OSL Trader View | Weekend Digest

Friday, July 24, 2020

The new normal?

King Elon, has done it. He’s left the haters biting the dust as TSLA.US pops 92% MoM spearheaded by the millennial army fully loaded with an arsenal of TikTok soundbites, commanded by the likes of @stoolpresidente. It’s a joke. 



But is it? 

 
Not only is Tesla the most valuable auto manufacturer on the planet, but one hundred billion dollars more so than #2, Toyota. Think about that. The company is seven times the size of the Bimmer maker Bayerische Motoren Werke AG. These millennials do not share the nostalgia of the petrol engine as much as the boomers do and in a world where environmental activists like Greta Thunberg are treated like rockstars by her peers, a juvenile social media platform that pumps out brain-numbing video clips like TikTok is the pinnacle of Sino-US tensions… 

Another example is Exxon - until 2012 the most valuable company in the world (dethroned by AAPL US). From its peak market cap of c.$450B, XOM US has shed $262 billion (the entire digital asset market cap is $284B ). Additionally, with the Fed & Treasury encouraging this speculation by joining the buying spree maybe this is the new normal. And guess which currency these rainbow-unicorn-loving millennials trust the most? #BuyBitcoin.

In crypto, the craze in DeFi has done nothing but continue to grow. Since June 1st, total value locked in these dApps has grown by $2.5B


During the same period:
DEX’s $784M, +$696M 


Balancer $278M, +$263M


Defi 373 > 640 +70$, $267M Curve $80> $387M, +$180M


Aave $606M, +$544M

 

You get the idea. You can laugh at them but they are moving markets. And with the forever giving Fed, these mind boggling multiples might just be the new norm.

And what better incentive than the prospects of a hockey-stick growth profit projectile of a nascent industry to lure in the old guard? While Wirecard finds its way to zero...

 

Some of the news that caught our eye this week:

  • Mastercard has stepped up, taking the mantle as a crypto-friendly global card operator as they rush to jump in the race with Paypal; VirgoX has timed the debut of their World Stablecoin Association with the $10B milestone; Tether hit (USD backed issuances only); and Standard Chartered dropped the mic with the launch of their virtual asset custody business (foreshadowed by the commitment headline last week). 


For some added reading:


It looks like the gears are shifting on the FOMO front and this time, it’s the governments. The Korean government has announced a 20% capital gains tax on crypto profits - inline with the tax regime for equities. This comes at a disastrous time as the Moon regime flips the previous government’s house purchase encouraging policies only to slap a double-digit capital gains tax on the very people they lured in. Adding insult to injury, they have proposed to jack up the highest tax bracket by 3ppts to 45% while also jacking up capital gains tax for real estate profits earned on property owned for less than one year to 70%. The populist president will need to step up his game at the polls as this is clearly not taken well by Mrs. Kim. 

 


And while governments elsewhere mull on which department or ministry should be tested with a blockchain based solution, China rolls adds yet another pilot to its test base with the city of Chengdu joining the fray.

The much despised US Postal Service is also looking to reinvent itself and find new growth in the form of crypto as they open the doors for John Doe to “come on down” and grab some $BTC along with some stamps. 

The rumblings of a CBDC in the works from Banque de France & the Bank of Japan continue as we saw yet another delightful speech delivered by #cryptoMom Hester Peirce at the Singapore Blockchain week. There is hope! 

The jersey however, goes to the Office of the Comptroller of the Currency (OCC); the government agency with the oversight of all national banks and federal savings associations has given them the greenlight to push the boat out on Virtual Asset custody businesses. Back-dated futures have adjusted upwards rather aggressively on the back of this headline.


As CME OI continues its upward trajectory.

#RealLifeUseCases.

Ethereum ($ETH) +15.7% tops performance amongst the top10 as we inch closer to the 2.0 multi-client testnet Medalla debut weeks away.  It’s currently at $270, testing four month highs… 

There’s a lot of good happening in the world of digital assets and hopefully the actions of some bad apples haven't sullied the industry and the acceleration of further adoption and projects by the Wall Street types.  At OSL we have taken the steps to seek regulation and to be a partner of choice. Actions speak louder than words, but the steps we’ve been taking will hopefully soon echo loudly in the market.

Speaking about institutions and institutional adoption of digital assets.  Garry Kasparov is somewhat of an institution in his own right as one of the most decorated chess players of our time. Well, he’s a believer in bitcoin too, and its benefits to instill greater privacy in financial markets.  Adding to a growing list of champions for a digital future of finance

 

Have a great weekend! Stay safe.

 

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

 


 

OSL is Asia’s most comprehensive digital asset platform providing brokerage, exchange, software-as-a-service and insured custody solutions to professional investors.

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