The central theses
- Biden eventually moved into the White House, but what does that mean for Bitcoin and the crypto industry?
- Both Bitcoin and Ethereum have made steep dives this week, going through important levels of support in the process.
- The future of index funds paints an optimistic picture of the unique way blockchain technology can improve the financial industry’s favorite funds.
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These weeks wNews The column delves into the importance of a Biden administration for Bitcoin.
So far, many of him appointed persons and cabinet members appear to be far more tech-savvy than their predecessors. Some even Boasting Experience in working directly with cryptocurrencies.
Still, renewed attention, especially in the middle of a breathtaking bull run, may not be as positive as some hope.
Markets took another steep fall This week when Bitcoin bottomed just below the important $ 30,000 support. N.not all altcoins However, the king crypto followed. Some even cherished during the bloodshed.
This weekend’s crypto-to-do list finally includes all decentralized index funds.
All of that and more below.
An economy in tatters
President Joe Biden was officially sworn in this week. But after a controversial Trump presidency and the crushing effects of the pandemic, the new leader of the free world cut out his work for him.
Of course, he will not be alone in rebuilding the economy.
Throughout the week, crypto enthusiasts kept a close eye on the various staff, secretaries and chairmen employed by Biden. Key roles include chairing the Securities and Exchange Commission (SEC), chairing the Commodity Futures Trading Commission (CFTC), and secretary of the Treasury.
For each of the three positions there is a candidate who has not yet been officially elected. Even so, much can be learned from each candidate’s relationship with cryptocurrencies.
– Ben Golub (@ben_golub) January 20, 2021
The current candidate for finance minister is Janet Yellen. Only recently, the Senate Finance Committee unanimously voted for her to fill the role. The next step is a full vote, which should also be positive for you.
Her stance on crypto hasn’t been the most optimistic, but her recent comments suggest that she is taking a balanced approach to the industry.
She first made headlines for a Soundbite that implies She was totally against crypto because of its nefarious use cases. But later in the week she added a much more nuanced answer. she said::
“I think it’s important that we consider the benefits of cryptocurrencies and other digital assets, as well as the potential they have for improving the efficiency of the financial system. At the same time, we know they can be used to finance terrorism, facilitate money laundering, and assist with malicious activities that threaten the US national security interests and the integrity of the US and international financial systems. “
Although Yellen is balanced in her recent remarks directly related to cryptocurrencies, she has suggested an extremely controversial tax on unrealized gains. This is just a consideration for now, but if markets skyrocket it could be disastrous.
As Treasury Secretary, Yellen would also play an outsize role in United States fiscal policy.
Biden has already suggested another massive stimulus round to put the economy back in order. He recently admitted that it exists very little the government can do to follow the current trajectory of the virus.
With extreme money pressures on the horizon, many institutions are turning to tougher and riskier assets. Thomas Kuhn, an analyst at Quantum Economics, told Crypto Briefing:
“You clearly can not allow deflation and allow debt to rise versus GDP. You are happy to devalue the currency to a point, but it already has a direct impact on the historically high asset prices. You want managed inflation, but it looks like it’s pretty common in soft commodities and energy. ”
He added that central banks around the world, not just the Fed, are running out of options to deal with the current financial environment.
Indeed, fighting inflation has become one of the biggest consensus deals of 2021.
In one survey From major money managers, Bank of America announced that short dollar trading is one of the “busiest deals” on the market.
The nominated SEC and CFTC chairs are also important to consider. In contrast to Yellen, however, both Gary Gensler and Chris Brummer Bring extensive knowledge of cryptocurrency and blockchain.
Gensler taught a 12 week course at MIT Sloan, MIT’s business school, on cryptocurrencies and was a vocal advocate of the technology. Brummer also presented crypto to the congress on several occasions and was actively involved in several influential fintech working groups.
At first glance, this all-star team of crypto-conscious financial regulators seems like a dream for the industry. But it’s not just roses.
With so many Institutions entering cryptoDue to the ongoing Ripple lawsuit and high profile SPACs and IPOs, the industry is likely to go through a long professionalization phase.
That’s not to say that anonymous Twitter accounts aren’t in abundance, but you should definitely expect a few new guard rails.
Market Action: Bitcoin (BTC)
The biggest bitcoin news this week was its catastrophic drop below $ 30,000 on Friday. But as with previous declines, on-chain analysis found that larger investors were busy buying the dip. Even micro-strategy took the opportunity to collect even more BTC.
To learn more about the next steps, Crypto Briefing spoke to SIMETRIs leading bitcoin analyst, Nathan Batchelor. He said:
“Bitcoin fell below its 200 period moving average in the H4 period for the first time since October, resulting in a major technical sell-off. This should be the battlefield for bulls and bears in the days to come. BTC also broke below a widening wedge pattern of around $ 32,220. So I’m watching the daily price close in this area for more clues as to the near-term direction of BTC. ”
Failure to follow this pattern indicates a steeper correction, but the success “suggests that $ 50,000 is still possible,” Batchelor said.
There are a few other basics to keep in mind. On January 29, $ 3.5 billion worth of BTC options will be offered expired, the greatest expiration of all time. In the past, large option runs have signaled extreme volatility.
OKCoin also has integrated Bitcoin’s Lightning Network for its users. This makes trading on the platform much cheaper and faster, according to the company.
And with the exchange undergoing a major overhaul of its user interface and a new earn function, it could also become a top trading venue for those curious about crypto.
Mainstream media have already brought Bitcoin back into focus – this week Jim Cramer of CNBC’s Mad Money recommended a 5% allocation in BTC. The program is being watched by millions, most of whom are retail investors who are likely all looking to buy some crypto.
Market action: Ethereum (ETH)
With just a few exceptions, this also applies to the rest of the market if Bitcoin collapses. Ethereum was no different, falling below $ 1,100.
Since then, however, the number two cryptocurrency has dropped to over $ 1,300.
In addition to Ethereum, many popular DeFi platforms and their respective tokens saw positive price increases.
Synthetic (SNX), Uniswap (UNI) and Aave (AAVE) are officially the top 20 cryptocurrencies CoinGecko. Kuhn suggested that platforms like this one will be the main engine for further ETH profits. He said:
“I think that decentralized platforms like Ethereum will be offered for most of the year. After DeFi has proven itself as a concept, the next jump is coming back to these platforms.”
There is several other basic Drivers to watch out for, including hashrate and ETH 2.0 usage, but DeFi is arguably the most interesting sub-niche of recent times.
That and of course the booming NFT space. This week, Rick and Morty’s creators sold Over $ 1 million worth of works of art minted on Ethereum.
11 characters $ ETH will exceed its all-time high 👇🏼
– Spencer Noon (@spencernoon) January 19, 2021
Crypto To-Do List: Decentralized Index Funds
For those just entering the crypto room, it can be difficult to separate the winners from the losers. The same problem affects traditional finance. This is one of the top reasons to invest in a Set-It-and-Forget-It index fund.
Index funds are “bundles” of top stocks, bonds, commodities and cryptocurrencies.
When investors buy this type of fund, they are essentially buying a small fraction of the best performing assets within the fund sector. In traditional finance, the Vanguard 500 Index Fund (VFINX) tracks the performance of the 505 largest American companies.
Different types of Crypto indices are offered in Crypto.
Grayscale, the leading centralized asset management company for crypto, offers the Grayscale Digital Large Cap Fund with four top cryptocurrencies.
Crypto Briefing too offers A helpful educational tool for setting up an index fund for ten of the leading cryptocurrencies on Coinbase Pro. However, the CB10 is much more practical. Users have to buy each asset and manually rebalance the portfolio.
Limiting yourself to the DeFi space in particular, there are a ton of new index funds that users can buy. The list of providers currently includes:
As with traditional indices, these six indices allow investors to buy an asset and get exposure to various DeFi-centric cryptocurrencies. The main differences between these indices reside in asset allocation, token selection, centralized and decentralized, and the way funds are rebalanced.
FTX, for example, is the main decider for the allocation of its index, while a much larger community of token holders decides on the allocation for the decentralized versions. Everyone has their advantages and disadvantages.
Friends asked me which tokens to buy to invest in #DeFi. I researched a few index providers and found @indexcoop, @powerpoolcvp @PieDAO_DeFi, but surprisingly my winner was @ndxfi, a newly introduced protocol that offers passive portfolio management strategies.
– Freddy (@freddycoen) January 18, 2021
However, with crypto there are some other unique experiments taking place in the DeFi world.
When an index has a governance token, the community of token holders first decides on the future of the index. “It differs from a centralized index like FTX is that a decentralized index is managed by NDX holders,” he said Lito CoenIndexed Finance ahead of growth. Add:
“Imagine if you could run the policy of the Vanguard Index. This is made possible by DeFi. “
Second, any of the underlying assets in the decentralized grades can be active instead of sitting passively in the index. With DPI, Index Coop’s fund, users can use the token to raise a farm for additional profits.
Indexed Finance goes one step further in this regard.
Rather than idle appreciating, the underlying assets are also held in a balancer pool to generate fees similar to traditional liquidity providers (LPs). Coen said fees in excess of $ 100,000 have been generated since the project began. These fees go directly to the holders of Indexed’s DEFI5 and CC10 index holders.
Readers will get more information about Balancer and how this project works Crypto Briefing project spotlight Feature on this topic.
Indexed also uses the same pools to accommodate changes in market conditions and rebalancing weights. Coen said:
“The price and market capitalization data come from a Uniswap pricing oracle. This causes the AMM pool to set new target weights in the pool, which causes the price to change gradually over time. This creates small arbitrage opportunities that external traders benefit from. They buy the tokens that we want to reduce our exposure from and sell those that we want to increase our exposure to. No governance at all is required for this process. “
Essentially, the pool is adjusting its weighting and allowing Arbitragers to rebalance. This is a win for both index holders and traders.
That’s all for this week’s edition of wNews, readers. Look forward to the shipping next week.
Disclosure: At the time of going to press, the author held BTC, ETH, POLS, DPI and WBTC.
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