Market Update...105
Apologies for the gap in newsletters, I’ve been away the past week. I’ve been watching what is going on, and monitoring what the market is doing. This newsletter will cover what the market is likely to do over the next few weeks, and which key areas to look out for.
Market Cap
We saw the market cap peak around $380 billion, this was after a substantial climb from $140 Billion just a few months prior. It is quite common to see a pullback around 50% of the rally, which is about where we are now at $260 Billion. This move, in a bull market, indicates a healthy pullback, leaning towards the upward momentum progressing.
Bitcoin Price
Bitcoin’s price is directly correlated to market cap. The reason why we haven’t seen a 50% drop in the price of Bitcoin is because investors have chosen to jump into Bitcoin as a safe haven instead of alts, pushing Bitcoin’s dominance up to the mid 60 levels.
Bitcoin has been ranging between 9-11K for a while now, and I suspect it will continue to do so until we see a breakout.
Today: Senate Hearing Examining Crypto & Blockchain Regulations
Notes from watching live…
Some of the main concerns are criminal activity on any blockchain, theft, fraud etc. The typical arguments of dark web activities have been brought up. However, many members argue that the technology is extremely valuable. Including helping technological efficiencies, innovations and will greatly benefit the financial system and other systems globally.
The CEO of Circle explains the value proposition of blockchain and why many crypto companies are located off-shore (regulatory uncertainty). He suggests that once guidance is in place, many digital assets would chose to be compliant and welcome US citizens with open arms.
SEC asks whether they should be securities or not? CEO of Circle responds that there should be new definitions of what cryptocurrencies are, not slotted into an existing category.
Talks move to Libra and banking the unbanked (third world etc). A Professor of law is highlighting the risks of funding the unbanked due to the huge risks involved, and compares such funding to sub prime lending.
The Lawyer states that the unbanked would prefer credit cards to crypto, and the technology is there, just not the legislation in those companies.
Interesting discussion about the gold standard and potentially having another hearing to litigate monetary policy on whether fiat currency should be reformed - but she is against crypto being the reform as it is too new.
Back to Libra.
Mentioning Libra being backed 1-1, mentioning that it is similar to the gold standard. How can they ensure the backing of the asset. The liquidity of the backing is brought into question too.
Stable-coins have now been brought up.
USDC is brought up, concerns about how they monitor the backing of the 1-1.
Questioning why they would back 1-1, where would they make money…
Circle CEO recommends a new regulatory body to monitor and control Cryptos.
Government is the only entity that can mint a coin, questions the legality of many cryptocurrencies.
(seems like they would rather keep it all ‘in house’ within the government)
Debating now the access to the technology, Crypto side is that tech is in early stages and mass adoption will come, Anti-Crypto states that they’re sceptical on the feasibility on banking the unbanked.
NOTE: Every Senate Member has stated that there is a future with blockchain, and they know it won’t go away. If the US doesn’t lead, China will is a common scare.
Lawyer doubts if Blockhain is better than current technology. US Senator asks to expand…
The question raised is, how do we get the unbanked off cash? Questioning banking fees for those countries.
You can watch the hearing here:
Many seem confused as to what Crypto is, but some are aware of the risks of the technology and how other countries are much further ahead of the US in regulation and structure of Cryptos. The US admits to the flaws in their banking activities, but keeps highlighting the criminal side of crypto. The good news is regulation is coming, the bad news is that the US will likely protect the dollar as the global reserve, so alternative currencies (like BTC) will be attacked. This may have the adverse reaction to what they’d hope, and push the price up further!
I’ll be speaking about the FED tomorrow, and plans for the future of DDCT!
All the best,
Devin