CryptoAM: Tether Relief, a Thumb Prick, and Goldman Sachs

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Good morning! This is the third CryptoAM in the row that BTC has been trading at 67xx. This is despite the wicked movements between 6.8 and 6.5k over the past few days.


3 things you need to know:

One: Tether vetted its finances. There have been many allegations against Tether that they don’t have the US dollar reserves for each Tether in circulation. No one would argue that Tether has been forthcoming with its finances, but that hasn’t stopped hundreds of millions of dollars worth of tether from being traded every single day. Tether hired Freech Sporkin & Sullivan LLP to verify that each of its Tethers were backed by a dollar.

  • “In conjunction with receiving the above balance information, FSS requested the Chief Financial Officer and the General Counsel of Tether to certify, by sworn statement, the amount of fully-backed USD Tethers that were in circulation as of the close of business on June 1st, 2018. The amount certified to FSS was $2,538,090,823.52 USD Tethers.

  • According to Tether’s transparency page (https://wallet.tether.to/transparency), the amount of fully-backed USD Tethers in circulation as of June 1st, 2018 was equal to $2,538,090,823.52 USD Tethers. FSS did not provide the Tether personnel with any advance notice, nor did FSS provide Tether the account balance information gathered from the two banks prior to receiving the Tether balance information.”

  • What this means: Tether very likely has one-to-one Tether to USD backing at this moment in time. Note that this report was not a formal audit, and concludes nothing about whether Tether has always been backed on a one-to-one basis. Will you be fine if you use Tether? Probably. But it’s still worth exploring alternatives like TrueUSD which have been transparent from day one.

  • Read more…

Two: Another day, another hack. Bitthumb was hacked for ~$30M(?) yesterday. Directly after, the markets were sent into a mini-dump. This is the second Korean hack in a matter of weeks, and it is not a good look for the markets. With every hack, more people are scared away from interacting with cryptocurrency making it harder for the markets to grow.

  • One thing: Keep an eye out for any updates. Bitthumb originally tweeted they would be covering losses for their customers. About an hour later, they deleted that tweet. We’re still waiting on additional information, which is likely to be a report that more than $30M was stolen.

  • Word of advice: If an exchange announces a hack of <50M, buy the dip. Markets generally overreact strongly to situations like this.

  • Read more…

Three: Bitcoin is not for me, says Lloyd Blankfein, the CEO of Goldman Sachs. Meanwhile, the president of Goldman Sachs (David Solomon) was telling clients in China that Goldman is open to crypto trades beyond just Bitcoin futures. There always seems to be a slight disconnect between top brass at a firm and the actual actions. Back when Jamie Dimon was venting about Bitcoin, J.P was slyly offering clients access to BTC futures. So who’s really in charge here?

  • Let’s be fair: If you listen to the video where Lloyd speaks about Bitcoin, he is very balanced. Instead of bashing Bitcoin, he took the reasonable stance of saying he understands why people think it’s important, but doesn’t agree with the thesis. In the video Lloyd gives a brief history of money which is spot on, and says that if Bitcoin does become a global currency, he understands why it might have happened.

  • Watch it here…


Also in the news:


What I’m reading today:

Token Curated Registries

“Token-curated registries are decentrally-curated lists with intrinsic economic incentives for token holders to curate the list’s contents judiciously.”

The best way to explain a token curated registry is to use an example. Take a list of the top 20 universities in the US. In this example, colleges are the candidates for the list, prospective students are the consumers, and token holders are the curators of the list. The more accurate the list is, the greater value it holds, if the list is inaccurate, it will be worth little. Token holders of the curated list have an incentive to vote as honestly as possible for the universities in the list and to maintain the accuracy over time by continually voting because it will increase the value of their holdings. Universities theoretically could accrue a large number of tokens and vote themselves into the list, however, challenging existing entries to the list requires staking your tokens, and if the university clearly does not deserve a spot on the list, the challenger will lose that stake. Moreover, if the university’s only way of getting on the list is acquiring even more tokens, to guarantee they don’t lost the challenge, the admission to the list will likely look suspicious to consumers, therefore devaluing the reputation of the list, and the value of the tokens they spent so much money to aquire.

Token curated registries are a simple, yet wicked-smaht implementation of blockchain technology. People rely on lists and rankings to help make judgements when there simply isn’t enough time to individually review every item that needs to be compared. However, the quality of lists can often be compromised when one party has an economic incentive to misrepresent the data. Curated registries provide greater economic incentives for the curators to remain honest, in turn making lists more reliable.


Around the corner:

Tell us what we should add!


Market Outlook:

Long shorts have been getting more greedy and momentum has definitely picked up. Unless we break 6.8k soon though, all this means is the 6.7k level is getting more “expensive”. A short squeeze is unlikely because of the long/short level, as it seems most shorts have taken profit here. Breadth indicates a growing volume flowing to alts, which combined with a low speculation could indicate accumulation. I’m overweight in alts.

Here’s a reminder of what these criteria mean

Good news: We are seeing higher daily closes, and a sustained uptrend off the June 17th candle. It seems our swing low to 6.2k was a bottoming out and strong support at that level indicates we likely will not revisit the 6k level anytime soon.

Bad news: Actually…things are looking pretty good short term. The one thing to watch for is a 4th rejection of the 6.8k level. That could send us spiraling down but I put the probability of that happening relatively low. I’m watching to see how we end up breaking those levels.


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