CryptoAM: The Crypto Threat, Institutional Investors, and Future of Money

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3 things you need to know:

One: Grayscale reports 56% of new capital is from institutional investors. This is hilarious, as two days ago the founder of Citadel (a massive hedge fund) said that there was very little interest from institutional investors. It seems as though Grayscale released this as rebuttal to that statement.

  • “The average investment was $848K for institutional investors, $553K for family offices, $335K for retirement accounts, and $289K for individuals […] Moreover, if we break down our investor base by geography, roughly 64% of all new investments came from U.S. investors, 26% from offshore investors (e.g., Cayman-domiciled entities), and 10% from investors in other regions of the world.”

  • Read more…

Two: Fed Chairman Jerome Powell believes cryptocurrencies aren’t large enough to pose a threat (yet). He also said that the Fed is not exploring issuing a state backed cryptocurrency.

  • My thoughts: This might sound like good news, but Powell also has formed this opinion based on a flawed view of crypto. He believes that there is no intrinsic value for cryptocurrencies when in reality, the security offered by a secure and stable blockchain is no different than the security offered by a secure and stable government. In my opinion, cryptocurrencies are already a threat, but by time most of the world realizes it it will be too late to stop.

  • Moving forward: It’s the crypto-incrementalist viewpoint. Allow yourself to be scrutinized by the government, because by the time scale is reached, the decentralized nature of the network will make it impossible to regulate.

  • Read more…

Three: Binance’s BNB trading discount to reduce by 50% tomorrow. In the year since Binance launched, using BNB token to cover your trading fees would reduce them by 50%. Starting on July 20th BNB token will reduce fees by 25%. This percentage will halve every year until the fifth year after launch after which BNB token will not reduce trading fees.

  • My thoughts: This makes sense from a business perspective. Offering a trading discount for using BNB was a great way to grow initial usage for Binance. This will likely reduce demand for BNB token over time. After all, if it can’t be used to pay for fees, it’s basically just a security.

  • Big picture: This theoretically should devalue BNB by quite a lot, and the almost negligible reaction of the market means that the market sees BNB as having more value than a fee-reduction token. It shows immense trust in Binance as a system.

  • Read more…

Also in the news:

What I’m reading today:

I would highly recommend watching the US House of Representatives’ Committee on Financial Services’ hearing yesterday on digital currencies. There were a lot of choice quotes along with interesting economic discussion.

For those with less time, the key takeaways:

Congress still doesn’t know much about cryptocurrencies and it will be some time before meaningful legislation is passed.

They also debated the potential of the Federal Reserve to issue a digital currency directly to consumers. The conclusion seems to be this was not a good approach, as it would essentially be the government allowing citizens to open deposit accounts which would be competing with the private sector.

Lastly, Brad Sherman (D-CA) came in guns blazing, saying that “Cryptocurrency is only good for drug trafficking & illegal good…[and] we should prohibit U.S persons from buying, mining or interacting with cryptocurrencies”

Good luck with that.

Around the corner:

Tell us what else to add!

Market Outlook:

Quick Take

Not much has changed since yesterday, I’m still bullish. If you asked me to give a hot take, I would say we are much more likely to see 10k than 6k over the next month.

As of right now, I think we’re primed to continue the run towards 7.8k and beyond. If we break 7.8k, we are likely to see mid 8k Bitcoin shortly after. Intraday 10%+ moves are rare and generally draw in interested buyers and make sellers less likely to follow through.

The chart today is the same as yesterdays and shows three different scenarios. I’m leaning towards scenario 1 and 2, with 2 being the most likely. I still believe we are due for a retracement before we continue forward with our run, but the failed retracement of yesterday made this less likely.

I would put the odds of a retracement to 7.2k at ~60% at this moment.

A note on alts: If you hold alts, you’ve probably noticed that they are bleeding pretty heavily compared to BTC right now. That happens when BTC spikes. Generally, BTC will spike and alts will follow when BTC stabilizes.

I believe that speculation in the markets right now is incredibly low, and we are seeing a repeat of the July - Nov of 2017 where alts just bleed relative to BTC. If you are bullish on crypto (and want to trade), I would look into not trading alts and instead using those funds to take out a leveraged long on BTC, which will give you a better R/R.

If you’re a HODLer then feel free to ignore this :)

Daily Chart

❤️ Links if you want to support CryptoAM ❤️ 
  1. Sign up for Robinhood and get a free stock (worth anywhere from $5-$200) 

  2. Leverage trade Bitcoin on Bitmex (10% off fees) 

  3. Trade Altcoins on Binance 

  4. ($1 in BTC free for sign ups)

  5. BTC Address: 1DyxmdvDBFRUP6E8ddh5xxRGJKfidgAzyF

  6. ETH Address: 0x24042BAd591F17c1beC9e413487eE12EC1ceAcd0

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