Plus, an ETF …
February 12th marked the start of the Chinese calendar and began the year of the Ox, possibly a serendipitous sign for the continuation of the 2021 crypto bull run… if you needed any other signs to convince you.
This week was busy enough that Bill Gates changing his view on Bitcoin to “neutral,” the Motley Fool purchasing $5 million of bitcoin as a reserve asset, and Uniswap processing $100 billion in transactions got buried amidst other news.
Institutional adoption continued flooding into Bitcoin as Blackrock, Morgan Stanley, DoubleLine Capital, and Deutsche Bank all contributed a crypto related news release this week. Microstrategy continued its Bitcoin macro strategy by announcing another round of convertible bond sales to further its investment in Bitcoin. Canada approved a Bitcoin ETF, breaking ground as the first North American country to do so.
In other news, Coinbase is valued at $77 billion, Bitcoin mining is drawing institutional investment (and environmental ire), and Robinhood announced it intends to allow customers to deposit and withdraw crypto from personal addresses. Then, amidst other major players in the GameStop saga, Robinhood CEO Vlad Tenev testified in front of the U.S. House of Financial Services Committee in regards to the GameStop mania, receiving the most questions out of any other person testifying.
Ethereum and DeFi had a positive week. The NFT fad, once a niche corner of the Ethereum network, has exploded once again on the back of digital art with Dapper Labs raising $250 million in its latest funding round and Christie’s, a prominent art house, hosting the first digital art auction — and accepting ETH for it. Bitwise announced a new DeFi Index, transforming decentralized finance into the structure of a security.
Listen to the Latest Episode of Unchained
On Unchained this week, Stani Kulechov, founder and CEO of Aave, came onto the show to discuss the lending protocol and second biggest DeFi project by total value locked.
Listen to the Latest Episode of Unconfirmed
On Unconfirmed, Lea Thompson, aka Girl Gone Crypto, talked about what goes into producing her popular “The Crypto Minute” vlog, what initially got her into crypto, and her recent decision to quit her day job and go full- time crypto.
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This Week’s Crypto News…
The flagship crypto had another landmark week after passing the halfway mark to $100k on early Monday morning and pushing up to a new ATH at $52k by mid Wednesday. On-chain analyst Willy Woo, in an interview on The Investor’s Podcast Network, estimates the top of the current bull run reaching $102,000, roughly doubling Bitcoin’s current price. He went on to explain that his models estimate a bear floor of $30,500, a prediction that, if true, means we will never see sub-$30k Bitcoin again. In a Thursday morning tweet storm, Willy Woo updated his bear prediction saying that Bitcoin is showing “strong support at $48k.”
Crypto analyst PlanB, in the same interview, says we are still in the infancy of a bull run and that “we have at least half a year to go.” PlanB, using data from previous bull runs in 2013 and 2017, estimates Bitcoin’s price topping out anywhere between $100k and $300k.
Running parallel to the rise in the bitcoin price is an increase in institutional adoption of Bitcoin. In the last week, Blackrock CIO Rick Rieder said the asset management giant “is starting to dabble” in crypto, Bloomberg reported that Morgan Stanley’s $150 billion Counterpoint Global Investment unit is considering placing a bet on bitcoin, “Bond King,” Jeffrey Gundlach, who had previously been negative about Bitcoin tweeted that it may be “The Stimulus Asset,” and Deutsche Bank, the world 21st-largest bank, is aiming to develop a custody platform for digital assets. In addition to these new institutions joining crypto, Microstrategy announced plans to raise another $600 million to purchase bitcoin through the sale of senior convertible notes. The company already owns 71,079 bitcoin, worth about $3.7 billion at publishing time.
While not institutional news, rapper Jay Z and Twitter co-founder Jack Dorsey, who are institutions unto themselves in their respective fields of music and social media, are donating 500 BTC towards Bitcoin development in Africa and India.
The Block reported that Tesla used Coinbase in its $1.5 billion purchase of bitcoin. While neither Tesla nor Coinbase was available for comment, sources familiar with the deal said the purchase was executed over several days in early February using a similar workflow to Microstrategy’s purchase, in which the order was routed to multiple OTC trading desks.
Coinbase is currently valued at $77 billion based on trading of the company’s privately held shares via the Nasdaq Private Market, where individual shares are being traded for $303. Coinbase plans to go public later this year with a direct listing, a technique popularized by Spotify and Palantir, in which Coinbase will post its shares straight onto the exchange.
Robinhood, Citadel, Melvin Capital, Reddit, and trader Keith Gill, aka Roaring Kitty, testified in front of the U.S. House of Financial Services Committee on Thursday afternoon about the GameStop mania, with Robinhood CEO Vlad Tenev taking the brunt of questions about the trading app’s decision to suspend buys of certain stocks last week, including GameStop. Robinhood CEO Vlad Tenev did not directly answer Representative Maxine Waters’ yes-or-no question about whether or not Robinhood faced a liquidity problem that forced it to shut off purchases of GameStop and other stocks on its platform during the height of the GameStop mania.
In a series of tweets on Wednesday, Robinhood said it intended to allow customers to deposit and withdraw cryptocurrencies. Customers currently only have the option to purchase or sell crypto on the platform. Robinhood further clarified that it does not invest in cryptocurrency and intends for their actions to be “systemic, objective, and derived from first principles” going forward. Robinhood did not give a timetable for when deposits and withdrawals will be enabled.
NFT startup Dapper Labs is closing on a $250 million round of new funding after the rapid growth of its NBA Top Shot NFT product. The deal would value the firm at $2 billion. NBA Top Shot recently saw two digital cards sell for $100k a piece, a Lebron James “From the Top” and a Zion Williamson “Holo MMXX.” Dapper Labs, previously on Unchained, has so far seen $100 million in revenue from sales of its first successful NFT product, CryptoKitties, and NBA Top Shot.
Another project to keep an eye on is “The First 5000 Days,” a piece of digital artwork by Beeple (a previous guest on the show) and hosted by blockchain-based digital art platform MakersPlace. It will be “the very first purely digital artwork to be sold by a major auction house!” — the venerated Christie’s, which will also be accepting ether as payment for the artwork.
Jesse Walden, founder of Mediachain Labs (check out his Unchained interview here), published an essay titled, “NFTs make the internet ownable,” in which he uses his years in the music industry to explain how NFTs fix problems that creators have had on the internet. He writes “In media, NFTs—or Non-Fungible Tokens—make it possible for creators to retain ownership of their content, without limiting the propagation of their files across the internet. As a result, NFTs have the potential to invert the ownership model of media—offering creators, their audiences, and developers who build for them, a viable alternative to platform-driven monetization.”
He says NFTs cannot be copied, edited, pasted, or manipulated by anyone, and that NFTs unlock the ability to uniquely own digital media assets in the same way Bitcoin allows for unique ownership of digital financial assets. Read the full essay to see where Jesse thinks the space is going and where we are in the adoption cycle.
- On Wednesday, Crypto asset manager Bitwise announced the Bitwise DeFi Crypto Index, the first DeFi index fund, which provides a vehicle for accredited investors to bet on DeFi through the structure of a security. The DeFi market, while young and prone to hacks, has grown from $1 billion in early 2020 to $56 billion in total value locked into protocols this month. Bitwise CIO Matthew Hougan says “there’s a huge amount of venture capital pouring into the space.” The Block reports that Uniswap, Aave, Synthetix, Maker, Compound, UMA, Yearn.Finance, 0x, and Loopring will make up the diversified fund.
- Flash loans were once again used to attack a DeFi application on February 13th when an attacker exploited Alpha Homora’s V2 code and stole roughly $38 million. The resulting debt will be worked out between the Alpha team and Cream V2 as the nature of the attack affected protocol-protocol lending, not protocol-consumer lending.
The first North American Bitcoin Exchange Traded Fund (ETF) began trading in Canada Thursday. The Purpose Bitcoin ETF trades under one ticker, BTCC.B, for the Canadian dollar-denominated version, and another ticker, BTCC.U, for the U.S. dollar-denominated version. While multiple close-ended crypto funds exist in North America, such as Canada’s 3iq and the Digital Currency Group’s Grayscale Trust, an ETF allows for the crypto-backed investment vehicles to be traded on a continual basis instead of only at initial offerings and reopenings. At least one analyst sees this as a good sign a U.S. bitcoin ETF will be approved soon.
And on that note, on Tuesday, NYDIG, the crypto unit of Stone Ridge Holdings Group, filed for a bitcoin ETF with the US Securities and Exchange Commission, in the hopes that 2021 will be the year the SEC finally relents.
Coindesk reported Tuesday that Bitcoin miners made $354.4 million last week, a new record for weekly revenue. The Block estimated that “institutional investors in North America have allocated more than half a billion dollars” to mining equipment over the past few months, with at least ten institutions announcing pre-bulk orders since October 2020. In addition to investing in mining hardware, Luxor Technologies announced a $725,000 pre-seed round backed by Argo Blockchain, Celsius Network, and others.
However, the longstanding controversy about the environmental impact of Bitcoin heated up this week. According to an analysis by Cambridge University, if Bitcoin were a country, it would rank in the top 30 of all countries in terms of its energy consumption. Tim Swanson, founder and director of research at Post Oak Labs, published a salty essay that estimated future Bitcoin energy consumption could be roughly equivalent to the U.S. “without seeing anywhere near the economic output,” if the price were to reach $1 million per bitcoin. He views Bitcoin as an inferior alternative to the current financial infrastructure, writing “Bitcoin currently uses about three orders of magnitude more computing machinery than Fedwire yet processes and secures significantly less. It is monumentally less efficient per watt on purpose.”
In response to what she called mining FUD (fear, uncertainty, doubt), Meltem Demirors, chief strategy officer at Coinshares, created a website titled bitcoinwillnotboiltheocean.com that will publish “well supported, credible, academic, and independent research” on the side of bitcoin mining. Andy Estrom, author of “Why Buy Bitcoin” and Peter McCormack, the host of “What Bitcoin Did,” also co-published an essay saying Bitcoin mining could be used to build renewable energy centers in rural and remote areas, bringing them online.
If you haven’t seen the video of the 3-year-old Lily explaining Bitcoin, you absolutely have to stop everything and watch it now. Since it’s “Lily’s show,” I won’t say more.