Yeezy's in the Metaverse

Good morning. Jerome Powell was renominated as the Fed Chair, which means four more years of MONEY PRINTER GO BRRR memes. In addition to that critical news, we've got more athletes taking their salary in bitcoin, luxury brands aping in, and the potential development of a new financial metric.

What this is:
A "Top 5" of crypto, digital asset, and other blockchain related news sent to your inbox on a daily basis

My asks from you:
- Send to your friends, family, and anyone that would be interested (check the Top Sharers leaderboard at the bottom of this email to see where you stand!)
- If you were forwarded this newsletter and would like to keep receiving it, hit the subscribe button below
- Send any and all feedback to jmaxxyoungii@gmail.com
- Add us to your Contact List so this newsletter doesn't end up in your spam folder

Top 5:

1. Biden to Renominate Powell as Fed Chair and Appoint Brainard as Vice Chair
   President Biden announced on Monday that he will renominate Jerome Powell as the next Federal Reserve chairman. Powell has served as Fed chair since 2018 and oversaw the doubling of the central bank's balance sheet to $8.7 trillion during the COVID-19 pandemic. Generally speaking, Powell has expressed the need to regulate cryptocurrencies in order to protect the traditional financial system from any destabilization. The Fed confirmation hearings will be the next chance to get Powell's view on cryptocurrencies and already Senator Lummis (R-WY) has indicated her desire to raise this topic.

2. Luxury NFT Market Could Hit $56B by 2030: Morgan Stanley
The rich may be getting even richer, according to a Morgan Stanley report. The firm estimates that the metaverse and non-fungible tokens opportunities could generate $56 billion in revenue for the luxury brands market by 2030.
"NFTs and social gaming present two near-term opportunities for luxury brands, allowing them to monetize their vast IP built over decades,” the report says. Already some companies have taken advantage. Last month Dolce & Gabanna sold nine NFTs for $5.7 million, illustrating the demand for virtual luxury goods. The bank estimates that metaverse and NFT developments could add 10% to the total addressable luxury market and that fashion houses Gucci and Yves Saint Laurent are currently best positioned to take advantage given their brand demographics and existing collaborations.

3. NFL’s Odell Beckham Jr to Take ‘New Salary’ in Bitcoin
The newest addition to the LA Rams wide receiving corps, Odell Beckham Jr., will take his salary with the team in bitcoin. Beckham is partnering with Cash App, the the mobile payments company, backed by Square and is following in the footsteps of Aaron Rodgers who earlier this month announced a similar partnership. The announcement is another in a string of sports-crypto connections, including last week's news that Crypto.com had purchased the naming rights to the Staples Center.

4. Bitcoin Miners Are Flocking to TX as Grid Operator Warns of Future Blackouts
A report from ERCOT, the organization that operates Texas’s electric grid, says the grid is still vulnerable to crises like the power outages experienced in February of this year after several major winter storms. That might be a problem with Texas becoming the hot-spot for crypto mining firms to relocate to after China's ban earlier this year. Bloomberg reports that the new power demands for crypto mining in Texas could reach around 5,000 megawatts over the next two years—around twice the yearly electricity demand for all of Austin in 2020. The massive increase in energy consumption couple with the still susceptible energy grid, is a recipe for outages unless miners are willing to power down during periods of high demand says Joshua Rhodes, a research associate at the University of Texas. Currently, it seems unlikely that miners would be willing to power down unless financial incentives are offered or regulations are put in place that forces them to do so.

5. Bitcoin Interest Rates
What is a "perp swap" and how does it relate to the "bitcoin interest rate"? The author of this article is glad you asked.

"The perp swap is a derivatives contract that gives exposure to the bitcoin price by using only a fraction of the capital as collateral, similar to how futures contracts work for other assets on exchanges around the world. The difference between perpetual bitcoin swaps and most other futures contracts is the term—expiration is only eight hours away. This brings a metric into the bitcoin market that provides a strong signal to traders and can often make short-term price action follow a pattern: the perp swap’s funding rate. This is the interest rate that links the spot price to the futures price over an eight-hour timeframe."

TLDR: the perp swap's funding rate is currently serving as bitcoin's short-term interest rate and serves as a strong short-term price indicator

What does the evolution of perp swap rates for bitcoin tell us?

"... the vibrant perp funding market is evidence that bitcoin is serving a monetary function [collateral] on par with two of the world’s most important asset classes: US Treasuries and real estate. Additionally, arbitrageurs are capitalizing on opportunities within the bitcoin asset class based on funding rates across different exchanges. Funding rates often coalesce because the arbitrage trade is becoming highly efficient. Bitcoin is a dynamic collateral type as its commodity qualities shine brighter than ever before."

TLDR: bitcoin is a standalone asset class that is being widely used as collateral in decentralized capital market activities

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.