April 7, 2021 | Issue #163

MUST READS

Coinbase Reports First Quarter Results

As Coinbase prepares to go public on April 14, they have published their estimated financial results for the first quarter of 2021 on Tuesday.

To say they exceeded expectations would be an understatement. Here's what you need to know:

An estimated $1.8 billion in total revenue for the first quarter of 2021
Of that $1.8 billion they reported a net income of "approximately $730 million to $800 million"
An estimated 56 million verified customers and 6.1 million monthly transacting customers
$335 billion in trading volume, compared to the $89 billion for Q4 2020
Indications that they may spend upwards of $1 billion over the course of 2021

Current price data from derivatives exchange FTX suggests a $120+ billion market cap valuation.

Speaking of FTX, CEO Sam Bankman-Fried, reviewed the numbers and then gave an estimate on how his company is doing in comparison:

~$100M-$250M revenue
~$70M-$180M net income
$670B volume

Grayscale’s Commits to Bitcoin ETF As Pressure Mounts

Over the last few months, we have discussed the tightening premium and ultimate discount at Grayscale Bitcoin Trust (GBTC). This discount has led to a lot of discussion on "the point" of investing in GBTC.

To assail these concerns, Grayscale has released a press release stating that they are 100% committed to becoming an ETF.

The conversion would mean GBTC shareholders would no longer have to put up with a six-month lockup, the 2% annual management fee, and would reduce the discount.

Meanwhile, Marlton LLC, an activist family office that owns shares in Grayscale Bitcoin Trust (GBTC) is demanding a tender offer to boost prices.

"As of March 31, the share price represented a $3.1 billion loss to shareholders compared with the Bitcoin it holds."

DEEP DIVE

Bitcoin On-Chain Indicators Update

The team at CoinMetrics just updated their Bitcoin On-chain Indicators Primer, which shows you how to use on-chain data to help gauge crypto market cycles.

In the update, we get a timely look at:

Market Value to Realized Value (MVRV)
Spent Output Profit Ratio (SOPR)
Bitcoin (BTC) Age Distribution Bands

Strike Launches Bitcoin Lightning Payment App in El Salvador

As all the hype today is geared towards things like NFTs, DeFi, and institutional adoption, Jack Mallers and his team at Strike are quietly revolutionizing the remittances industry.

They just launched in El Salvador. Up next is the EU.

The Original Sin

For crypto, an original sin regularly observed is insiders owning too much of systems that are marketed as public, egalitarian networks.

If a small group of insiders regularly take ~half of the fully-diluted upside (which is common), it is seriously kneecapping the redistributive effects of this technology in order to make a handful of people obscenely rich.

If there’s one thing we all can do, it’s to ask each cryptonetwork, “What is the initial distribution of the capital here, and the reasoning behind that distribution?”

Where the capital accrues, so too will the power.

REGULATORY FRONT

🇨🇳 Peter Thiel Worries about China using Bitcoin as 'Financial Weapon’

Peter Thiel is urging the U.S. government to take a closer look at cryptocurrencies and particularly Bitcoin.

In comments Tuesday night, he described himself as a “pro-crypto, pro-Bitcoin maximalist,” but warned that China could be using Bitcoin to “threaten the U.S. dollar.”

“I do wonder whether at this point, Bitcoin should also be thought [of] in part as a Chinese financial weapon against the U.S... [If] China’s long Bitcoin, perhaps from a geopolitical perspective, the U.S. should be asking some tougher questions about exactly how that works.”

China Creates Its Own Digital Currency, a First for Major Economy

A thousand years ago, when money meant coins, China invented paper currency. Now the Chinese government is minting cash digitally, in a re-imagination of money that could shake a pillar of American power. Here is WSJ's deep dive into China's new digital currency.

Perhaps the most interesting part of the entire article is this line though:

"Beijing has tested expiration dates to encourage users to spend it quickly, for times when the economy needs a jump start."

Fidelity, Square, Coinbase Launch Bitcoin Trade Group

The newly formed Crypto Council for Innovation will lobby policy makers, take up research projects, and serve as the burgeoning industry’s voice in championing the economic benefits of digital currencies and related technologies.