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The biggest crypto news and ideas of the day Oct. 20, 2021 If you were forwarded this newsletter and would like to receive it, sign up here. Sponsored by Welcome to The Node.
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–Daniel Kuhn
Today’s must-reads Top Shelf ALL-TIME HIGH: Bitcoin, the world’s largest cryptocurrency by market capitalization, has hit a new all-time high above $65,000. The crypto broke above its previous high of $64,889 reached in April, partially on the strength of the BTC futures-based exchange-traded fund (ETF) that debuted yesterday. ProShares’ bitcoin futures ETF (NYSE: BITO) saw nearly $1 billion in its first trading day. COINDESK INVESTIGATION: CoinDesk’s Anna Baydakova investigated online markets where people can buy access and login information for cryptocurrency accounts for as low as $200 dollars. Users are able to purchase access to accounts on Coinbase, Binance US, Kraken and numerous other exchanges, sometimes receiving accounts and information pertaining to the real accounts of real people. The report calls into question the currency “know-your-customer” (KYC) and verification models in place. INSTITUTIONAL CRYPTO: Digital Currency Group is planning to buy up to a billion dollars worth of Grayscale Bitcoin Trust (GBTC), a large crypto trust that has faced stiff competition, the company announced Wednesday. GBTC traded at a 16.55% discount relative to the price of bitcoin yesterday. (Both Grayscale and CoinDesk are owned by DCG.) Meanwhile, Cboe Global Market is acquiring crypto spot and derivatives marketplace ErisX, the company behind the first BTC and ETH futures products. Finally, Huobi’s Japanese subsidiary received approval from the local Financial Services Agency to offer crypto derivatives. ANALYSTS SAY: Western Union was downgraded to neutral from buy at investment bank BTIG, which says the company’s money transfer platform may face pressure from free alternatives including Facebook’s new digital remittance app, Novi, and Strike’s bitcoin service on the Lightning Network. Separately, short-selling research firm Hindenburg Research is offering a bounty of up to $1 million for previously undisclosed details about the reserves backing Tether’s stablecoin USDT. And Bank of America has added 23 more stocks to its equities research coverage “that may see market value expansion due to digital asset exposure.” RAISING THE BAR? Animoca Brands, a prominent investor in non-fungible tokens (NFT) and decentralized gaming, has completed a capital raise of $65 million at a $2.2 billion valuation. Meanwhile, Chinese e-commerce giant JD.com is following rival Alibaba into NFTs. Lastly, Multicoin Capital is planning to raise $250 million for its third crypto-focused venture fund. The initiative comes less than six months after Multicoin Capital raised $100 million for its second crypto venture fund.
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What will 2022 bring? Crypto 2022 is CoinDesk’s ambitious effort to scope out what’s next. This week it's Policy Week, a week devoted to exploring the complex ways governments are interacting with the cryptocurrency ecosystem, and how policy decisions or lack thereof will affect the year ahead. Read more here.
“It takes a long time for members of Congress to fully wrap their head around the fact that crypto isn’t just the future of money but that it’s the future of everything.”
What others are writing... Off-Chain Signals Treasury overlord Yellen worried crypto undermines US sanctions, dollar (Protos) US Bitcoin mining firm Stronghold raises $127 million in IPO (The Block) Bitcoin Lender Celsius Denies Receiving Cease and Desist From New York AG (Decrypt) Elizabeth Warren Urges Zuckerberg to Halt Facebook's Crypto Wallet Novi (Decrypt) Cult Game Creator Builds $1.7 Billion Stake After 620% Rally (Bloomberg) Martha Stewart releases NFTs as more celebs tap into crypto craze (NY Post) Coinbase will offer customers a ‘get paid in crypto’ direct deposit option (CNBC) Treasury Seeks More Money for Illicit-Finance Oversight, Including Crypto and Cybercrime (WSJ) Overwhelmed by Social Media, Cybersecurity and Other Tech Topics? Read These Books. (WSJ)
A message from ADALend ADALend — decentralized native Cardano protocol governed by DAO
ADALend protocol based on Cardano will power flexible finance markets by providing for larger instant loan approval, automated collateral, trustless custody, and liquidity.
ADALend seed round was 400% oversubscribed, those who did not make it into the seed stage have been whitelisted for the private sale.
Putting the news in perspective The Takeaway Contango Conmigo: Why a Bitcoin Futures ETF Could Be a Bloody Ride Since at least 2013, when the Winklevoss twins first filed an application to create one, a bitcoin exchange-traded fund (ETF) has been the crypto industry’s white whale. An ETF would open bitcoin investment to a huge new array of players, from individual 401(k) users to major institutions, who can’t buy bitcoin directly for regulatory or compliance reasons. Yesterday, we finally got a bitcoin ETF … sort of.
In this case, the word being replaced is “futures” because rather than a fund that actually holds bitcoin, the ProShares ETF will hold bitcoin futures contracts.
(There is also an inverse phenomenon called “backwardation,” when the longer futures price is lower – but this seems less significant because it just gives futures ETF holders a small premium when the underlying commodity is already heading downward.)
Simeon Hyman, a strategist at ProShares, pushed back against Morris’s analysis yesterday on CoinDesk’s “All About Bitcoin." Hyman instead estimates an annualized 2.5% roll cost, and rightly points out that an expanding market could shrink the bleeding further. In any conventional asset, that would still be pretty brutal, but the expectation of continued upward movement for bitcoin could still make it worth it. Investors are certainly not being put off, with BITO attracting $570 million in inflows and a record-setting $1 billion in trading volume on day 1.
I am not one of the single-minded trolls who think all regulation simply distorts markets, but it’s hard not to see some seriously perverse dynamics embodied in what regulators have brought to fruition here.
–David Z. Morris
The Chaser...
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