Monday, January 18th, 2021 Sign Up

Your Weekly Update On All Things Crypto

OVERVIEW

Miami May Become First Municipality to Hold Bitcoin in their Treasury Smart Contracts are coming to Bitcoin Voyager Increases Stifel Private Placement to $40M Bitcoin: Starting to Feel Gravity Again Alt-Coins Gain Market Share as Bitcoin Cools Off Picks of the Week: OMG & COMP

MACRO NEWS Miami May Become First Municipality to Hold Bitcoin in their Treasury In an interview last Friday, the Mayor of Miami, Francis Suarez told Fox Business he wants to diversify the city's investment portfolio. "We are looking at the possibility of diversifying our investment portfolio and having and holding a percentage of our investments in Bitcoin," said Suarez. This is the latest breaking news following the flood of institutional money that has been rushing to Bitcoin over the past 6 months. Every day, more businesses are choosing to allocate a portion of their treasury reserve into Bitcoin as a hedge against monetary inflation. This would be the first municipality to break the news and may cause a similar domino effect that has been cascading through the private sector. But a portfolio allocation is just the tip of the iceburg for Mayor Suarez's municipality. He also added, "We're looking at creating a regulatory framework that makes us the easiest place in the United States to do business if you're doing it in cryptocurrencies.” He also indicated that they are studying the possibility of accepting cryptocurrencies, especially Bitcoin, as a means of paying taxes and city fees. What this means for crypto: While the price of Bitcoin has been soaring, and many may feel like they have missed the boat, it is important to step back and remember how early we are in the global adoption cycle for this new technology. We are still at under 2% global adoption for Bitcoin. While big companies like Microstrategy and Ruffer have been making massive investments into the cryptocurrency space, their balance sheets don't hold a candle to those of major municipalities, state budgets, or even National treasury reserves. Once governmental dominos start to fall, we will truly see a tidal wave of capital like we have never seen before. The macro-landscape has been set The interest has been growing and The use cases are expanding An investment from the municipality of Miami might be the nudge we need to see a whole new level of institutional capital flowing into Bitcoin.

TOP STORIES Smart Contracts are coming to Bitcoin The world of smart-contracts, which was invented and popularized by Ethereum, just got its newest competitor. Stacks (formerly Blockstack) is an open-source network for building smart-contract and DeFi bridges to Bitcoin. This will bring an immense new use-case to the Bitcoin protocol. Stacks launched a watershed updated on Thursday called Stacks 2.0. The protocol employs its own smart contract coding language called Clarity. It is based on a proof-of-transfer, (PoX) consensus mechanism. The novel mining system utilizes proof-of-work to create new blockchains that are rooted in Bitcoin's security. The PoX algorithm will allow miners to be paid in Bitcoin or the native STX token. Shortly after the Stacks 2.0 launch, the company announced some major partners that will be fueling the growth of the ecosystem. Foundry Digital, a Digital Currency Group company, announced that it will provide mining services for the STX token. Blockdaemon, a blockchain infrastructure platform, also announced integration with Stacks 2.0. This will allow institutions and investors to become node operators in the network. What this means for Bitcoin: While Bitcoin will most likely not become the go-to smart contract platform, there are still major advantages to building on the Stacks protocol. Security - Building on Bitcoin allows developers to tap into the most secure decentralized network on the planet. This level of security is paramount for building specific enterprise-grade infrastructure directly on the Bitcoin blockchain. Clarity - Clarity is the coding language developed by stacks. It is a "decidable language," meaning you can know, with certainty, from the code itself what the program will do. This removes the risk of a whole class of bugs and attack vectors. Programmability - If Bitcoin does become the reserve currency of the internet, we will need a sophisticated layer of programmability built on top of it. This will dramatically remove the friction of using Bitcoin for reoccurring payments and international settlements.

ACQUISITIONS & FUNDING

Voyager Increases Stifel Private Placement to $40M

On Thursday, the crypto brokerage, Voyager Digital Ltd announced the sale of $25M worth of private shares to the Canadian investment banking service provider, Stifel GMP. Then, just one day later, they announced they were upsizing the deal to $40M USD. The deal is set to close on January 22nd, pending the completion of all regulatory approvals from the Canadian Securities Exchange. Voyager Digital Ltd is a crypto-asset broker that provides retail and institutional investors with a turnkey solution to trade crypto assets. Think about it like Robinhood for crypto. Voyager offers customers the best execution and safe custody on a wide choice of popular crypto-assets. The project was founded by established Wall Street and Silicon Valley entrepreneurs, who teamed up to bring a better, more transparent, and cost-efficient alternative for trading crypto-assets to the marketplace.

TECHNICAL ANALYSIS

Bitcoin: Starting to Feel Gravity Again Since early October, Bitcoin has been growing at an astounding pace, but we may be seeing signs of a short term correction before pushing higher. Bitcoin has been forming an ascending megaphone pattern, which can result in steep drops and just as volatile moves back up. If the price of BTC were to fall to the bottom of the megaphone, the total correction would be just over 40%, something not unfamiliar in past cycles. It is also important to note that the 100-day exponential moving average (EMA) is also approaching the bottom line of support. Why Is Bitcoin Consolidating? We've listed a few likely causes below: Parabolic runs are unsustainable - Bitcoin was growing at double digits for the last four weeks, it cannot keep that pace forever. Institutional Selling - some of the larger institutions that we have seen enter the Bitcoin market this cycle have mandates to keep their portfolio balanced. Since they made so much so quickly, they may have been forced to quietly sell their positions and take profit in order to rebalance their portfolio. Shifting Liquidity - Alt-coins have been bleeding value versus Bitcoin for the past few months. This may be a sign of liquidity starting to circulate into the alt-coin market as investors look for riskier bets. Miner Selling - There has been a decrease in miner selling over the past few months given the rapid growth of the Bitcoin price. Now they may be unloading some of that extra Bitcoin to cover their electricity costs. Which section of the Newsletter are you least interested in? Top Macro Stories Select Funding & Aquisitions Select Technical Analysis Select Top Alt-coin Picks Select Crypto Jobs Select Alt-Coins Gain Market Share As Bitcoin Cools Off The cryptocurrency market moves in cycles. Bitcoin exhibits 4-year cycles due to its halving schedule, the media moves in cycles with regard to their coverage of cryptocurrency, and alt-coins move in cycles relative to Bitcoin. It tends to work that when Bitcoin goes parabolic in a bull market, not many coins can keep pace with its growth. However, when Bitcoin slows down, investors search for alternative assets that might outperform the king coin. Therefore, alt-coins get their chance to make up some of their losses versus Bitcoin. Looking at alt-coin dominance on the weekly chart, we can see that alt-coins have made a significant recovery versus Bitcoin in the past three weeks. After breaking through the descending line of resistance last week, we are now testing the critical ascending (green) line of resistance. If we have a weekly close above this line, it is likely the trend continues and alt-coins start to outperform Bitcoin in the short term. If we fail to break through, it is likely that we drop down and retest the descending (red) line of support before making another attempt to cross above the critical line of resistance.

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TRADES OF THE WEEK

OMG Network (OMG) As the hype around alt-coins and Defi grows, the need for scaling on Ethereum grows in lock-step. Gas prices are simply too high to allow for the real-world use-case of many applications on Etheruem right now. OMG Netowork plans to fix this. OMG aims to increase the scalability and functionality of the Ethereum Blockchain by adding a trustless, non-custodial, value transfer layer on top of the Ethereum protocol. This will allow the bulk of the transaction volume to be processed off-chain, minimizing the traffic on the main Etheruem chain. OMG has the tendency to make dramatic vertical moves upward, followed by steady declines vs Bitcoin. This pick is for short-term profit in my opinion. OMG is trying to break out of a long-term descending wedge formation on the daily chart. If it breaks above the line of resistance, it may go vertical for a short sprint. See the Trading View chart here. Compound (COMP) Compound Finance is an algorithmic, autonomous interest rate protocol built for developers, to unlock a universe of open financial applications. Users stake their currency in smart contacts and can earn interest on their funds. The Compound protocol is currently the second-largest lending solution in the De-Fi space, with almost $3 Billion in assets locked.  There is a total supply of only 10 million COMP tokens, with roughly 4.1 million currently in circulation. While other Defi lending projects such as AAVE have already largely recovered their losses vs. Bitcoin, Compound still sits roughly 80% shy of its all-time high vs Bitcoin. If the alt-coin cycle really is here, Compound still has lots of room to grow and may outpace some of the larger coins that have already seen their recovery. See the Trading View chart here.

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