June 16, 2021 | Issue #173

MUST READS

What A Week For Bitcoin Fundamentals

It all started with El Salvador passing a law that officially recognized bitcoin as legal tender... which could spark a domino effect amongst nation-states in similar economic situations. (Rumors have it that Tanzania is next?)

Next up, we had the successful lock-in of Taproot – the latest upgrade to how bitcoin transactions work that brings real benefits (i.e. reduced transaction fees, increased privacy, more wallet functionality, etc.) to bitcoiners across the world.

And finally, the icing on the cake was May's Consumer Price Index (CPI) numbers. Simply put, the dragon called inflation is officially out of its cave.

May's report showed inflation was 6.2%, which was well above April’s numbers as well as the average expectation of the always correct Wall Street economists. 😉

This was the highest rate of inflation since 2013. The core inflation rate, which excludes food and energy, rose by 3.8%, which is the highest rate since 1992.

All of this combined - El Salvador, Taproot, and increased prices/decreased purchasing power - provides a fundamental backdrop for bitcoin that could not look any better.

Billionaire Investor Paul Tudor Jones Wants to Have 5% of His Assets in Bitcoin

In a CNBC interview on Monday, legendary investor Paul Tudor Jones emphasized that he likes and wants to invest more in BTC.

On its Certainty:
"Bitcoin is math. And math has been around for thousands of years. And two plus two is gonna equal four and it will for the next 2000 years. I like idea of investing in something that's reliable, consistent, honest, and 100% certain. So bitcoin has appeal to me because it's a way for me to invest in certainty."
On Environmental Impact:
"If I was king of the world, I'd ban bitcoin mining just because of the environmental impact and make the ecosystem figure out a way to do it without expanding supply anymore at all."
On Allocation in Regards to Fed Policy and Inflation:
"I like bitcoin as a portfolio diversifier... The only thing that I know for certain is that I want to have 5% in gold, 5% in bitcoin, 5% in cash, 5% in commodities, at this point in time. I don't know what I want to do with the other 80%. I want to wait and see what the Fed's gonna do, because what they do will have a big impact."

Watch the full clip here.

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DEEP DIVE

The Brilliance of Yield Farming, Liquidity Providing and Valuing Crypto Projects

Mark Cuban recently wrote a blog post about his forays into DeFi yield farming that also provides a neat breakdown of DeFi and the value props of the top projects in the space.

“The crazy part of it all, is that because these businesses are token driven and the costs are distributed and operations are decentralized, it is FAR LESS EXPENSIVE to operate than a traditional centralized business.”

FinTech 3.0: Re-Architecting Financial Market Infrastructure

FinTech has gone through several distinct periods of innovation including unbundling, rebundling, and more recently embedded finance. But it feels like DeFi is crossing the institutional chasm and could result in the next distinct phase.

Here's an excellent overview by John Street Capital of the evolution of fintech, the current state of DeFi, and the pros/cons of the current CeFi (centralized finance) systems in place.

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REGULATORY FRONT

El Salvador’s Bitcoin Bill Raises ‘Issues’: IMF Spokesperson

International Monetary Fund (IMF) spokesman, Gerry Rice, said last Thursday that “adoption of bitcoin as legal tender raises a number of macroeconomic, financial and legal issues that require very careful analysis so we are following developments closely and will continue our consultation with authorities.”

A cynical person might read this as, "Don't Mess With The US Dollar!"

Look, the El Salvador news is one of the most exciting things to happen to Bitcoin this year. But let's not forget that this is the same country that gave up on its own native currency 20 years ago... and decided to go with the US dollar instead.

If you think bailing from the US dollar won't come with consequences, think again. El Salvador is reportedly already in "make or break" talks with the IMF over a $1.3 billion loan.

Crypto investors out-settle SEC, snag $27.5M from Block.one over EOS

Block.one quietly laid to rest to a class-action lawsuit over its EOS sale this past week. The company agreed to hand $27.5M to crypto investors Johnny Hong and the so-called Crypto Assets Opportunity Fund. (That’s $3.5M more than what Block.one paid to the SEC after failing to register a securities sale in 2019.)

Block.one continues to spend billions of dollars on multiple projects... but let's be real. Have any been successful?

EOS appears to be constantly in legal trouble...

They invested ~$300M in Voice, which recently pivoted into an "environmentally friendly NFT platform"...

And, oh yeah, they just formed a new exchange called Bullish.com, which has been "capitalized with over $10B in cash and digital assets." Sounds legit. 👎