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We hope you all had a happy 4th of July. Unfortunately, our portfolio didn’t shoot off like a firework.
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The Past Week
The past week has been interesting in the crypto sphere. Binance was ordered to cease operations in the UK, a Mexican billionaire urges people to buy BTC even though the Finance minister confirms it’s banned, and something about eyeball scans? At least crypto is never boring.
Billionaires continue to see the potential to make A LOT of money off of crypto and continue to push it to the general population. Whether or not the products they push are legitimate, for the betterment of the people (hah), or even work is yet to be seen. Ricardo Pilego, Mexican billionaire, came out to say he has 10% of his net worth in crypto and is working to be the first bank in Mexico to accept BTC (how much will you make in fees?). Obviously this boosted the share price of BTC when the news broke, but was short lived as the Finance Minister responded that crypto is currently banned from the financial system.
Other wealthy individuals are trying to make waves as well. Sam Altman, from Y Combinator, is pushing Worldcoin as a way to give everyone on earth an equitable share. What do you need to do to get some? Well all it requires is for you to scan your eye - to prevent fraud or something. Allegedly everyone has a unique iris and thus will prevent people from tricking the system (we have no idea, we are not biologists). Nonetheless it still seems sketchy to trade crypto for retinal scans.
What will they do with the scan? How safe is the system from hackers? Will there be biases? There are countless other questions that need to be answered before people should do this.
Since we run a finance meme page, we have to mention that everyone’s favorite investor is trying to start a crypto ETF. Cathie Wood is submitting a BTC ETF application with 21Shares. I am honestly surprised she didn’t do this sooner given the ARK funds held GBTC for so long. Let’s see if she will be able to get this over the finish line, although history tells us this isn’t likely.
As investors and companies continue to push forward in the crypto space, there are a lot of headwinds. The UK’s FCA told investors Binance’s UK operations are not permitted to conduct operations related to regulated financial activities. The FCA also stated that it must make known on all platforms that is no longer permitted to operate in the UK without written consent (tough break). Japan’s financial regulator also warned Binance that it is not operating in the country with permission. Regulators are not the only ones mad at exchanges, it seems registered complaints are on the rise. Primarily at Coinbase, but Binance.US has a whole story written about customer issues earlier this year.
This raises an interesting question. Understandably this is a very young asset class, so are governments adverse to it because it is a new technology they don’t understand? The value these tokens are based on is not the same as traditional assets obviously. Perhaps it is because they do not have the insight/control into tokens like they do for stocks/bonds? So…should they have that power? Should the government be able to unmask the holders of crypto wallets? Rep. Bill Foster believes so. As “crypto crime” rises, we think something like this will happen. The U.S. Financial Crimes Enforcement Network is turning its attention to crypto as we speak, so we will see.
To be clear, we are not BTC purists. We are not adverse to this type of regulation. If someone broke in to your wallet and stole all your crypto I think you would want to be able to go to court and get it back, no? If you are not doing anything illegal, why does it really matter if the government can only see your address from a court order? Until something is in place, we don’t see any ETF’s or regulated products coming to market.
What else:
Coinbase Debuts Savings Product With 4% APY on USDC Deposits (coindesk)
Craig Wright Sues To Have Bitcoin.org Remove Whitepaper (coindesk)
Beijing subway now accepts digital yuan (cointelegraph)
Bank of Russia Picks Banks to Pilot Digital Ruble (coindesk)
Spain Considers Implementing a Digital Euro (coindesk)
Senator Cynthia Lummis backs crypto for US retirement plans (cointelegraph)
Support for making Bitcoin legal tender grows in Latin America (fortune)
Huobi Reveals Countries Where It Has Halted Derivatives Trading (coindesk)
Even Gold-Obsessed Indians Are Pouring Billions Into Crypto (yahoo)
Crypto billionaire Jed McCaleb nearly out of XRP to dump on the market (protos)
Iran’s Ministry of Industry Issues 30 Licenses to Crypto Mining Farms (coindesk)
German Law Allowing $415B Investment Into Crypto Takes Effect (coindesk)
Point72 Seeks Crypto Head While Soros Starts Bitcoin Trading (bloomberg)
Crypto ownership has nothing to do with distrust in fiat (cointelegraph)
Bitcoin’s active addresses fall below Ethereum’s (cointelegraph)
What do our followers think?
As crypto continue to rise, we can see the effect it is having on our followers. 48% of the responders are bullish this week compared to last week where only 42% were. Also, the sentiment is shifting back to BUY or HOLD on most of our positions. Although, compared to our question on crypto overall, our positions seem to be more popular. Of the 1,265 individuals that responded, 22% are BUYING, 57% are HOLDING, and 21% are SELLING. It does seem that people have sold, according to our data ownership is at 58% this week vs 64% last week.
Do investors care that Binance was banned from doing regulated business in the UK or that crypto is leaving the most populous country? It is hard to tell from our limited data set, yet, we can see that markets are up even when this news dropped - so possibly not.
Data:
BTC: 1,575 total votes; 561 buy, 487 hold, 527 sell
ETH: 1,469 total votes; 694 buy, 321 hold, 454 sell
ADA: 1,234 total votes; 401 buy, 326 hold, 507 sell
LINK: 1,044 total votes; 239 buy, 302 hold, 503 sell
DASH: 979 total votes; 180 buy, 297 hold, 502 sell
FMA People’s Crypto Portfolio:
This will be a slimmed down update, our analyst is on vacation. Ethereum (+1.7%) and Cardano (+24%), our two first positions are still up, while Bitcoin (-30%), Chainlink (-62%), and Dash (-64%) are hurting bad. Overall the portfolio is down 11% since inception.
The crackdown in China significantly impacted the market and we see this continuing to force prices down as miners continue to sell. Our eyes will be on the BTC hashrate to see if the miners are setting up their operations again.
Looking ahead:
We believe this is just a temporary correction given a one time anomaly. Institutions have to act cautiously and thus are trimming exposure to crypto. If we look at who is buying and selling, the whales (more than likely institutions) are selling while retail is buying. It will take time for the market to improve - no new stimmy checks and people are out blowing their paychecks on vodka redbulls. As restrictions are lifted, people are more than likely to go out and enjoy themselves instead of gambling in the markets. So instead of positions rocketing to the moon, it will be a slow ascent. We hope to tell you the portfolio is positive next week. Until then, have a good one.
If you would like to see a live view of the portfolio, you can do that on CryptoCompare.
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We look forward to doing this all again next week, take care!