Tuesday 12 May 2020 9:35 am

Message in a Block: "NYTimes 09/Apr/2020 With $2.3T Injection, Fed's Plan Far Exceeds 2008 Rescue"

City A.M's Crypto Insider

Price Watch

Last week saw Bitcoin (BTC) surge to the US$10,000 mark before crashing 15%  stabilising at a similar level to my last edition of City AM’s Crypto Insider and, at the time of writing, was trading up at US$8,907.44  / GB£7,241.09; Ethereum (ETH) is at US$188.68 / GB£153.22; Ripple (XRP) is at US$0.1962 / GB£0.1588; Binance (BNB) is at US$15.06 / GB£12.26 and Cardano (ADA) is at US$0.04813 / GB£0.03932.  Overall Market Cap is down circa US$4bn from last week at US$242.81bn  / GB£196.92bn (data source: www.CryptoCompare.com

City AM’s Crypto Insider

Greetings from a blustery locked down London where the silent celebrations marking the 75th Anniversary of VE Day last Friday were inspirationally given a roar by the iconic Red Arrows flying across the empty streets and a deserted Buckingham Palace balcony.  The winds picked up and ahead of Boris Johnson’s address to the Nation on Sunday I went for my daily walk by the river Thames which was at such a high level that it made me think that the Thames Barrier might have been forgotten! Strange times for all us and in the world of Crypto nonetheless where the much anticipated halvening took place yesterday at 20:23 BST The next and fourth halving will take place sometime in May 2024 (Source: https://www.bitcoinblockhalf.com

As the halving was about to take place and in a reflection of the extraordinary times we are living in, just as Satoshi Nakamoto left the message in the Bitcoin Genesis Block “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks” in block  629999 mined by f2pool (source: https://bitcointicker.co/latestblocks/) the decrypted coinbase had the message “NYTimes 09/Apr/2020 With $2.3T Injection, Fed’s Plan Far Exceeds 2008 Rescue” The accolade of the first block mined with the halved reward of 6.25BTC went to AntPool with block 630000.

Last week James Bennett, CEO of ByteTree, addressed three things to expect (see here) from the halving as seen on-chain.  This week ByteTree will be hosting a live webinar in the aftermath of the big event, recapping on what happened and what to expect from bitcoin in the months ahead. I’m terribly excited to be on the roster alongside some terrific speakers from across the industry, including Danny Masters, Chairman of Coinshares Group; Mona El Isa, Founder & CEO of Avantgarde Finance and Jon Matonis, Chief Economist at Cypherpunk Holdings. The event will go live at 17:00 BST today, make sure to sign up and reserve your spot for the ‘Halving Webinar’

Turning my attention across the Atlantic, 3iQ’s Toronto-listed Bitcoin Fund announced the completion of a US$48m offering a mere month after becoming the first bitcoin-focussed Exchange Traded Fund to launch in North America. The development showcases the growing institutional appetite for such assets at a time when safe havens are increasingly in the spotlight. The fund tracks the MVIS CryptoCompare Institutional Bitcoin Index, a reflection of the aggregated price of bitcoin across a myriad of global digital asset exchanges that are included based on CryptoCompare’s Exchange Benchmark ranking methodology.

Financial products tracking the performance of digital assets are increasingly gaining traction as more institutions and investors take seriously the notion of bitcoin as “digital gold.” In this vein, renowned macro hedge fund manager Paul Tudor Jones II revealed his appreciation of the asset class in his recent monthly investment letter, explaining that Bitcoin reminded him of gold in the 1970’s and that it might be the best bet against inflation amid the coronavirus-induced financial turmoil.  When asked on CNBC’s Squawk Box having been skeptical,  that he has appeared to have changed his mind, his answer was comprehensive.

“COVID happened and a great monetary inflation happened and that made me begin to think about how do you want to be positioned in your portfolio going forward? So, naturally, what tripped my interest in Bitcoin, and you have to realise if you just think about Bitcoin versus cash, Bitcoin: when I think of stores of value, I think of it four ways: purchasing power, trustworthiness, liquidity and portability and that’s the kind of the categories I put it in. So, when it comes to trustworthiness, Bitcoin’s 11 years old – there’s very little trust in it, we’re watching the birthing of a store of value and whether that succeeds or not, only time will tell.  

What I do know is that every day that goes by and Bitcoin survives the trust in it will go up. If you take cash, on the other hand, and you think about it from a purchasing power standpoint. If you own cash in the world today, you know your central bank has an avowed goal of depreciating its value 2% per year.  So you have, in essence, a wasting asset in your hands.  So Bitcoin I think it’s a great speculation I’ve got something between one and I think just over just over 1% of my assets in Bitcoin, maybe it’s almost 2%: that seems like the right number right now, it’s not for me it’s not the greatest it’s not the you know the great cure for that for all the monetary ills etc, it’s a great speculation that’s what I would say Bitcoin is.” My personal takeaway is that Tudor’s words have resonated loudest on the institutional front when it comes to making the case for Bitcoin.  Watch this space.

With the backdrop of unparalleled, concerted central bank monetary expansion, investors are rightly seeking assets to hedge against inflation – a loss of purchasing power in their home currencies – and bitcoin is increasingly being proposed as a credible investment option, alongside its metallic counterpart, gold. To the uninitiated investor though, direct investment in bitcoin might still be too daunting, which is why ETF products like The Bitcoin Fund  – which abstract the technical considerations of buying and storing bitcoin – are welcome developments for the digital asset space.

In a not-all-too-surprising turn of events, what started as an attempt at decentralized governance has ended up as a run-of-the-mill organisation as last Thursday,  Facebook’s Libra appointed the Chief Legal Officer of HSBC as the new CEO of the Libra Association.

The Libra Association, which has printed its name in the minds of crypto enthusiasts as a controversial stablecoin project led by Facebook, has now hired Stuart Levey as its first CEO. Stuart is the ex-first Under Secretary of the Treasury for Terrorism and Financial Intelligence – a position he held during both the Bush and Obama administrations. Such a background gives credence to suspicions about the prospect of the US-Government having substantial influence over the direction and development of the stablecoin project, at the very least.

Originally backed by a basket of fiat currencies, the Libra Stablecoin has been widely condemned by regulators who most likely saw Libra as a direct challenge to government-denominated fiat currency hegemony. As is common knowledge, governments are still attempting to come to terms with the fact that there is now an open marketplace for competing currencies, most likely as a direct consequence of Bitcoin’s rise and immutability. Indeed, given that Libra is effectively a company many regulators have vowed to block the development of Libra on their soil, come hell or high water.

I caught up with friend and Crypto AM contributor (see here) Chris Attard of Chris on Crypto who gave me his view, having followed the story closely.  He observed “as per the whitepaper issued last month, the Libra Association will now provide stablecoins for major fiat currencies, such as the US dollar, the British pound, and the euro. The Libra coin will now be backed by a basket of fiat-backed stablecoins, instead of fiat itself. Should Levey manage to pull this off, the stablecoin launch might go a long way in further bridging the gap between bitcoin and the masses as the halving effects weigh in on the market”.  I’m inclined to agree and it allows Libra as a project to move forward without too much loss of face!

Finally, as I do every week, during London’s Lockdown, I’d like to remind you again about my ongoing local community effort for the elderly and vulnerable living on the Isle of Dogs. I teamed up with BABB (Bank Account Based Blockchain) to raise money to pay for food and care parcels.  It’s really even more essential now with the added difficulties that Ramadan timings produce. BABB has added a light registration for web donation which otherwise allows you to download the app and donate direct to the campaign via www.bit.ly/IoDFoodCare