Volcano Bond & Square's "DEX"
Good morning. We open the week with a weekend market update, Square's plans for a decentralized exchange, and "Bitcoin City". Programming note: we'll be off Thursday and Friday this week.
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A "Top 5" of crypto, digital asset, and other blockchain related news sent to your inbox on a daily basis
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Top 5:
- First Mover Asia: Bitcoin Continues Drift Below $60K as Investors Eye Shoppers’ Inflation Response, Biden Fed Chair Pick
Over the weekend BTC ($57,740.60) and ETH ($4,193.67) prices held steady around recent lows, before both dropping slightly on Sunday evening. As we head in to the week, a few things to watch for:
- Reduced trading due to the Thanksgiving holiday
- President Biden is expected to announce his pick on the next Fed chairman, with the two top candidates being current Chair Jerome Powell and Fed Governor Lael Brainard
- Early holiday shopping numbers will provide an indication on how shoppers' are responding to the largest CPI increase in decades - 4. El Salvador Plans Tokenized Bitcoin Bonds and Tax-Free ‘Bitcoin City’
El Salvador plans to issue the world’s first sovereign Bitcoin bonds and build "Bitcoin City", which will be free of income, property and capital gains taxes. The issuance will be $1 billion in tokenized U.S.-dollar denominated 10-year bonds to pay 6.5% via the Liquid Network, according to Samson Mow, chief strategy officer of Blockstream. Half of the funds of the so-called “volcano bond” will be converted to Bitcoin and the other half will be used for infrastructure and Bitcoin mining powered by geothermal energy. Bitcoin City will be built near the Conchagua volcano which will provide energy for mining, El Salvador's President Bukele said, adding that the bond issuance will begin in 2022. The only tax in Bitcoin City will be a 10% value-added tax to fund city construction and services, he said. As an added bonus investors will also be awarded permanent residence and be fast-tracked to citizenship. - White paper introducing Jack Dorsey's decentralized Bitcoin exchange
On Friday, Square released a white paper detailing plans for a new decentralized protocol to exchange digital and other assets and known as tbDEX. Mike Brock, Square's strategic development head, has previously tweeted about the exchange, saying “this is the problem we’re going to solve: make it easy to fund a non-custodial wallet anywhere in the world through a platform to build on- and off-ramps into bitcoin. You can think about this as a decentralize[d] exchange for fiat.” While Square is positioning tbDEX as decentralized, they also plan to incorporate features that make it far less decentralized than other DEXs in the market. The protocol will require that all participants pass a know-your-customer, or KYC, check to comply with relevant regulations depending on their region. While many in the crypto community will certainly criticize this move, there are certain advantages to some level of centralization. For example, the white paper addresses chargebacks which would give Square the ability to reverse transactions and stop losses from rug pulls that have occurred on other exchanges. The latest news on tbDEX can be found @TBD54566975. - Anthony Pompliano Interviews Michael Saylor Interview from Nov. 8th
A long form interview with Pomp and MicroStrategy CEO, Michael Saylor. Highly recommend giving it a listen this week if you're traveling for the holidays or have a little extra free time.
Quick Hits:
- Saylor covers MicroStrategy's decision making process behind converting their treasury funds from short-term treasuries to Bitcoin
- Saylor's view on current inflation and future expectations
- Bitcoin as a hedge against inflation
- Bitcoin's future with public companies
5. Bitcoin’s Pandemic-Era Correlation With Tech Stocks Disappears
The 30-day correlation between Bitcoin and the Nasdaq 100 futures has fallen to almost zero from a 2021 peak of 0.56 at the end of September. The September metric suggested that technology stocks and Bitcoin were often moving in and the correlation had generally been positive since February 2020.
Top Sharers of the Crypto Top 5:
1. Cameron S. - New York, NY
2. Jake Y. - Greenville, SC
3. Lauren A. - Nashville, TN
Disclaimer: The information contained in this newsletter shall not be understood or construed as financial advice. I am not an attorney, accountant or financial advisor, nor am I holding myself out to be, and the information provided is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation.