Hvbris#42 - Anchorage Partners with VISA to Bring Crypto API to Banks.
Weekly Crypto Market Insights.
Welcome to Hvbris, a crypto-focused weekly newsletter.
In this week’s installment:
Anchorage + VISA + Crypto = 👍
GameStop post-mortem
The effect of low bond rates on the price of equity
Bitcoin skepticism, Ethereum fee crisis, China fears
Option-trading educational material
One-chart Bitcoin and Ethereum market updates
DISCLAIMER: This content is not financial advice and only represents my personal opinions.
Always do your own research.
Let’s go!
The News.
Let’s kick things off with OCC-regulated digital asset platform Anchorage announcing that they will partner with VISA to provide a pilot API program to help bank and neo-bank customers buy cryptocurrency.
From a technical perspective, this pilot will enable Visa clients to easily connect to Anchorage infrastructure, allowing banks, neobanks, and other financial institutions to maintain their own unique user experiences on the front end, while securely tapping into the digital asset ecosystem on the back end. Through the pilot program, First Boulevard clients will be able to buy, hold, and sell digital assets held in Anchorage Digital Bank, the first federally chartered digital asset bank.
If successful, this will allow financial institutions connected to the VISA networks to seamlessly integrate crypto assets to their offering. This is a massive yet completely overlooked piece of news and another big lead towards mainstream crypto adoption.
Next, here the latest on the GameStop saga. Erik Townsend from MacroVoices suspects an undercover WallStreet hedge fund passing as a retail investor might have provided the research which started the WallStreetBets trade. Su Zhu from Three Arrow Capital thinks it was a one-off event which might have benefited some early retail momentum-traders but mostly played into the hands of other hedge-funds and trading firms. For the Winklevoss brothers it’s the little guy sticking it to the “suits” on Wall Street (the complete sleaziness of this statement coming from two billionaire heirs of the wealthy Winklevoss family is beyond me). The best take by far came from ex-UBS investment banker Brian DeChesare who not only debunks the David v. Goliath narrative painted by media outlets but also makes a compelling predictions for the political backlash we could see in the coming weeks (i.e. some regulators might want to start experimenting with banning short selling, which is a dumb idea but what else did you expect…).
Lyn Alden has written a post on the effect of interest rates (sovereign bonds) on the price of equities. The gist of it is that low bond yields warp equity valuation models, making equity look much more attractive as an investment because the opportunity cost to not invest in bonds is so low. It’s a good read.
Offshore trading platform Deribit has good educational material on option trading. It covers the basics, some option strategies and they even provide a sandbox to practice your option-trading skills without having to put money on the line. I personally don’t trade options for money (it’s risky) but, as an analyst, it’s a useful skill to learn to deepen your knowledge of finance and markets.
Speaking of Deribit, Su Zhu from crypto trading firm Three Arrows Capital wrote an interesting piece for their Research series on how market making works and the impact of short squeezes in equity and option markets.
CoinDesk reported that IBM’s enterprise-blockchain business unit is not in good shape. This is the latest example that “private” blockchains are and have always been a bankrupt idea. Meanwhile, public blockchains Bitcoin and Ethereum are settling a combined 30+ billion USD of native units (BTC and ETH) a day! on a 30-day moving average (and we’re not even counting stablecoins). If you still believe that bananas on the blockchain is the future of finance and Bitcoin is “just a bubble“ then it might be time to question your assumptions.
This long piece by Taylor Pearson breaks down what the economy of "Tomorrow 3.0" will look like and the place of blockchain technology within it. There’s a lot to like in this article. I particularly enjoyed how Pearson explained that the compression of 3 types of costs over the centuries (triangulation, transfer and trust) has led to the rise and fall of conglomerates, how the invention of accurate mechanical clocks made time-rate labor the norm and how technology is currently opening a phase of "You own almost nothing, but have access to almost everything". It’s a great and visionary read.
The popularity of DeFi and the spectacular returns of ETH are yet again leading to a huge spike in fees. According to this 2020 piece by Nic Carter, this could trigger a negative feedback loop which could stunt usage growth on Ethereum by pricing out retail users. I think there’s no denial that’s already the case, Ethereum transactions are very expensive, particularly those involving smart contracts. On the bright side, necessity is the mother of invention and this fee crisis should accelerate L2 and ETH 2.0 deployment.
Morgan Creek partner and Bitcoin maxi Anthony Pompliano (Pomp) was seen on Real Vision Crypto sparring with Bitcoin-skeptic Mike Green over Pomp’s Bitcoin investment thesis. Green got under Pomp’s skin really quick by questioning his technical competency which led to some spicy exchanges. Overall, I found Green’s position on Bitcoin to be somewhat driven by its suspicions towardsChina, it goes like this:
Around 70% of Bitcoin mining is done in China (true)
China is the enemy of the US (debatable)
Therefore China controls Bitcoin (false)
Therefore Bitcoin is bad (that’s opinion, not fact)
Green though is not a blockchain minimalist. Towards the end of this discussion on MacroVoices he admitted being interested in Ethereum. Green is smart man and I’d love to hear his take on Ethereum.
Vanity Fair wrote this portrait of the BitMex ex-CEO Arthur Hayes. The story follows a classic “rise and fall“ narrative but it’s an entertaining read.
On a final non-crypto note, NASA’s Curiosity rover recorded a panoramic view of the surface of Mars, you can even hear the sound of the Martian winds! What a time to be alive 🤩
One-Chart Market Updates.
Bitcoin (USDT/BTC), Binance.
Sentiment: 🐂
Ether (ETH/USD), Bitfinex.
Sentiment: 🐂 (but likely to see a correction soon)
_______________
See you next weekend for more insights.
Until then,
Hvbris.