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HEALTH, WEALTH, AND HAPPINESS

June 1, 2022

"The true nature of all wealth is temporary; those who have wealth must here and now do good deeds that will live for a long time."

- Thiruvalluvar

Binance Labs Raises $500M Crypto Fund (Binance): Last week we reported on the $4.5 billion crypto fund launched by a16z, the legendary Silicon Valley VC firm.

This week, Binance threw another $500 million onto the pile.

Binance Labs, the venture arm of the global crypto exchange, announced a new $500 million fund to invest in blockchain and Web3 companies. Like a16z's fund, it's a land grab: they will invest in any promising blockchain company, at any stage of development.

Investor takeaways: These funds are blasting a torrent of money into the Web3 space, which will have several likely outcomes.

1) Venture capital firms, like all investors, tend to move in herds. So when the sharpest minds are flooding into Web3, expect many more to follow. $5 billion is just the beginning.

2) Entrepreneurs will go where the money is. We're about to see a golden age of Web3 (which is what a16z said in their blog post, which we predicted would be a self-fulfilling prediction).

3) Web3 is now officially a thing. This "Internet of Value" -- enabled by blockchain technology, digital wallets, and decentralized applications -- is here to stay.

If you're new to Web3, check out our Hands-On DeFi Workshop where we walk you through how it works, and how to invest. (Premium access)

Here's a look at the price of Binance Smart Chain (purple line), bitcoin (light blue line), and Coinbase (dark blue line), on a percentage basis over the last year.

(Note to new readers: Our thesis is that long-term investing in Binance Smart Chain [BNB] is the closest thing to investing directly in Binance.)

Courtesy Yahoo Finance

Investor takeaway: In our view, Coinbase is the gold standard for US-based crypto exchanges, and Binance for global crypto exchanges. Note how their prices mirror that of bitcoin (pretty much everything in crypto follows the price of bitcoin).

Note also the price of investing in these two crypto exchanges (i.e., buying COIN stock and the BNB token) is at the deepest discounts for the year. Bargain shoppers, take note!

That's not against USD, that's against bitcoin. In fact, EOS is 98.2%down from its all-time high against bitcoin. 

Solana's SOL token is another one we can examine. In 2021, it gained more than 9000% against USD. In 2022, it's not been doing so hot. SOL is now down 70% from its all-time high against bitcoin in November.

Today Solana also reportedly just experienced its eighth outage of the year. That sounds like my power company in Florida during hurricane season!

Ok, so these tokens are going nowhere fast. 

Now the boring question—who makes money in a bear market? The answer? The same organizations that make money in a bull market—cryptocurrency exchanges.

In fact, some of these tokens hold up the strongest against bitcoin in a bear market and overall. Let's take a peek at Binance's BNB token. Against BTC since December 1, it's actually holding its own. It is slightly down, with an 8.05% decrease. It also outperformed BTC in the last bear market.

Since Dec. 1, here are how some other exchange tokens are doing against BTC (as of May 31):

LEO: + 186.49%

KCS: + 17.36%

FTX: - 2.27%

OKB: - 12.83%

The Moral of the Story

Follow the money.

Crypto exchanges make money in bear markets and in bull markets. They make money every time you trade, whether you win or you lose.

Sincerely, 

Alexandre Lores

Opportunity Analyst

Bitcoin Market Journal is a daily newsletter that makes you a better crypto investor. It is created by Evamarie Augustine, Charles Bovaird, Mati Greenspan, John Hargrave, and Alexandre Lores.

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