Weekly Bulletin (Dec 23, 2018)

CoinSheet #235

Great perils have this beauty that they bring to light the fraternity of strangers.

— Victor Hugo


Weekly Bulletin

Noticed some narrative crafting this week.

It’s along the theme of “Wall Street is leaving Bitcoin.




This narrative is stupid

This narrative is stupid because Wall Street isn’t here yet.

Folks on Wall Street make money by finding some sort of edge.

Sometimes they have better fundamental analysis.
Sometimes they have better high frequency algorithms.
Sometimes they’re quicker with event-driven plays.
Sometimes they have really good arbitrage model, etc…

How they don’t make money is by buying and holding Bitcoin (because it’s kinda hard being a hedge fund manager and telling your LPs that you’re going to buy some Bitcoin and just chillax for a few years).

Here’s an excerpt from a blog by Jack Liu.

In essence, Wall Street will be there when Bitcoin is big enough for them to take their cut or 'edge’ on the daily trading volumes. They will be there to provide liquidity and offer various investment vehicles. They are not going to be a pawn in the Bitcoin enthusiasts’ plan - as a source of significant speculative capital to pump Bitcoin up another 10x. 


Facebook to develop its own stablecoin?

It was reported a few days ago that Facebook is looking to develop its own stablecoin for money transfers.

It appears to be a stablecoin for remittance payments to be used in India via WhatsApp.

The keywords here are “looking to develop.

Which means this project is still in the planning stage, and might not even happen.

Vijay Boyapati made a good Twitter thread back in October discussing the potential entry of Facebook into the space and whether it’s a threat to bitcoin.

Let’s take a look:

You can read my general thought’s on centralized organizations that accumulate substantial chunks of your personal data in CoinSheet #232 (The Internet identity crisis).

I’m interested in changing the way we think about money. I’m interested in open and borderless environments. I’m interested in open public blockchains that are about decentralizing trust.

Bitcoin is a currency that’s borderless, neutral, censorship resistant, open to all participants and is a trusted network despite having a lack of central governance.

I don’t have much faith in a Facebook-coin, Amazon-coin, or Google-coin because these companies have incentives that contradict with what I think we should be building.

I’m sure we’ll see something like a Facebook-coin in the future. And it will probably be some sort of payment service that competes with Square, Coinbase, Visa, Mastercard, Paypal, etc…

I’m just not sure I’ll care.


Market Sentiment

Bitcoin

I had a few questions asked in the Telegram chat about how folks are coming up with these “bottom” predictions. I thought it would be useful to share some thoughts here.

Below are the 3 most common scenarios I’ve seen being discussed.

  • Option 1: Fractals analysis bottom (2,300 - 2,600)

  • Option 2: Fib extension bottom (1,700 - 1,900)

  • Option 3: Retest support of 2017 rally bottom (900 - 1,200)


I don’t have a concrete opinion yet. I’m not that omniscient so I’m taking it one data point at a time.

I’m currently waiting to see how the daily 50-SMA holds up. My hunch is that we're going to see a rejection of the daily 50-SMA in ~48 hours or so.

The general consensus seems to be that if Bakkt’s futures launch, we will see some strong bullish price action for a few weeks leading up to the date of the VanEck ETF decision.

Of course, a disapproval of VanEck’s bitcoin ETF will probably crash Bitcoin prices 30% - 50%.

This is why I’m hesitant about calling a bottom until we know what’s going on with the ETF.

Last time the ETF was rejected, price dropped ~35%.


Recommended Readings

Four Crypto Gospels

Su Zhu writes about regulatory clarity.

What do people mean when they say that regulatory clarity will usher in a bull market?

You can read the article here.


If you think something important happened last week and we missed it, let us know!

Continue the discussion in our Telegram group.

That’s all for now.

Have a great week folks!