OSL Trader View | Weekend Digest

Friday, July 17, 2020

Strap in folks, it’s about to get real

The assets held on the Fed’s books have tipped on June 10th, and since seen $211B shaved-off in the seven-trillion dollar-scheme-of things. 

 

It’s interesting how the date dovetails with the gap drop in the all invincible S&P 500.

 

And while Goldman may have hit the ball out the park, this is far from the harbinger of things to come. Netflix has come off its peak after missing expectations in new subscribers, and many other tech highflyers have plateaued. Strap in folks, it will be a wild one...

For all the hype DeFi yield farming has mustered up recently, 2Q20 earnings paint more lazy fly balls than home run as earnings for the space collectively drop 42% QoQ. This is actually worse than what it appears to be given the lions’ share of the pullback stemmed from MakerDAO scrambling to keep the house in order alongside Synthetix and their woes. Having said that, it’s a sobering reminder that the bottom lines to these projects have yet to enjoy the meteoric price action seen by their platforms’ native tokens. 

 

Despite the sketchy latency that has been the cause of frustration for many Coinbase users (all too frequently) during times of escalated volumes and volatility, there is no doubt the company has paved the way as one of the OGs by elevating the space into regulated territory. The last series-E round had the company post-money at $8B. Given the non-existent price discovery in traditional markets - or any apples-to-apples peers (Binance?) with which this unicorn stacks up to, it’ll be fun to watch the price tag Mr. Armstrong will be shooting for?  Strap in, it should be a smooth ride but we’ll be ascending to some lofty altitudes.


It’s been a busy week around the World of digital assets:

  • It’s been a slap in the face to decentralized assets with Tether toeing the line and further freezing multiple addresses and the associated ~46M USDT held in those wallets. It isn’t too difficult to envisage the scope of surveillance and control that governments can, and will likely, exert through their CBDCs that are starting to spread like wildfire. But it is tough to blame them as the alternative would be to pull the plug altogether a-la Telegram. It’s ironic given that they are self-regulating and showing a much more legitimate approach to business vis-a-vis what the NYAG presents them to be.  It’s disheartening the double standards that permit clear and known repeat offenders in traditional businesses are saddled with (ineffective) monetary penalties whilst the businesses driving the new economy are (effectively) shuttered altogether.  Power of the lobbyists?
  • Bank of England Governor confirmed this week their interest in pursuing a CBDC.  Maybe the future of currencies will be a concoction of sovereigns, central banks and corporations. 
  • The Japanese zaibatsu have been particularly aggressive on this front with heavyweights GMI, Softbank subsidiary SBI, and now Mitsubishi UFJ Financial Corp - the fifth biggest commercial bank in the world has firmed up the debut of their coin (circa 2H20).  It will be interesting to see how these behemoths navigate with the Bank of Japan also looking to join the party as the Nikkei reports serious consideration given to issuing a CBDC of their own.  Strap in folks, this should be a sumo match worth watching. 
  • We’ve certainly come a long way from “magical internet money” as good for nothing, as many policy makers are taking a much closer look at the potential impact the digital asset trading markets may have in lining public coffers in their jurisdictions.  The latest action is coming from Korea as Korean lawmakers are openly discussing a 20% capital gains tax on virtual asset related income. 

Some of the other news that caught our eye:

  • Binance rolls out the Binance Card - a debit card connecting the real world with your stashes of $BNB and $BTC- for now. Way to go #CZ
  • Implementation of the Taproot BIP finally gets discussed - six months after announcement;
  • Coindesk has opted to take a cheque from the IRS to assist the taxman trace your crypto… Google and military contracts deja vu
  • Grayscale 2Q20 commitments: $905.8 million
  • Waves will tokenize ‘industrial assets’ through partnership with IBM Russia
  • The Monetary Authority of Singapore looks to push out a multi-currency payment solution run by a blockchain based solution 
  • Following the listing on Bitflyer,  the Brave token has integrated with the wallet as well as plugging into Gemini. They are clearly picking it up
  • Standard Chartered participates in $18mn series-A round for Metaco- a cold wallet and exchange solution with tokenization capabilities. 
  • Zap emerges as a force to reckon with following their Visa partnership announcement 

 

Have a great weekend ahead. 

  

OSL Trader View and Weekend Digest are contributed by Stefan Chu, SJ Oh, and Santiago Nazaretti

 


 

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