Welcome to the 39th edition of ‘The Digital Asset Digest’. Today we look at the aftermath of Janet Yellen being confirmed as Treasury Secretary, as well as some new ideas for capital allocation.
“‘Like JPMorgan, we have issued an RFI looking at digital custody. We are broadly exploring digital custody and deciding what the next step is,’ said the Goldman source, who asked not to be named. (An RFI on crypto custody was issued by JPMorgan in October 2020, as reported by The Block.)”
Source: Bitcoin News
“Grayscale CEO Michael Sonnenshein says institutional investors are also exhibiting a growing interest in diversifying their investments by choosing other crypto assets besides bitcoin. Sonnenshein, who was recently appointed to the CEO position, made the comments just before the revelation that the company had raised more than $700 million in a single day.”
“One of the first actions President Joe Biden has taken on his first day in office is to freeze Federal regulatory process, including the controversial self-hosted crypto wallet regulations proposed by former Treasury Secretary Steven Mnuchin.”
“Ethereum investors withdrew 659,000 ETH from crypto exchanges in one hour on the 22nd of this month. This is according to an observation made by the CEO and Founder of NuggetsNews.com.au, Alex Saunders, who also postulated that the net outflow of Ethereum might be the largest to date in the stated time period.”
INDUSTRY WIDE SNAPSHOT
Today’s topic is more about capital allocation than pure DeFi. Something I’ve noticed in the last few weeks is that HODL actually carries some unnecessary inefficiencies to it, and I’m readjusting accordingly.
Over the last 20-40 years, index investing has become very popular, especially for investors without the time or expertise to reliably earn returns over that of the market. This has been great for investors because it gave them the ability to perform as well as the market, but it has also created a bunch of inefficiencies.
If everyone is buying the same asset, then it’s impossible to discover the actual fair market value.
So just like index investing, HODL has its limits. Many crypto investors are holding their funds in a wallet and leaving it at that. That is the simple and sensible thing to do, but there are ways to do better without taking significant extra risk.
The simplest way for this is using crypto “banks” like Celsius or BlockFi. By putting funds in these institutions, it’s possible to earn interest at a marginal amount of extra risk.
This is not investment advice and it is recommended to do research into these companies. They can be viewed as riskier versions of banks. The risk to consider is whether or not these companies will survive, so think of this investment as a high-risk bond (with your Bitcoin).
The best part of investments like this ins you are earning interest in Bitcoin, so it is doubling down on an investment you already hold
Source: VYSYN VENTURES
Uniswap has historically been a dominant player in the DEX space. It has more individual users and greater traction in the broader DeFi ecosystem. However, it’s position as a market leader is currently being challenged by Sushiswap. Sushiswap has a tumultuous history but since Chef Nomi’s infamous exit from the project, the team and community have been relentlessly focussed on surpassing UniSwap as the dominant DEX.”
The price of Bitcoin has increased by 12% today, coming from its lowest point of $31,030 to $34,791 at its highest. Now it is being traded slightly lower as the price has been repealed at the 0.382 Fibonacci level.
Source: Trading View
Looking at the hourly chart, you can see that the price made a recovery from the 22nd of January when it fell to $28,785 at its lowest wick. The decrease to those levels was the completion of the 3rd wave from the corrective structure that started developing after the all-time high.
We could have seen the completion of the correction, but the wave structure is still looking more corrective than impulsive on the recovery that followed. This is why more likely, we are seeing the corrective wave continuation in the form of the second wave X from the WXYXZ complex count.
As you can see the price made a descending triangle from its all-time high and since it made interaction with its resistance level, now we are going to have a validation of the assumed scenario as if the price is in a prolonged correction now the Z wave is shortly going to start developing. That means that now a breakout to the downside would be shortly expected.
If this starts developing the price of Bitcoin could fall back to the $24,000 area where the next significant horizontal support level in line with the downside. This would be a downfall of just over 30% which would be a highly significant one.
This concludes another issue of the ‘Digital Asset Digest’. We hope you enjoyed this week’s edition. We are constantly making changes and are always open to feedback.
On another note, a research report on one of our portfolio companies was recently released and we think you’ll learn a lot from it. To check out this free report, click here!