July 7, 2021 | Issue #176

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MUST READS

Robinhood's Dogecoin Problem?

Last week, Robinhood filed to go public in an IPO under the symbol HOOD.

Although primarily a traditional (albeit skewed younger) brokerage, it's worth digging into the company as it has become emblematic of the highly speculative side of crypto asset investing.

A simple glance at the company’s S-1 explains it all…

Dogecoin accounted for 34% of Robinhood’s cryptocurrency transaction-based revenue in Q1 2021, and 6% of the trading firm’s overall revenue in the same period
Crypto as an asset class made up 17% of Robinhood’s revenue in the same period
Overall, crypto assets on the platform skyrocketed in the first quarter on a year-over-year basis from $480.7M to $11.6B

Here’s the thing though – the Robinhood filing only covers the first quarter of 2021 which WAS NOT the quarter when crypto assets, and more specifically Dogecoin, took off.

All that’s to say… expect to see even larger crypto trading numbers for Robinhood in next quarter's filing.

And don't forget, just because a popular exchange lists a popular/trendy token... doesn't necessarily mean that it's a great investment. The exchanges just want the fees. Most exchanges (you too, Coinbase) are trying to make a buck one way or another.

P.S. Check out the regulatory section for some not-so-great news for Robinhood.

Visa Crypto-linked Card Usage Tops $1 Billion

To this day, you'll often see people shut down the idea that BTC can be used as a medium of exchange, using the good ol' "I still can't even easily buy a cup of coffee with it" argument.

Well, this one's for them...

In the first half of 2021, Visa reported that over $1B worth of cryptocurrency was used to buy goods and services. Not to mention that Visa only began offering the ability to pay with digital assets at the start of this year.

Circle, BlockFi and Coinbase are current Visa partners that allow cardholders to spend from their cryptocurrency wallet at more than 70 million merchants globally.

"People are exploring ways in which they can use cryptocurrencies for things they would use normal currencies for... There are lots of issues in terms of volatility, etc. But that’s up to the owners of cryptocurrencies to manage and track.”

Related: Visa is making some major hires and placements as it continues to build out its crypto team.

Announcing the Bitcoin Tab

We believe news like this deserves a bit more credit...

Last week, Jack Mallers and his team at Strike broke another barrier by launching the Bitcoin Tab – giving users the ability to buy Bitcoin with no fee outside of the market spread.

"No hidden fees, no sifting through sh*tcoins, no added noise. The way stacking sats should be."

Check out Jack's announcement here. It includes a bit more details on the product and a couple of hefty jabs thrown directly at Coinbase (who by the way earns 94% of their top line from asinine trading fees), Venmo, and CashApp.

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DEEP DIVE

The Riddle of Ethereum

Ether is down 10% in the past 30 days and has plunged 45% since its $4,357 high reached in May. It has been inching its way up from this month’s low of $1,718 and is trading at around $2,300 currently. So the question investors are asking is: Is the bull market back or are we at the gates of a bearish cycle?

The Defiant just reviewed last month’s on-chain data from both a bullish and bearish perspective to find out.

Crypto Hedge Fund Report 2021

According to PricewaterhouseCoopers (PwC), the total number of assets under management of crypto hedge funds globally doubled in 2020, jumping from $2B in 2019 to $3.8B.

The report also indicated that:

The median crypto hedge fund returned +128% in 2020 (vs +30% in 2019)
More than 90% of crypto funds trade in BTC... 67% in ETH... 34% in LTC... 30% in LINK... and 28% in DOT.
About half of the fund's trade derivatives (56%), but short-selling has drastically reduced, from 48% to 28% in 2020. Crypto hedge funds are also involved in cryptocurrency staking (42%), lending (33%), and borrowing (24%).

2Q'21 Currency Sector Recap

2Q’21 was one of the most eventful quarters of the Currency sector’s history.

BTC hit an all-time high... and also tanked
Coinbase went public
Institutions continued to invest in digital assets
Meme coins took off like never before
Regulations hit crypto

Get the full recap of events here, courtesy of Messari.

Are You Ready For Financial Lockdown?

Few Americans seem to realize the repercussions of $11 TRILLION being pumped into the U.S. financial system in the past 18 months.

If you’re counting on IRAs, 401(k)s, insurance policies, annuities, pension plans, stocks, or bonds, you NEED to prepare for what one former Goldman Sachs trader is calling “Financial Lockdown.”

Learn what’s happening now, what’s coming next, and most importantly, what YOU can do to protect and grow your money in the years to come.

Click here for details (includes 4 steps to prepare now).

REGULATORY FRONT

New York Legislation Proposes That Public Officials Disclose Their Crypto Holdings Annually

A proposed law in New York would, if approved, require public officials in the state to disclose cryptocurrency holdings above a $1,000 threshold on an annual basis.

Meanwhile, US Senator Patrick Toomey disclosed his investment in both ETHE and GBTC.

Oh and US Congressman, Barry Moore, filed a trading disclosure in which he bought Etherium (he spelled it this way, not us), Cardano, and Dogecoin.

Is this actual news? Probably not. It just goes to show that our elected officials can't help but get caught up in the FOMO that is the crypto markets.

Our only hope is that this doesn't become another kind of situation where public officials can make trades on non-public information and then use their power to influence asset prices.

As always with our great leaders in the US government... we won't get our hopes up.

Robinhood Gets Fined... Again

Robinhood has set aside $15M to settle a legal dispute with the New York State Department of Financial Services (NYDFS) over allegations related to its crypto unit's handling of cybersecurity and anti-money laundering.

This comes only a week after Robinhood agreed to pay a $70M fine—the largest of its kind—to FINRA over outages and miscommunications that created "significant harm" to Robinhood customers.

Israeli Government Seizes Cryptocurrency Addresses Associated with Hamas Donation Campaigns

In the first terrorism financing-related cryptocurrency seizure, Israel’s National Bureau for Counter Terror Financing (NBCTF) has seized Bitcoin, Ether, XRP, Tether, and others assets from Hamas.