Cryptogram - 17FEB2023

Murky regulations = unstable portfolio

17 February 2023

The newsletter is put together by Giottus Crypto Platform and The News Minute’s Brand Studio. You can read all the previous issues of Cryptogram

.

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Hello!

We saw a lot of regulatory ups and downs this week, with various institutions, especially in the US, rolling up their sleeves and getting down and dirty with the crypto industry. Tougher rules, bans and fines are incoming – let’s brace for impact, in slow motion. 

Here are our Top-5 stories for this issue: 

1

US SEC is coming down hard with

, making it hard for crypto companies to hold customer assets (and do whatever they want with it). This is a good thing, we think, but not everyone

.

2

Want to invest in a BlackRock ETF? There’s a

for that now!

Sign of exciting times for TradFi getting integrated into DeFi (or the other way around).

3

Paxos burn is Tether’s gain. As the Binance branded stablecoin from Paxos, BUSD, came under regulatory scrutiny,

, increasing its market cap by $1 billion.

4

. If you want full, zero-fee NFT royalties from Blur, you now have to blocklist those NFTs from OpenSea.

Want to buy Blur token? You can do it on Giottus. Here’s an explainer. 

5

China is changing its tune on crypto, just a little bit. Tencent expands its Web3 strategy, China Telecom will build a blockchain SIM card and Hong Kong has tokenised its Green Bonds. Also two other quick stories for you – Polygon’s zero-knowledge Ethereum Virtual Machine (zkEVM) beta main network will go live on March 27, and Abu Dhabi pumps in $2 billion to promote Web3 startups.

 WEEKLY MACROS

Total crypto market cap: $1.03 trillion - 

 6.5% 

Bitcoin market cap: $580 billion -

 5% 

The dollar index (DXY): 104.4 -

 0.6% 

Bitcoin Dominance: 44.1% - 

1.7%

Crypto Fear and Greed Index:

48

- The market is in greed condition as Bitcoin’s rally has given enough momentum for many altcoins to pop up and narratives like LSD, zkEVM etc to hold on.

 WEEKLY PRICE TRACKER

Price movements from last Friday

BTC Watch

 9% as new capital seems to have entered the market, obliterating the Bitcoin shorts by $184 million. BTC might pullback given the recent rally as the macro is still looking bearish.

ETH Watch

 7% with Ethereum breaking key resistance levels, surpassing $1,700 briefly. ETH will likely follow the market leader’s price action.

Altcoins Watch

MATIC

:

 14% as zkEVM narrative has some steam left off amid Bitcoin's rally

OKB

:

 21% with OKEx exchange announcing the launch of a new blockchain

FIL

: 

 36% as Filecoin finally breaks out of its accumulation zone getting renewed attention from investors

 WHAT'S HOT

  Coins to watch out for

Mina (MINA)

- The MINA protocol attempts to solve blockchain trilemma, and it does it by staying small – at just 22 kilobytes, it’s roughly the size of a couple of tweets. It is able to function without getting too large by using Zero-Knowledge Succinct Non-Interactive Arguments of Knowledge, or zk-SNARKs. MINA is up by 46% in the last 7 days.

Azero (AZERO)

- Aleph Zero is a layer 1 privacy-enhancing blockchain that ensures scalability, low transaction fees, and maximum-security guarantees for developers. It’s unique because it has a lot of interesting features like decentralized cloud storage, dynamic fee adjustment, oracle support and better smart contract ability. It already has a coin listed in the market and worth to keep an eye on. AZERO is currently at $1.8.

Project to watch out for

zkSync

- zkSync Era is an EMV-compatible ZK Rollup being built by Matter Labs, powered by zkEVM. zkEVM is a virtual machine that executes smart contracts in a way that is compatible with zero-knowledge-proof computation. It's mainnet has been launched and a token is expected to come out too at some point in the future. One of the main features is that developers can deploy their existing Solidity code, without modifications, on a live ZK-rollup on mainnet for the first time ever.

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 THE HOT TAKE

Future-proof your portfolio ahead of regulatory turbulence

Three things happened this month.

1.

2.

3.

What does this mean to you? Let’s deep-dive into key issues of the above.

Staking as a Service (the new SaaS? :P)

Staking as a service is required for blockchains to function and grow. While the US SEC is adamant on not letting crypto related products to mass retail clients, the moot point is about how ignorant governments really are.

Governments (including India) agree blockchain technology is the way-forward but conveniently ignore that many top blockchains that exist today and will exist in future are built as Proof-of-Stake (PoS). Unless a cryptocurrency (or crypto asset as our FM calls it) is staked for validation, transactions will not be processed on them.

These moves will not affect global crypto space for the long term but – decentralized validators are going proliferate.

This is why blockchain exists – to be the proponent of decentralization.

Stablecoins have become the backbone of crypto investors – governments want it broken

Stablecoins are essentially used to park investments that would otherwise be in the traditional finance world. USD-denominated stablecoins currently have a market cap of $135 billion – more than 13% of the entire crypto ecosystem. Naturally, governments are miffed – a product that is an extension of their own sovereign currency is being used to grow cryptocurrencies.

We anticipate more stablecoins to be affected leading to short-term FUD (fear, uncertainty and doubt) in the market. Of course, CBDCs will be promoted as the alternative by the governments but tracking (as our FM explained) will be a key issue for many investors.

Given the above context, we enlist some takeaways for the investor in you:

Use/Invest in decentralized platforms

Decentralized platforms will grow if the current regulatory uncertainty continues to play out and investing in them can become a good hedge in case of any radical move. As soon as the US SEC Kraken settlement news came about,

, a decentralized Ethereum staking platform, on which the SEC has no oversight on.

Ability to use DEXs are also a key learning required by investors to identify trends in the market before they become trendy. 

Minimize your stablecoin assets

This is obvious – a stablecoin is loved by all as long as it remains stable. We saw what happened with Terra (LUNA) when a stablecoin lost its peg. While the BUSD issue seems to have not had much of an impact in the market, any future issue with Tether (USDT) or Circle’s USDC will have a strong reaction globally.

Majority on Bitcoin

We say this often – Bitcoin is classified as a commodity in the US, the only cryptocurrency to be explicitly called out as such. If the commodity v/s security debate eventuate, Bitcoin will be the safety net you would want in the short term. Keep your portfolio BTC heavy in 2023.

That’s it for this issue, see you next week.

If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.

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