June 10, 2020 | Issue #121

MUST READS

The Future is Not What it Used To Be

Nothing makes sense anymore…

Everything is broken, cities are on fire, businesses across the map are skating on thin ice... yet the stock market is nearing all-time highs (ATH).

“We’re only down 15% from the ATH of February 19, and it seems to me that the world is more than 15% screwed up.” - Howard Marks, April 20, 2020.

As of today, we're only down ~5% from ATHs.

Some interesting examples of the market's attitude right now:

Nikola (NKLA), a Tesla of trucks went public basically via a SPAC. It's made $0 revenue trading with a $25B valuation. The market cap just surpassed Ford. Elon Musk then "leaks" email saying Tesla is going all in on trucks. Stock hits $1,000. Up 134% YTD.
Not a single S&P500 stock is down in 10 weeks.
Random Chinese stocks are being manipulated? Only need to look at JFIN (+700%), WINS (+500%), and DUO (+800%).
Bankrupt companies stocks are soaring, yet the bonds are trading at pennies (keep in mind that bonds are senior in the capital structure to the equity). Just take a look at CHK: +500%, WLL: +400%, HTZ: +500%.

So what's going on? Robinhood traders influence on the market? Free money? Stocks are the new sports betting?

We don't claim to know. But, we apparently STILL can't have a Bitcoin ETF... Go figure.

Not a Good Look, Coinbase

According to The Block, public records show that Coinbase wants to sell blockchain analytics software to the U.S. government. Simply put, they want to help the DEA and IRS identify Bitcoin users.

Matt Odell eloquently summed up how the crypto community feels about this...

Adding to the pile, Josh Rager carried out a poll on Twitter, asking his 73,000 followers: “Would you actually delete or stop using your Coinbase account?” Here are the results.

If you're thinking about moving your keys OFF Coinbase, or finally taking up the responsibility of becoming your OWN bank, we recommend checking out: The Dos and Don'ts of Bitcoin Key Management, recently published by James Lopp.

Bitcoin listed on German Stock Exchange as an ETP

London-based investment firm ETC Group announced Tuesday that they're launching an exchange-traded product (ETP), dubbed Bitcoin Exchange Traded Crypto (BTCE), on Deutsche Borse’s Xetra market – a Germany-based digital stock exchange.

Key takeaways:

Don't look into these kind of reactions. Other exchanges offer similar products
The Bitcoin ETP can be settled for Bitcoin or cash
The ETP will be available for users Germany, UK, Italy, and Austria.

Novogratz’s Galaxy, Bakkt Start ‘White-Glove’ Bitcoin Service

Mike Novogratz’s Galaxy Digital Holdings is partnering with Intercontinental Exchange Inc.’s Bakkt unit to offer a “white-glove” service for large asset managers looking to buy and store Bitcoin.

The announcement comes amid a rush of companies – including BitGo and Genesis – adding new capabilities in order to be known as crypto’s prime brokers, offering a safe, regulated way for institutional clients to wade into this market.

The #1 Gold Pick for this New Gold Bull Market

The bull market in gold is finally here, but you should NOT rush out and buy gold bars or coins. While the best miners can return hundreds of percent in a gold bull market – most of them are extremely risky.

Priced around $7 today, there's a gold play that's much, much better.

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DEEP DIVE

When $10k BTC?

According to IntoTheBlock, crypto's 30-day volatility fell to 40% yesterday – the lowest level since March 6. Meanwhile, 60-day volatility declined to 52.18%, its lowest since March 11.

Why it matters: Declines in volatility are often associated with the lack of clear directional bias in the market. From here, basically anything can happen. Additionally, the longer the consolidation, the bigger the breakout/breakdown tends to be.

Quite honestly, we've been eager to write "happy 10k BTC" for quite a while now in this letter but, like everyone else, we'll have to patiently wait.

In the meantime, here are some interesting data points that allude to us getting there...

Option traders remain very, very bullish
This shouldn't mean anything, but historically, BTC performs pretty well in the month of June
Over 60% of BTC hasn't moved in over a year. (Last time this happened, was right before the 2017 run-up)

Analyzing Stablecoin Supply and Activity Distribution

This week, CoinMetrics analyzed the supply and activity distribution of different stablecoins and looked at the data behind some recent stablecoin based ponzi schemes.

Hightlights:

On-chain data shows more than 40% of all PAX transfers are directly related to a ponzi scheme.
The ERC-20 variant of Tether shines as being particularly well distributed amongst its holders. Meanwhile, 6 accounts or less own 80+% of the supply for Gemini Dollar, Binance USD, Tether (Tron), USDK, and HUSD.

REGULATORY FRONT

Crypto Mom" Hester Peirce Nominated for Another Term

SEC’s Hester Peirce – aka "Crypto Mom" – was tapped for a second term at the agency. If the Senate backs her, she will serve until 2025.

Great news for all who believe we need more competition and innovation in our financial system.

Announcing HRF's Bitcoin Development Fund

Couldn't leave this out...

The Human Rights Foundation has launched a fund to support software developers who are making the Bitcoin network more private, decentralized, and resilient so that it can better serve as a financial tool for human rights activists, civil society organizations, and journalists around the world.

This may actually be the first way for people to make tax deductible donations that fund Bitcoin development.

One Simple Tax Election Could Let Crypto Traders Write Off Unlimited Losses

If you are a cryptocurrency “trader” in the eyes of the IRS, you may be able to greatly benefit from a frequently overlooked tax election called the “475(f) election."