Weekend Rundown - October 31, 2021
Highest monthly close ever?
On September 4, I drew a squiggle on bitcoin’s price chart. That squiggle plotted the path bitcoin’s price would take if it followed the same path as previous bull market consolidations.
Bitcoin’s price roughly followed that squiggle, as you can see:
Now that we’ve reached November 2021, there is no more need for this squiggle. What good does it do anymore? We reached the destination. As such, I’m going to retire this squiggle.
Scroll down for some content you may enjoy and make sure you catch up on what you missed in October.
Catch up on what you missed in October:
Listen to this episode of the Bacon Wrapped Business Podcast, “NFT Strategies for Experts, Authors, Creators, and Artists.” You’ll learn about some specific and interesting business models you can build with NFT’s that are impossible with legacy technology.
People will use NFTs for all sorts of productive and commercial purposes. It’s amazing how durable, flexible, and applicable the technology is to all sorts of problems that have nothing to do with apes, JPEGs, or collectibles.
(If you know how to use them.)
Chainalysis released its “2021 Geography of Crypto” report.
Crypto is everywhere, in every country. While the US has a ton of money—roughly 26% of the world’s wealth—the crypto market’s still driven by normal people who have little or no exposure to stocks, bonds, or any legacy financial product or service. Truly a new financial system.
Peer-to-peer exchange is way more popular than I thought. Looks like emerging market economies and countries with unstable currencies prefer peer-to-peer, other countries use conventional exchanges.
US dominates DeFi and nothing else.
Europe plays an outsized role in the movement of crypto around the world. It’s the biggest market with the most touchpoints to other regions.
Side note—US continues to lag the rest of the world. It’s not just that the best projects fled to other countries or started overseas, but actual usage and engagement is way lower than I would’ve expected given the size and relevance of the US in the legacy financial system.
Our loss, your gain.
US Financial Regulators Aiming at How Banks Could Hold Bitcoin & Crypto Assets, Says FDIC Chairperson
Bottom line: FDIC, the US agency that keeps banks solvent, wants to let banks hold bitcoin for custodial services, collateral for loans, and assets on their balance sheets.
My take: if this actually happens (a big if), it will fundamentally change the nature of bitcoin as an asset and lay the foundation for massive long-term growth in bitcoin’s price and adoption in the US if not everywhere else. Imagine all the bitcoins people might stash in the “safe” hands of their banks. US boomers have a ton of money—likely $60+ trillion in total assets—thanks to long-time relationships with banks. Until those banks can make money off of bitcoin without running afoul of US regulators, they have no incentive to offer products or services related to bitcoin. FDIC, working with other bank regulators, can carve a safe path forward. Whether that’s good for bitcoin itself is a different question, but let’s save that conversation for another day.
Why we care: people go crazy about US ETFs that simply give Wall Street a way to make money off of people who want to make money off of bitcoin. Read Bitcoin or Bust: Wall Street’s Entry Into Cryptocurrency for my thoughts about ETFs. Once bitcoin carves out a role in the US banking system, the floor for its price will go up significantly as people put bitcoin into actual use, not just HODLing and selling. Unlike people who dabble with ETFs, people who deposit bitcoin in a bank or post it as collateral generally aren’t speculators. They intend to keep that bitcoin for a while or redeem it far into the future.
Coindesk posted a two-minute blurb that includes a fun awkward pause and a brief update on US plans for regulating stablecoins. Also a short update about the new US infrastructure bill that doesn’t have the crypto provisions that were included in the previous version.
Cheers to November. Relax and enjoy the ride!