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GM. This is Milk Road, your daily slice of the crypto pie - always fresh, never stale. |
Here’s what we got for you today: |
2 reasons a “Bitcoin Billionaire” thinks a crash is coming…🧐 We’re giving away $500 in prizes 💰 Graph of the day: 2024 is off to a hot start! 📊 10K vendors around the world accept BTC 🤑 Gary Gensler tweets about crypto 👀
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2 REASONS A “BITCOIN BILLIONAIRE” THINKS A CRASH IS COMING 🧐 |
Life is good in the crypto hood right now. |
Prices are green. Morale is flying high. Even the skeptics are peeking over the fence to see what’s going on… |
My Uncle Vinny (aka Mr. I-Wouldn’t-Touch-Bitcoin-With-A-10-Foot-Pole) called me yesterday asking about this “ETF thing” he keeps hearing about. |
It feels great to be back on top. |
But be warned, this is when you need to be the most careful. Or else you’ll get infected with NGUS - Number Go Up Syndrome. |
This is when you get so blinded by prices, you start ignoring the counterarguments… |
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Well, check it out. |
Arthur Hayes (one of the youngest “Bitcoin Billionaires” ever) dropped a new blog post highlighting his bear case over the next few months. |
He talks about interest rate hikes, the chilling effects on the banking sector, and a whole lot of macroeconomic mumbo jumbo that would make your Econ 101 professor proud. |
Here are his predictions: |
Bitcoin will pump in the near term (mainly from ETF news). But, there will be a 30% to 40% downturn by early March.
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His logic? A few big events are happening at the same time… |
1/ The Federal Reserve’s Reverse Repo Program (RRP) balance is decreasing. |
The RRP lets banks and investment firms park cash at the Fed to earn interest. |
Over the last few months, it’s been a big source of liquidity for markets. Investors withdraw funds from the RRP and dump them into other assets - like stocks, bonds, and crypto. |
But the RRP balance is dwindling. And without a new source of dollar liquidity… stocks, bonds, and crypto will bleed. |
Hayes estimates the RRP balance could get “close to zero” by March. |
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2/ The Bank Term Funding Program (BTFP) is set to expire on March 12. |
U.S. banks were falling like dominos last year… |
To control the crisis, the Federal Reserve created the BTFP and offered one-year loans to banks and institutions. |
Well, the clock is ticking and the one-year program is set to expire in mid-March. |
To make matters worse, Hayes predicts the Fed won’t renew the program. Meaning the banks will need to cough up money (they don’t have) to repay the loans somehow. |
As a result, many of them will go bankrupt. |
“The combination of a lack of liquidity gushing from the RRP and the lack of printed money to cover the bond losses on the non-BTFP banks’ balance sheets will decimate the financial markets globally.” | | | | Arthur Hayes |
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Milk Road Take: Arthur Hayes is a smart dude. He’s been running miles around the crypto track while most of us are still figuring out how to tie our shoelaces... |
And while there are a bunch of people in crypto who just want to hear “rah-rah-yay-everything going up”... not us. |
It’s important to hear both sides of the argument. |
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WE’RE GIVING AWAY $500 IN PRIZES 💰 | We’ve got a challenge for you… | The Challenge: Guess what BTC’s price will be at the close of the Bitcoin ETF’s first trading day. Down to the penny. We’re looking for sniper accuracy! | The Prize: A total of $500 is up for grabs. (1st place = $250. 2nd place = $150. 3rd place = $100. 4th place or worse = a pat on the back). | The Timeline: The contest kicks off as soon as this hits your inbox (aka NOW) and ends tomorrow (1/10) at 9:30 AM PT. | The Bonus: Refer a friend to subscribe to Milk Road and we’ll DOUBLE your winnings. That’s right, it’s like finding two pots of gold at the end of the rainbow. | … should you choose to accept the challenge, all you need to do is submit your guesses here! | Good luck, Roaders. May the odds be forever in your favor. | **holds up 3 fingers and does the whistle thing from The Hunger Games** | P.S. - here are the giveaway rules. |
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GRAPH OF THE DAY: DIGITAL ASSET FUNDS SAW $151M IN INFLOWS 📊 |
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2024 is off to a hot start! |
According to CoinShare’s latest report, digital asset investment products saw $151M in total inflows last week. |
Here’s everything you need to know: |
BTC saw the majority of inflows ($113M). Blockchain equities saw $24M of inflows. ETH saw $29M in total inflows, bringing its 9-week streak of inflows to a total of $215M. (Surprisingly) Solana saw $5.3M in outflows. Not the start you want. Other altcoins like Cardano, Avalanche, and Litecoin saw minor inflows. 55% of inflows were from U.S. entities (even though a spot Bitcoin ETF hasn’t even launched yet).
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Milk Road Prediction: If a spot Bitcoin ETF does get approved this week, CoinShares might need to adjust its graph because I don’t think all the inflows will fit. |
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10K VENDORS AROUND THE WORLD ACCEPT BTC 🤑 |
According to BTC Map, ~10,000 vendors around the world accept Bitcoin as a payment method. |
This is up from ~8,600 a year ago. (Hell yeah!) |
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Why this matters: One of the biggest arguments against crypto right now is, “I can’t use it in the real world.” |
And it’s true. I can’t walk into 7-Eleven to buy a Slurpee (blue, of course) using BTC. |
But as more and more vendors open up to the idea of BTC and begin accepting it as a payment method, the closer we can get to true mass adoption. |
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BITE-SIZED COOKIES FOR THE ROAD 🍪 |
Gary Gensler tweeted a thread about investing in crypto assets. I don’t know what’s crazier - the fact he actually tweeted it or the fact it already has 25 MILLION views. (!!) |
Spot Bitcoin ETFs could bring $50B - $100B of inflows in 2024. According to Standard Chartered Bank’s estimates, the price of BTC could also rise to $200,000 by the end of 2025. |
VanEck and Bitwise are prepping over $200M in advance of spot Bitcoin ETF approvals. With Bitcoin spot ETFs imminent, the financial firms are poised to inject millions into the new investment products. |
Someone sent $1.2 million to the Genesis wallet mined by Satoshi Nakamoto. The Genesis wallet now has a balance of almost 100 bitcoin. |
More than 1 million smart accounts have been deployed. According to Alchemy, an estimated 53% of the total smart accounts deployed were created in Q4 of 2023. |
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MILKY MEMES 🤣 |
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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research. |
