1. Federal Reserve Chairman Jerome Powell said the Federal Reserve would keep policy easy. The Fed will maintain its current $ 120 billion monthly bond purchase program until “significant further progress” is made on inflation and employment.
- “I’m much more concerned that I haven’t fully recovered and lost the careers and lives of the people who built them because they couldn’t get back to work on time,” Powell said. “That worries me a lot more than the possibility of higher inflation. … Frankly, we would like higher inflation. “
Bitcoin enthusiasts see long-term benefits for the cryptocurrency under this current regime, which is campaigning to keep inflation hot. Bitcoin didn’t respond immediately to what the Fed said, but it surged 7% after trading on Red Wednesday (at press time).
- Powell was asked about Bitcoin on a question about how cheap money could create bubbles. His answer: “The weaknesses in terms of financial stability are moderate overall.”
- Separately, the BIS chief banker, the bank for central banks, Agustín Carstens, doubted Bitcoin’s long-term viability on Wednesday, saying Bitcoin’s volatility was in decline.
2. The DeFi scene is heating up. Grayscale Investments, the world’s largest digital asset manager, has filed for registration of five new cryptocurrency asset trusts, several of which are related to the DeFi (decentralized finance) division. (Digital Currency Group owns Grayscale and CoinDesk.)
- Aave, Cosmos, Polkadot, Monero, and Cardano have all been listed in new records, although that doesn’t mean there will be a Grayscale XLM trust anytime soon or ever.
- In the meantime, Uniswap’s native Token Uni (UNI) broke $ 15 per token on Coinbase on Wednesday morning. It’s up more than 92% in a week and it’s up 1,300% since debuting in September 2020.
- This makes UNI the highest rated DeFi coin in terms of market capitalization. As previously reported, DeFi’s Total Value Locked has passed the US $ 25 billion milestone.
- DeFi Darling Curv has teamed up with Algorand, the proof-of-stake network launched by Turing Prize winner Silvio Macali, to develop new wallet technology.
3. Longtime Bitcoin skeptic Mark Cuban has apparently reversed course and has become optimistic about non-fungible tokens (NFTs) and blockchain. According to CoinDesk’s Jeff Wilser, the Dallas Mavericks billionaire and celebrity Shark Tank said, “NFT lets you sell anything digital,” possibly even merch for his basketball team.
- “The benefit is really unlimited,” said Cuban, speaking about the entire crypto room. “It’s a platform for any number of amazing applications that surpass their traditional financial counterparts.”
On the game
Yesterday I spoke to a colleague about GameStop and the gamification of the stock market. We’ve covered here in the past how traditional markets are increasingly reminiscent of crypto, especially because coronavirus precautions are causing people to spend more time online.
Millennial-friendly brokers like Robinhood allow nearly anyone to buy, hold, and trade, take on complicated derivative positions, and even fractionate stocks – turning the S&P 500, albeit more commonly penny stocks, into a casino.
Together with the simple money of the macroeconomic zero interest rate policy (ZIRP), for example, this has led to market distortions. With that in mind, my colleague actually asked seriously whether crypto has become more rational than stocks.
All of this starts with WallStreetBets, a subreddit for day trading, and perhaps the greatest financial story since the markets bottomed out in March in the early days of the coronavirus crisis. A plan was worked out among the self-proclaimed “degenerate dealers” on Reddit to raise the price of GameStock (GME) and “squeeze” a hedge fund that the video game dealer (who has seen better days) fell short of.
What began as a whimsical attempt to beat a hedge fund has had real impact, with real money on the line. As CoinDesk’s Zack Voell notes, the same short-squeeze playbook is being repeated for other heavily shortened stocks, including BlackBerry (BB), AMC Entertainment (AMC), and Kodak (KODK).
To try to prevent the contagion caused by memes, the WSB moderators briefly took the subreddit privately last night while Discord banned the group’s server, allegedly for hate speech. TD Ameritrade has stopped GME trading, and Nasdaq – the world’s second largest exchange – said the platform has started monitoring social media and will stop trading if another WallStreetBets-controlled pump is flagged.
Even the US Securities Exchange Commission (SEC) is watching this and making a brief statement saying it is “reviewing” the “ongoing market volatility.”
CoinDesk columnist Preston Byrne recently said the trend is likely to continue: “The people who lose the most at GameStop-style events will seek to limit freedom of expression and economic activity by turning to tech companies this enables these freedoms to be exercised. “
It’s crazy! It actually hurts my head! Bloomberg columnist Matt Levine wrote, “A popular conclusion from GameStop history is, ‘Well, I think the stock market is nonsense now,’ and I’m not sure if that conclusion is wrong. Seems like the SEC wouldn’t like it. But what can you do about it? “
Crypto has a fair share of pumps and landfills. In the long list of crypto assets (8,000+), any token or coin could be pumping every day for what appears to be a reason. But as market commentator Mati Greenspan told First Mover this morning, “You have to take the bad with the good. Overall, it is about the democratization and freedom of the financial markets. “
Reddit founder Alexis Ohanian has also picked up on the trend and told CNBC’s Squawk Box: “We vote on two things in the US: votes and dollars. The internet has obviously had a huge impact on our democratic process. Now we are seeing the impact if the internet also revolutionizes dollar votes. “
As has often been said, many see Bitcoin as a purchase against unprecedented money pressures. Ethereum is an increasingly attractive proposition for institutional investors as a legitimate, albeit experimental, alternative financial system is being built on it.
So has crypto become more sensible than traditional markets? Well, maybe you should see what happened to the doge.
After a tweet from “WSB Chairman” Unconnected to the popular subreddit, the question of Dogencoin prices for meme cryptocurrency got mixed up.
- Dogecoin (DOGE) rose over 250% to over $ 0.027 on Thursday morning, giving the meme-based cryptocurrency a total market value of over $ 2.5 billion.
- DOGE is susceptible to random spikes and random “endorsements” from TikTok, adult star Angela White and of course Elon Musk.
Scott Minerd, Bitcoin will have a hard time staying above $ 30,000, according to the chief investment officer of billionaire investment firm Guggenheim Partners.
- “Right now, the reality of institutional demand that would support a $ 35,000 or even $ 30,000 price tag is just not there,” he said in an interview with Bloomberg Television on Wednesday.
- The comments come weeks after he publicly stated that Bitcoin should be priced at hundreds of thousands of dollars.
Bitcoin tends to underperform during tax timeshow new data. From 2014 to 2020, Bitcoin was down in four out of January seven and six in the last seven brands. According to Delphi Digital, the average losses for these months were 5.24% and 12.59%, respectively.
- “It is difficult to determine exactly how much pressure to sell, and different jurisdictions treat capital gains more favorably than others,” said Kevin Kelly, co-founder and head of global macro at Delphi Digital. “Bitcoin alone contributed more than $ 400 billion to total market value last year. A decent chunk of those returns went to speculators and traders who may have already made some profits or rolled profits into other corners of the crypto market, triggering taxable events. “
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