Your Weekly Update On All Things Crypto |
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New German Law Opens Door For $415 Billion In Bitcoin Buying Power |
On June 1st, a new German law came into effect that could theoretically see up to $415 billion flow into crypto. The German Fund Location Act, introduced in April and approved by parliament shortly thereafter, permits Spezialfonds, or special funds, to invest as much as 20% of their portfolios in crypto.
Sven Hildebrandt, CEO of Distributed Ledger Consulting estimates that if every Spezialfond chooses to allocate the full 20% in crypto, that would equate to €350 billion ($415 billion), based on the total AUM (assets under management) of such funds in Germany. His work was cited in a report by the financial newspaper Boersen Zeitung in April.
Spezialfonds are the dominant institutional investment vehicle in Germany. While the $415 billion figure is sizable enough on its own, it pales in comparison to the potential inflows that may come from other European countries if they chose to follow suit. Given Germany's status as the euro zone's most powerful economy, their policy actions have profound impacts on the surrounding neighbours.
There have been other signs of such acceptance of crypto emanating from Germany in recent months. Last Monday, Coinbase received a crypto custody license from Germany’s Financial Supervisory Authority (BaFin). The license allows Coinbase to continue serving the German market. Deutsche Bank also announced its intention to offer custody and brokerage services to its institutional clients in December.
We are currently witnessing the beginnings of a very bullish narrative for institutional Bitcoin buying in Germany. Given their impact and influence on the entire Euro-zone, it will be interesting to see how Germany's policy influences the sentiment coming from the rest of Europe.
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Binance Under Attack By Ontario and UK Regulators |
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The scrutiny and regulatory eye on crypto tighten as the world's largest crypto exchange by volume, Binance seems to be the "example", and focus of traditional investment regulators from around the globe. Tension mounts in crypto as the regulation vs. crypto battle heats up, and governments try to retain a position of power in this economic revolution.
As countries push forward with their own centralized digital currencies, decentralized cryptos and exchanges we know and support are being illuminated by regulators and governments as competition to their own projects, and the regulation heat is being turned up. Of course, all crackdowns with crypto regulation are cited as efforts to curtail money laundering, illicit activities, crypto scams, tax evasion, and to protect investors. Countries such as China, India, Turkey, Germany, and Nigeria are leading the regulation parade, and have already put measures or threats of exchange fines in place to restrict or stop crypto trading.
Binance exchange, with a history of traditional investment regulation breaches, has again come under attack by regulators, most recently in Japan and UK. There has also been a recent change for Binance's operations in the Canadian province of Ontario, in reaction to regulators' dealings with other crypto exchanges. The regulation attacks are aimed at hybrid crypto investments products that are pegged to traditional regulated stock market offerings, a dangerous line for exchanges to walk. Binance seems to be the "example" here but is not alone, many other exchanges are also being addressed by regulators.
Financial Services Agency of Japan has filed its second warning in 3 years to Binance, stating that Binance is not licensed to operate in Japan. In the UK the FCA (Financial Conduct Authority) has banned Binance from conducting any regulated investment activity within their boundaries, which does not include trading of unregulated crypto investments. In Ontario, Binance ceased operations, where recently 3 crypto exchanges have been issued notice by regulators stating that they were in breach of investment regulations.
Increased threat of regulations and scrutiny is having an impact on the crypto industry's overall growth, market sentiment, and maybe the reason a slew of new crypto exchange and trading applications with Britain's FCA have been withdrawn in recent months. Regulation in crypto is desirable, necessary, and in most cases welcome. Let's hope that these regulations are in fact designed for, and effective in protecting investors, and not just tools to protect the interests of those who are late to the party, and stand to lose some control.
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Nansen Closes $12M Series A Lead by a16z |
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Nansen, the DeFi-focused cryptocurrency tracker, announced a $12 Million Series A last week lead by a16z. Additional notable venture firms, including Skyfall Venutres, Coinbase Ventures, QCP Capital and more, participated in the round.
Crypto tracking has seen significant growth since the boom in decentralized finance (DeFi). Recently, companied like Chainalysis, CipherTrace and TRM Labs have all raised major rounds. However, top-tier blockchain analytics have often been considered a tool for the government, regulators, tax authorities and legal enforcement. Nansen's CEO, Alex Svanevik, believes that "the actual market participants, should have access to the best on-chain analytics as well."
Enter Nansen, an analytics platform for blockchain, which combines on-chain data with a massive and constantly growing database containing millions of wallet labels. "Nansen's high-quality data enables investors to follow where the smart money is moving, where influential investors are taking positions as well as for discovering new projects to invest and perform due diligence," Says Svanevik.
The start-up currently analyzes over 90 million Ethereum wallets & their activity. Users access the data & tools through a monthly membership package that is designed to help retail traders in addition to a pricey $2,500 monthly package for more bespoke clients. Although there was no explicit talk about what the fresh capital would be used for, the company will likely scale it's offerings and look to expand to multiple chains. |
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Bitcoin Struggles to Shake Off Bearish Trend |
It's no secret that Bitcoin has been facing major headwinds for the past two months, but last week showed signs of hope that we may be starting to break out of that bearish narrative. News of major institutions doubling down on their Bitcoin positions, formations of monstrous funds like Andressen Horowitz Crypto Fund III, and crypto-friendly regulation coming out of Germany have all dampened the bearish momentum and started to shift sentiment.
Bitcoin remains within its Descending Triangle pattern but has been spending much of the previous week testing the upper resistance band. Typically, descending triangles are bearish patterns that lead to further downside, but If Bitcoin can manage to make multiple daily closes above the descending line of resistance, it may be an early sign of a bullish reversal.
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Altcoin Dominance Closes Week at 50-Day Moving Average, Expect test of Ascending Support |
Altcoins managed to close the week at the 50-day moving average after breaking below it in the previous week. However, the trend looks likely for a short-term reversion back either the ascending green line of support or the 200-day EMA. If Bitcoin manages to mount a quick recovery, it is likely that liquidity will flow back from the altcoin market into the king coin. Regardless of short-term bearish momentum, we are still confident that alt dominance will push back to the 60% range before the end of this bull market.
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We at CryptoWeekly are not Financial Advisors. None of the content or opinions expressed in this newsletter should be considered financial advice. We highly recommend that you do your own research before investing in any project within or outside the cryptocurrency space. |
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