Welcome to Hvbris, a crypto-focused weekly newsletter.
In this week’s installment:
Wall Street firms takes massive losses in $GME short bet gone wrong
Raoul Pal launches Real Vision Crypto, talks about toxic Bitcoin maximalism and ETH bullishness
Top-notch Bitcoin debate
Bits and bytes you don’t want to miss
One-chart Bitcoin and market updates
DISCLAIMER: This content is not financial advice and only represents my personal opinions.
Always do your own research.
Let’s go!
The Main Course.
Let’s kick things off with this interview of Chamath Palihapitiya in the aftermath of the GameStop ($GME) epic gamma squeeze that sent investment firm Melvin Capital and a slew of WallStreet copycat firms packing with huge losses after the stock skyrocketed following a coordinated speculative attack launched by members of the sub-reddit WallStreetBets. I have no special love for Chamath (the dude is a smug populist) but his defense of retail investing was on point.
Let’s recap, a handful of Wall Street hedge-funds were unreasonably short $GME (140% of the stock’s free float was sold short!), some smart cookie on Reddit noticed the overexposed bearishness, advised the (very large) WSB community to buy the dip, the trade caught on, bigger financial players joined the fray, shorts were squeezed and money was made. It’s free market, it’s momentum trading, it’s hubris yes but it’s completely fair game. Good on everyone that’s up on the trade.
PS: As of now, I wouldn’t touch $GME with a 10-foot pole, and yes that is financial advice.
PS2: If you're wondering how 140% of a stock pool can be sold short yet not count as illegal naked-shorts, I recommend you read this analysis.
Next we have this must-listen debate between Mike Green of Logica Funds and Nic Carter of Castle Island Ventures about Bitcoin. It’s a wide ranging discussion about the merits of decentralized hard money as an investment, the bearish and bullish case for Bitcoin and of course Tether and its (non) influence on the price of BTC. If you’re somewhat on the fence about BTC, this conversation will probably help you refine your understanding about the asset and might even clear some of the most common misconceptions about Bitcoin.
Raoul Pal writes about “Bitcoin maximalism” and the value of crypto networks being mainly derived from Metcalfe’s Law (network effects) in the latest RealVision Crypto report. The report is packed with clever insights. For example, Pal rightly points out that although the onboarding pains that goes with investing in Bitcoin are high, the cost from switching from BTC to other crypto assets however is extremely low (crypto assets can be easily swapped). Thus, Bitcoin is a great brand for crypto awareness (the crypto gateway drug if you wish) but its utility (decentralized saving account) might not be enough to stop holders from migrating to crypto networks that offer more utility. Ethereum comes to mind of course. According to Pal, Ethereum exhibits even stronger virality (network effect growth) than Bitcoin at the same age (Ethereum launched 6 years after Bitcoin). Pal’s arguments hit close to home. It’s all about network effects and Ethereum has a thriving community. Yes it also generates a lot of waste and capital misallocation but such is the price of innovation. ETH has outperformed BTC in 2020 and I believe will continue to do so in 2021 as institutions start to catch on to the fact that you can now get ”native interest rates” by staking ETH2 coins on top of the appreciation of the asset itself. Exciting times for Ethereum.
Bits and Bytes.
Ethereum Foundation researcher Justin Drake goes on Bankless to discuss the influence of cryptography on everything and explain why he believes bitcoin (the asset) might eventually leave Bitcoin (the network).
Dan Held explains (yet again) why the Tether FUD is nothing to be worried about.
Braiins has a cool article on the economics of Bitcoin 51% attacks, the tldr is that 51% attacks aren’t very realistic at this stage of the life of the Bitcoin network and, no, China is not going to take over Bitcoin and crash everything.
Ark Invest just released its free Big Ideas for 2021 report. Free alpha, take it!
Speaking of free, Real Vision just launched Real Vision Crypto, it’s friendly to folks working in the financial industry, it’s in-depth and it’s FREE.
Sam Harris has a thoughtful discussion with professor Jack Goldstone about the ethics of paying taxes and how inequalities and revolutions arise in advanced societies. The episode is partly paywalled but you can get a free membership by mailing the Making Sense Website administrator (it works, I’ve tried) or by supporting Sam Harris on Patreon (it also works).
Another example of why podcasting is so great. Two world-class scientists: Harvard astronomer Avi Loeb and Caltech fundamental physicist Sean Carroll are talking about Oumuamua; a strange, pancake-shaped interstellar object which briefly visited our solar system before accelerating out of our view. Loeb believe it might have been an artificial object created by a scientifically advanced alien civilization (a light-sail maybe), Carroll is… not completely convinced. Nevertheless this is an amazing conversation. If you crave for more on the same subject, professor Loeb also discussed the same thing on Lex Fridman’s podcast 2 week ago.
Finally, the wonderful Asian-centric YouTube channel AsianBoss is facing Covid-related financial stress and is on the verge of closing shop. If you like their reporting (I sure do) you can help them.
One-Chart Market Updates:
Bitcoin (USDT/BTC), Binance.
Sentiment: 🐂
Ether (ETH/USD), Bitfinex.
Sentiment: 🐂
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See you next weekend for more insights.
Until then,
Hvbris.