| | | Good afternoon. Nobody is as happy as Ripple’s Brad Garlinghouse right now. While the SEC wanted $2 billion in their XRP lawsuit, the courts landed on only a $125 million penalty, while concluding that XRP (+20%) is not a security. | Clear skies, XRP army. The SEC vs. Ripple case is officially closed. Now get back to shilling. | Today’s Stories:
🤔 What is this? A crash for ants?!?!
📆 Coinbase & Robinhood Q2 Earnings | Today's newsletter is 1,098 words, a 5-minute good read. |
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Overblown Crash… Or is Something Actually Brewing? |
If you were online anytime between Sunday evening and Monday morning, it looked like the end of the financial world… |
Bitcoin was down 13%, Ethereum was flash-crashing nearly 25%, Asian markets were having their worst day since the 80s, Iran was gearing up to attack Israel, and the US stock market was still hung over from an super-soft jobs report from Friday. |
Scary times, indeed. |
Some Takeaways: |
BoJ Is (so far) The Biggest Culprit
Much of this week’s market turmoil started when the Bank of Japan (BoJ) made a surprise rate hike, which sent the yen soaring and put the systemically important yen “carry trade” in jeopardy. |
What's a carry trade? It's a financial strategy where investors or funds borrow a currency with low interest rates, like the Japanese yen, and invest those funds in higher-yielding assets such as US stocks and bonds. This strategy exploits interest rate differentials to generate returns. However, when the underlying currency appreciates significantly, as it did this week with the yen, it triggers a rapid unwinding of leveraged positions. Learn more. |
Jump Liquidations Adding More Pressure on Ethereum
Jump Trading, the controversial market maker that was obliterated during the FTX collapse and is currently under CFTC investigation, is in the process of liquidating. In the past two weeks alone, the firm has unstaked over $400m ETH, with the whole stack sent to exchanges on Sunday. This partially explains the drastic price decline of ETH as global markets went into panic mode. |
| Adam Cochran (adamscochran.eth) @adamscochran | |
| Jump liquidating their crypto book into thin markets on a summer Sunday afternoon, perfectly sums up why their crypto operation is such a mess. For a shop that's spun out so many smart builders in this space, the operation always seems like a clusterfuck. | 0xBoboShanti @0xBoboShanti It appears that Jump Trading has indeed been liquidating. ~ $400m ETH in the past 2 weeks from 1 wallet. I guess that partially explains the dampened effect of the ETH ETF on price action + current dumping. Lord knows what's going on with their Bitcoin wallets. |
| | | 6:23 PM • Aug 4, 2024 | | | |
| | 531 Likes 67 Retweets | | 31 Replies |
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Bitcoin remains one of the best alarm systems
In crises, markets sell what they can, not what they want (h/t @jackmallers). Bitcoin was down 10% on Sunday probably because it was the only market open to sell. Remember, while you or I may view BTC as risk-off, there are still millions of investors out there who view it differently or need to leverage bitcoin’s 24/7 open market during a liquidity crisis. |
Interestingly, BlackRock lived up to its claim that they (and their clients) still view bitcoin as risk-off, as we highlighted last week. Despite the sea of red on Monday, IBIT investors didn’t flinch. |
| Preston Pysh @PrestonPysh | |
| | Replying to@JSeyff | Isn’t it gorgeous. A real free and open market without some blanket holding, mouth breathing Wall Street suit calling their friend to pull a circuit breaker. A market where only the fit survive and can endure such volatility….because they don’t have a counterparty, they have… x.com/i/web/status/1… | | | 2:41 AM • Aug 5, 2024 | | | |
| | 946 Likes 93 Retweets | | 48 Replies |
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Were You Prepared? |
While markets have since recovered a bit, only one question remains: |
Is the worst part of the crash over or just getting started? |
Mainstream and social media outlets are funny. They were first to scream about the markets crashing, and the first ones to say it all was an overblown correction only 24 hours later. Meanwhile we had talking heads calling for emergency rate cuts mere hours after the open. |
If you zoom out far enough, you’ll realize that the S&P 500 is still within 10% of all-time highs, with unemployment still hovering at multi-decade lows. What about the top-heavy NASDAQ? It too is still in the green YTD. |
In other words, while we may certainly be in the early innings of a bear market (and potentially a recession), we still have a long ways to go. |
This week’s carnage was likely just a wee small sample size of what could potentially happen in today’s shaky global economy. |
| Arthur Hayes @CryptoHayes | |
| That was the first wave. Now we wait for bodies of TradFi over leveraged muppets to surface. Then wave 2 begins. If there is going to be a bailout the mrkt needs to deliver more pain by Fri. Enjoy the respite for the war shall continue. | | | 10:08 PM • Aug 5, 2024 | | | |
| | 3.47K Likes 364 Retweets | | 174 Replies |
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Take this week as a gift. If Monday’s selloff hurt and caused anxiety or panic, you are probably over-leveraged or investing with too much risk. You now have the chance to respond accordingly. |
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Coinbase Reports Q2 Earnings |
Coinbase (COIN) reported Q2 earnings last week. As we do every quarter, let’s review how the largest crypto-exchange did. |
$1.4 billion in total revenue $599 million in subscriptions and services revenue $781 million in transaction revenue Base grew 300% QoQ |
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Overall, the company managed to exceed even the CoinSnacks team’s expectations. For a quarter without much BTC price volatility, the company was still able to create a large amount of revenue. |
But, while the stock rose 2.5% in after-hours trading to $218, the recent market calamity (see story above) has sent the company’s shares plummeting more than 15% to below $180. |
What else we’re watching: |
Robinhood (HOOD) posted Q2 earnings today at market close. We haven’t had a chance to fully digest everything but we will have our eyes on: |
Crypto’s percentage of total revenue (9% in Q1) How the company’s expansion into EU is going |
| Robinhood is now outperforming Coinbase YTD |
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| Solana is closer to flipping Ethereum than Ethereum is to flipping Bitcoin. This isn't my opinion, this is the ratio of their respective market caps. Solana is 30% of Ethereum
Ethereum is 26% of Bitcoin | | | 3:45 PM • Aug 7, 2024 | | | |
| | 31 Likes 2 Retweets | | 3 Replies |
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Other Content You Might Enjoy |
Michael Saylor Announces He Owns $1 Billion In Bitcoin Personally (Bitcoin Mag) The Japan Trade and What it Means For BTC (Arthur Hayes) Airbnb host adds ‘no crypto mining’ rule after tenant installs 10 rigs (Protos) Morgan Stanley tells wealth advisors they can pitch bitcoin ETFs in a first for a big bank (CNBC) BlackRock, Nasdaq seek rule change to list options on spot ethereum ETFs (Reuters) Stripe Partners With Bitstamp to Make Crypto Buying Easier for European Users (CoinDesk) Ripple fined only $125 million in SEC case (TheBlock) |
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About CoinSnacks |
Launched in December 2017, CoinSnacks is home to the longest continuously running crypto newsletter. Each week, we publish our cryptoasset musings to an audience of 35k+ crypto enthusiasts and investors. |
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*Estimated net worth boost based on specific tax advantage maximization strategies. See helloplaybook.com/net-worth for methodology and assumptions. |
