the role of the dollar as the reserve currency, for destabilizing nations, perhaps starting with small ones but going much larger
Hillary Clinton
On our side, we had no indication of this from eToro and it’s rather unfortunate that nothing was sent our way […] There’s currently nothing we’ve received, no regulatory event, no subpoena, nothing from any regulatory agency, no threats of lawsuits, none of these things, that’s why we’re so blindsided by it, because actually, the trend has been over the last six months a significant increase of liquidity on cardano
Cardano founder Charles Hoskinson
