Disinflation, Market Rally, & Regulation.
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Disinflation, Market Rally, & Regulation.
Jerome Powell starting to bring some hope, NFTs in the Premier League, and US Regulation Updates
“The disinflationary process has started,” perhaps the most important pronouncement of the new year!
Federal Reserve Chairman Powell has injected some hope into markets - with his increasingly less-hawkish comments — Tuesday at the Economic Club of Washington (sounds boring we know). This comes on the back of a blockbuster US jobs report that came out Friday where the economy added an expectation-defying 517,000 new jobs! Don’t pop the champagne bottles quite yet, as this is just the start of a likely multi-year process of disinflation.
This is good news and exactly the kind of trend we need to see continue to set the stage for the next market rally. Both traditional and crypto markets extended their rally into the first week of February. Bitcoin traded as high as $23,300 during the talk. Traditional markets were up as well with the Nasdaq up as much as 1.5% and the S&P 500 by 1.1%; the 10-year Treasury yield is lower by four basis points to 3.61%.
The markets are finally showing us some love & with Valentine’s Day right around the corner let’s hope the rosiness continues! Maybe you can gift your significant other with a diversified crypto portfolio from Velvet.Capital so they can lock in gains for years to come. 😉
Quick Hitters
· Render Network’s native token RNDR rose 90% in this past week.
· Bridgewater Associates founder Ray Dalio advocates for cryptocurrency that is linked to inflation, rather than Bitcoin.
· Rolando Brison, a member of the St. Maarten parliament, is pushing to make Tron a legal tender in St. Maarten.
· Get rich or HODL trying. Tesla reportedly lost around $140M on their Bitcoin investments last fiscal year.
· HashKey Capital recently closed its third round of funding at $500M.
· Bitcoin mining group Greenidge Generation reduced its debt by $61M by securing a deal with NYDIG.
· The CBDC Tracker published an interesting graphic showing the status of CBDCs worldwide:
· Binance launches BUSD on Optimism.
In the News
Premier League gets Ethereum-based digital cards.
Don’t count NFT’s out just yet. Sports NFT group Sorare recently inked a deal with the English Premier League (EPL) to support their digital collectible endeavors. Sorare presents an interesting use case: fans can mint, collect, and trade their favorite players through the blockchain. Buying, selling, and collecting digital collectibles is big business. As fans look for more autonomy, agency, and interoperability surrounding their digital collectibles, NFTs look like a good fit.
UK Treasury Announces Regulatory Framework for Crypto Firms
The UK Treasury recently proposed a new regulatory framework for Crypto Firms wishing to conduct business in the UK. This would call for UK regulators to authorize crypto exchanges before they can legally operate in Great Britain. “The UK government’s priority should be to underline why crypto asset firms should be inside the perimeter,” the managing director of Kraken UK, told Decrypt, “Right now, there is little preventing firms based outside the perimeter from providing products and services to the UK market, exposing UK customers and institutions to additional risk.” Further regulatory clarity on crypto seems likely, and frankly inevitable.
Real World Assets Can Deliver DeFi’s Promise
The Defiant put together an interesting explainer around ‘Real World Assets’ (RWAs) and their value within DeFi. The general premise is that RWAs, bring more real-world utility and free market concepts to DeFi, rather than technological assurances and speculation. The real world runs on credit, security, and innovation; which can be best summarized in this quote: “As much as we disdain old-school finance in crypto, I think we can all agree that nothing kills financial innovation faster than losing someone else’s money.” Simply put, RWA’s offer a holy grail-type opportunity for DeFi. Getting it right will unlock an almost endless opportunity for DeFi innovation.
6 crypto investors talk about DeFi and the road ahead for adoption in 2023
Techcrunch.com did an interesting interview with 6 high-profile crypto VCs about their big predictions for 2023. According to these investors surveyed, between 20% to 50% of crypto pitches are DeFi-focused, showing a lot of attention and emphasis being put on this application. “To stand out in this crowded space, founders should focus on highlighting unique technology and a clear advantage for a specific use case, as well as a defensible moat,” Alex Marinier, founder at New Form Capital said.
Biden Administration’s Crypto Roadmap
The White House published its roadmap regarding cryptocurrency regulation, citing consumer risk as its primary concern. Crypto’s reputation as a wild west has put the industry in bad graces with the suits in Washington, forcing their proverbial hand. The goal of the Administration is to create a regulatory framework for crypto assets to be monitored, registered, and accounted for with the goal of protecting consumers and investors. Fortunately, this signals that a de jure ban on crypto in the US is probably not happening. Besides, regulation can nurture investor confidence — which is certainly important for industry maturation.
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