September 15, 2021 | Issue #186

Editor's Note: Another Teeka webinar goes live tonight at 8PM EST. For the first time ever, he's giving listeners the name of his #1 “Catch Up Coin” to buy right now… absolutely free, no strings attached.

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MUST READS

Coinbase Announces Private Debt Offering

On Monday, Coinbase announced plans to sell $1.5 billion of debt to fund product development and possible acquisitions. By Wednesday though, there was so much demand from institutional investors that Coinbase upped the round to $2 billion.

This is the second billion-dollar-plus offering from Coinbase in the two months since going public.

Meanwhile, Coinbase has filed an application with the NFA to register as a Futures Commission Merchant in order to offer futures and derivatives trading.

An Epic Litecoin Pump and Dump

Litecoin (LTC) saw its price jump from $175 to as high as $231 soon after the publishing of a press release stating that Litecoin and Walmart had entered into a partnership.

The only problem? It was totally fake.

After confirmation from both Walmart and The Litecoin Foundation that the PR was false, LTC fell more than 35% to $185.

Although the fake PR was caught pretty quickly, it was still an impressive sneaky little endeavor from whoever did it.

Mastercard Acquires CipherTrace To Boost Crypto Security And Compliance

Mastercard has agreed to purchase crypto analytics firm CipherTrace in an attempt to move “deep into the field of digital assets.”

Backed by the U.S. Department of Homeland Security, CipherTrace currently tracks over 900 cryptocurrencies and supplies data to over 150 financial institutions and government agencies. In addition to gathering data in the crypto space, CipherTrace publishes yearly reports about the trends in the crypto ecosystem and has built compliance tools for decentralized exchanges.

Last month, CipherTrace became the first to offer tracing of the "privacy-focused" crypto, Monero (XMR).

SPONSORED

Write this Down: The Exact Day of the Next Crash

Everyone knows this bull market will not last forever. But when will the next stock market crash begin? One man from Baltimore claims to have the answer. (Click here and get the date now).

He's part of an associated group that happens to be the largest independent financial research company in the world. And this man claims to have the exact day of the next crash.

Get the full story.

DEEP DIVES

ETH... Or?

Over the past couple of months, a few Ethereum rivals have surged in both price and popularity amongst retail investors. And while it's always exciting to see new major players in the market... we feel the need to explain why these coins are becoming so relevant in the first place.

So let's talk about it.

The Problem:
As the Ethereum economy (things like DeFi protocols, NFT markets, and other smart-contract apps) takes off, a couple of big problems still exist... The prices for “gas” (fees users pay to make transactions on Ethereum) are too high. At the same time, developers are struggling to increase capacity on the main Ethereum network.

The Result:
Despite the rollout of ETH2, which aims to solve these issues, interest is rapidly growing in theoretically faster and cheaper Ethereum competitors, also known as “ETH killers" like Solana (SOL), Cardano (ADA), and Avalanche (AVAX). The current ETH transaction cost/capacity issues have also fueled the rise of "layer 2" scaling solutions like Polygon (MATIC) and Arbitrum that can handle many more ETH transactions at lower costs.

The Bigger Picture:
The rise in these coins reminds us of a lesson that Chris Burniske once taught us in his book, Cryptoassets... That, as investors, it's critically important to diversify across different cryptoasset classes because it's still way too early to tell who will ultimately serve the greatest numbers of users.

So just like how we used to diversify across cryptocurrencies – Bitcoin, Litecoin, Bitcoin Cash, Dogecoin... We should also probably diversify across the increasingly competitive cryptocommodity space – Ethereum, Cardano, Solana, and so forth. In hindsight, considering the recent boom in ETH-Killer prices, we certainly wish we had done more of this months ago.

Lastly, investors should also note that if it wasn't for the surging DeFi and NFTs sectors... these ETH-Killers probably wouldn't be so "trendy." Any reversal in these trends could spell bad news for prices, especially when bitcoin's share of the market (BTC dominance) is currently looking uncomfortably low by historical standards.

Related: Solana Sputters Back to Life Following Downtime, Network Restart

New Bitcoin Core Release Adds Taproot

This crazy, cool NFT photo of a... justtt kidding. Want some real crypto/bitcoin news? Cool.

One of the most important upgrades to the Bitcoin blockchain since Segregated Witness (SegWit) in August 2017 just happened this week: Taproot.

Taproot’s notable feature is that through a mechanism called Schnorr signatures – an alternative to Bitcoin’s current multi-signature wallet mechanism – users can combine their public keys to create a new public key, thus significantly reducing multi-signature payments’ data size and helping to decongest the network.

Learn more about it and the other upgrades here.

Sushi and the Founding Murder

If you enjoyed The Generalists' writeup on FTX last month, then you'll enjoy their latest writeup on the decentralized exchange (DEX), Sushiswap.

For those that may not remember, one year ago, Chef Nomi, the founder of Sushiswap pulled $14 million worth of Ethereum out of the exchange and disappeared.

What followed was the crescendo of 2020’s crypto bull-run and in particular, the torrid months known as “DeFi Summer.” Part manhunt, part trial by media, and part murder. Here's the entire story.

Measuring Crypto Usage and Adoption

Crypto usage can be tricky to measure. Although all the data is public, it can be difficult to tell how many unique users are behind transacting addresses. For example, a single address may be owned by many individuals (such as an exchange) or an individual may also own many addresses for security or privacy.

This problem led Coinmetrics to introduce a new monthly active address metric to serve as a proxy of the number of unique addresses that either sent or received a transaction over the previous 30 days.

Using this data, Coinmetrics was able to point out a few interesting trends in their latest report:

Unique monthly active users of large-cap cryptos and major stablecoins reached a peak in mid-May before the market-wide crash. But it has started to rebound since mid-July as the market recovers.
Most of BTC's growth has come during the beginning of the year, adding over 1.5M addresses by mid-April. By comparison, though, ETH has surged since the summer, adding over 2.5M addresses.
As of September 11th, there are 7.5M addresses holding at least $1 worth of stablecoins, a new all-time high.

REGULATORY FRONT

Gary Gensler Suggests Coinbase May Be Breaking The Law

Securities and Exchange Commission Chair Gary Gensler doubled down on his criticism of cryptocurrencies Tuesday – and then took one more dig at Coinbase.

Some highlights:

Gensler feels there's not enough investor protection in the wild west worlds of crypto finance, trading, and lending... said this asset class is rife with fraud, scams, and abuse in "certain applications"
Gensler feels there needs to be more resources for the SEC to protect investors; mentioned that the SEC's staff has decreased 4% since 2016
Long-time crypto critic, Sen. Elizabeth Warren, pressed Gensler on Ethereum’s high gas fees which she said impacts small investors. [watch this "expert" convo here]

Now, the Coinbase stuff...

Sen. Elizabeth Warren asked Gensler about whether an investor can recoup financial losses in the event of a trading outage on Coinbase. Gensler’s response? The investor would be unable to turn to the SEC, and he implied that the exchange could be conducting illegal trading activity.

“[Coinbase hasn’t] registered with us, even though they have dozens of tokens that may be securities... [exchanges should] come in and talk to us."

The comments are just the latest evidence of a tense relationship between the SEC and Coinbase who said last week that the regulator threatened to sue the exchange if it released its crypto lending product.

Coinbase’s stock investors were nonplussed by Gensler’s latest comments. The price of the crypto exchange’s stock ended up 0.1% at Tuesday’s close. But credit rating agencies have taken a different view. Moody’s Investors Service gave Coinbase’s recently announced bond offering a junk bond rating, citing an “uncertain regulatory environment and fierce competition.”

OpenSea Executive Used Insider Knowledge When Buying NFTs

OpenSea, the NFT marketplace that recently raised $100 million at more than a $1.5 billion valuation has admitted that one of its executives was engaging in a form of front running.

It all started when the Twitterverse began accusing one Nate Chastain, the company's head of product, of having secret Ethereum wallets that he used to snap up NFT drops before they were released to the public. Chastain would then sell these NFTs later at much higher prices when the projects would be listed on the front page of OpenSea.

TWEET OF THE WEEK