TWR — Dollar plummets on U.S. stimulus hopes; bitcoin hits all-time peak
Okay, I might’ve ripped that from a Reuters headline from this Tuesday but it was way too good to pass up. What made it cooler?
This Reuters headline was added in and subsequently immortalized in block 659678 for future generations to look back on and think “Wow, Bitcoin was only $19k back then! I wish I got in that early…”
A quick look back at November.
It blows my mind how a month could feel so long yet so unbelievably short at the same time. I feel like I’ve aged.
People ask why we focus most of our attention on Bitcoin… well, here’s a list of some of the most important highlights from November that kept us on our toes:
- Stanley Drukenmiller announced Bitcoin position
- Bill Miller strongly recommends Bitcoin
- Citigroup Research publishes 2021 year-end BTC price target as high as $318k
- Blackrock Fixed Income CIO said Bitcoin could replace gold
- Guggenheim filed to buy up to 10% GBTC position in $5.3bn Macro Fund
- AllianceBernstein ($631bn AUM) recommends a 1.5%-10% portfolio allocation to Bitcoin
- Skybridge filed SEC amendment to invest in Bitcoin with $3.6bn fund
- Ray Dalio admits he might be missing something with Bitcoin
- Niall Ferguson writes Bloomberg Op “Bitcoin is Winning the Covid-19 Monetary Revolution”
- Square reports Q3 Bitcoin revenues and gross profit +11x & 15x YoY
- Wyoming elects Bitcoin bull Cynthia Lummis as US Senator
…the institutional herd is coming.
What we saw at the desk
November was by far the best month in our relatively short existence. The desk traded $21.7m and we saw roughly 90% of that volume on the buy-side. The large majority of those flows were into BTC followed not so closely by ETH.
Thank you so much to all of our clients who trusted us with their business.
We were able to catch our breath this week as December started off a bit slower than previous weeks. With the price of BTC hovering around $19k, investors could be waiting to see if Bitcoin can break out past the all important $20k mark which seems to be more of a psychological indicator at this point as Bitcoin surged 9% to a new all-time high of about $19,860 on Monday, topping the previous peak of $19,783 from December 2017.
Either way, we’re very excited for what’s in store this month as talks of big stimulus are underway and a bill likely to be passed in the coming weeks.
Stablecoins make the (crypto) World go round?
It’s no secret that Bitcoin and the broader digital asset market has benefited tremendously from the rise of stablecoins. For those who don’t know, stablecoins are tokens that attempt to peg their market value to some external reference like the U.S. dollar.
Stablecoins like USDC, GUSD, and USDT have made the crypto ecosystem a lot more fluid as traders are able to move stablecoins from exchange to exchange quickly and securely. They also let traders feel more comfortable leaving their dry powder on trading platforms and allowed them to take control of their funds without having to wait on the legacy banking system.
So, in typical crypto fashion, when things are working well — which means disrupting legacy systems — naturally, regulators attempt to shut it down.
A new bill dubbed The STABLE Act was introduced to the United States Congress on Wednesday and it could enforce blanket regulation on all stablecoins.
If anything this will have the complete opposite effect. Stifling innovation and making it harder for low-moderate income residents to access digital currencies.
If the bill is passed, any service provided in relation to these types of cryptocurrencies would become illegal without first receiving approval by multiple government bodies:
“It shall be unlawful for any person to issue a stablecoin or stablecoin-related product, to provide any stablecoin-related service, or otherwise engage in any stablecoin-related commercial activity, including activity involving stablecoins issued by other persons, without obtaining written approval in advance, and on an ongoing basis, from the appropriate Federal banking agency, the Corporation, and the Board of Governors of the Federal Reserve System.”
As Circle CEO and co-founder Jeremy Allaire put it:
“The STABLE Act would represent a huge step backwards for digital currency innovation in the United States, limiting the accelerating progress of both the blockchain and fintech industry.”
Before stablecoins, traders would have to buy volatile assets like Bitcoin or Ether from their local fiat on-ramp to then move them over to more advanced trading platforms like Binance so that they can trade against more exotic pairs or trade with extreme leverage. However, this created a challenge since the value of their Bitcoin and Ether could fluctuate wildly by the time it made its way onto the destined exchange presenting a ton of added risk (slippage). Also, before stablecoins, traders would have to sell their positions against the same major pairs like Bitcoin and Ether — further subjecting their gains to immediate volatility. Or, they would have to sell into “cash” and trust that the exchange was good for it. This was potentially even riskier… look no further than what happened with QuadrigaCX back in 2018… those damn Quad Bucks.
The list of valid use-cases goes on including stablecoins being used for settlement between institutional counterparties and cross-boarder remittences, and more.
It would be a crying shame if regulators were able to get in the way instead of being focused on embracing, investing in and supporting the incredible pace of open innovation that is happening with stablecoins and blockchain infrastructure. Thankfully, they’re track record of success when it comes to these things is abysmal (I knocked on wood anyway).
In case you missed it…
- S&P Dow Jones launching crypto indexes in 2021 https://cointelegraph.com/news/bitcoin-arrives-on-wall-street-s-p-dow-jones-launching-crypto-indexes-in-2021
- Head of world’s largest asset manager says bitcoin can possibly ‘evolve into a global market’ asset https://www.marketwatch.com/story/head-of-worlds-largest-asset-manager-says-bitcoin-can-possibly-evolve-into-a-global-market-asset-11606854857
- Bitcoin is Winning the Covid-19 Monetary Revolution https://financialpost.com/technology/bitcoin-is-winning-the-covid-19-monetary-revolution
- AllianceBernstein ($631bn AUM) recommends a 1.5%-10% portfolio allocation to Bitcoin https://ca.finance.yahoo.com/news/investment-giant-alliancebernstein-now-says-154358992.html
- This family bet everything on bitcoin when it was $900 — and bought more when it crashed in 2018 https://www.cnbc.com/2020/12/03/bitcoin-family-invested-their-retirement-and-savings-in-bitcoin-ethereum-litecoin.html
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Satstreet serves private Canadian clients including some of the largest Bitcoin mining operations, institutions, and high net worth individuals. Satstreet has raised initial funding from Round13 Capital and several prominent investors.