MAJR News 076
SEC rejects 2 more Bitcoin Spot ETF proposals, Bitcoin miners are hodling their coins - possible upcoming bull run, PwC buys digital property in the metaverse, Inflation hitting economy and CPGs
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Preston Pysh and Natalie Brunell discuss current market price action and the sentiment around a possible market correction in the near future. They discuss the market volatility, how the current system is rigged and why bitcoin is the best available investor solution.
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BITCOIN
SEC Rejects Valkyrie, Kryptoin Spot Bitcoin ETF Applications
The SEC continues to reject and delay institutional applications for a spot bitcoin ETF. Valkyrie and Kryptoin applications were rejected by the SEC because the proposals “failed to demonstrate that their proposal are consistent with the requirements of the Exchange Act Section 6(b)(5).” This rule states security exchanges need to prevent fraudulent and manipulative practices to protect investors and the public interest. The SEC has already approved a futures ETF, which is a more complicated way for investors to get exposure to bitcoin. Anthony Scaramucci’s Skybridge and Fidelity spot application are next on the chopping block.
Is There a Holiday Bitcoin Rally in the Works?
On-chain data indicates that bullish sentiment for bitcoin is rising. Miner’s unspent supply of bitcoin is approaching all-time highs, which may indicate that miners anticipate an upcoming bull run. Miners generally have to sell their mined bitcoin in order to pay down their capital expenditures. However, given the rise of financial services for crypto companies and miners, the new business model is to hodl bitcoin and borrow against their coins to pay down their expenses. This changes the price floor of bitcoin as less supply becomes available creating supply shock dynamics for another bull run, most likely to kick things off in early 2022.
Bitcoin miners generated more than $15 billion in revenue during 2021
Mining bitcoin is becoming an extremely profitable business. In 2021, miners made more than $15 billion in revenue, a 206% YOY increase. Data in the chart above, is extrapolated from March’21 data, when peak selling took place as bitcoin approached new all-time highs of $60k+.
More on Bitcoin
What Does Demand For Bitcoin futures ETFs Look Like in 2022?
Households are Exploiting Cheap Siberian Energy to Mine Bitcoin
CRYPTO
11 Most Interesting DAOs of 2021
DAOs, decentralized autonomous organizations had a big year in 2021 as the early projects showed that they’re more than a proof of concept. DAOs are simply a toolset enabled by blockchain as way to organize and coordinate strangers with a shared common interest at scale through token incentives and a community owned treasury. Some of the top DAOs in 2021 were Uniswap (DeFi protocol DAO), Friends with Benefits (social community or membership DAO), BitDAO (world’s largest treasury DAO), ConstitutionDAO (membership bidding for real US constitution), Decentraland DAO (metaverse membership that controls features in Decentraland) and Mirror DAO (membership for a decentralized blogging platform).
MAJR Take: DAOs are the future of work and will be the next biggest wave to hit crypto and mainstream, similar to NFTs.
Consultants Are Entering the Metaverse – Literally
Consulting giant subsidiary, PwC Hong Kong acquired digital property in the Sandbox metaverse. Virtual pieces of property represented as NFTs across a variety of blockchains are quickly being adopted from all types of buyers - celebrities, brands, funds and now consulting companies. Recent sales of these parcels of digital property are now selling for $10k, up from $200 in December 2019. Consultants are not only seeing digital property as an asset class, but consulting companies on the metaverse and how to approach this new digital world as a service and a new revenue stream. Tokens for Sandbox (LAND) are up 10% in the last 24hrs.
MAJR Take: Sandbox (LAND) is one of the leading metaverse platforms with the second most institutional adoption after Decentraland (MANA). Sandbox dethroned Decentraland and is now the largest metaverse blockchain by market cap, outside of Play-to-Earn game Axie Infinity (AXS). These tokens can be found on leading US exchanges Coinbase and Gemini. We believe these tokens will perform very well as the metaverse narrative continues to see mainstream adoption. Please note that buying digital land is a higher risk investment than buying the ecosystem tokens as liquidity / finding a buyer for that single piece of property because a challenge if the market corrects.
Ethereum Launches Kintsugi Public Testnet Ahead of Move to Proof-of-Stake
Kintsugi means the art of mending broken pottery with gold in Japanese is the name used for the recently launched Ethereum Proof of Stake test network. Test networks provide developers a simulated environment as mainnet without the real world costs. This move signals that Ethereum is getting closer to launch the long awaited migration away from Proof of Work (mining) to Proof of Stake (validators) currently slated to go live early next year.
MAJR Take: If the ETH 2.0 migration to Proof of Stake goes as planned without any issues, it will be a complete game changer for the space and the ETH price. However, it’s a very complicated and technical feat that comes with risk as they move a ~$500 billion network to a new chain and nearly $27 billion in ETH will be unlocked from the Beacon Chain flooding the market with supply which could affect price post migration. One ways of playing this change is to sell a portion of your ETH position as price runs up into the migration. Take risk off the table for the migration to settle and then revaluate the market before entering the position again.
Terra's LUNA Hits New All-Time High As Cosmos Coins Post Double-Digit Gains
Terra’s LUNA token has hit new all-time highs reaching $97 in the last 24hrs. The network has showed tremendous bullish sentiment as it continues to pump and see liquidity locked in its network as the rest of the market corrected over the last couple months. LUNA is up over 100% since the beginning of November and the protocol now has over $20 billion in Total Locked Value (TVL), the second most of any blockchain outside of Ethereum. Terra’s market cap is still only $33 billion compared to other leading smart contracts chains like Ethereum ($476B), Binance ($90B), and Solana ($56B). Lots of room to go, especially since it’s only year 1997 compared to the adoption of the Internet.
MAJR Take: Layer 1 smart contract protocols will be trillion dollar blockchains as more value gets tokenized over the next decade and more users enter the space. There’s approximately 200 million wallets globally that hold some amount of crypto. We’re so early and layer 1 coins are the next best risk-reward bet outside of bitcoin.
More on Crypto
Beeple-Backed Render Network Raises $30M From Solana, Alameda, More
Decentralized exchanges saw over $1 trillion in trading volume this year
MACRO
Summers Sees Risk of Recession Soon, ‘Secular Stagnation’ Later
Larry Summers, the former Treasury Secretary says that the Fed, the Biden administration and investors have under estimated the real costs associated with running the market too hot and the rising risk of inflation. We’ve seen the biggest leap in CPI since the Ronald Reagan era, which has forced the Fed to pivot hard towards tightening. His comments highlight the realities of inflation spiraling out of control as price pressures climb - business and household margins are tightened squeezing an already struggling economy. Higher prices = increased costs for materials for producers = higher prices for consumers = increased demand for higher wages to afford costs of living = tighter margins for companies as they pay higher wages = higher costs back to consumers…and the spiral continues.
MAJR Take: This inflation spiral can get out of control, scare markets and cause monetary authorities to act emotionally and tighten too quickly, which then makes companies ability to borrow capital even harder and more expensive, just as they levered up to all-time highs given the low interest rate environment. This is the reality that the system, the pandemic, central banks and governments have created. They’re all stuck.
U.S. New-Home Sales Jump in November to a Seven-Month High
New homes sale prices jump in November and a new seven-month high to $744k for a new single family home, up 12% since October. The median price for a new home rose 19% from a year ago to a record $416k. Construction for new homes is back logged due to increased demand and disrupted supply chains. New home sales are 10% of the overall housing market.
Food Companies Are Having Trouble Keeping Up With Inflation
General Mills and other food producers are seeing declining margins as input costs grow forcing companies to increase prices for consumers. General Mills reported strong sales in Q3, but weaker margins. They saw gross margins shrink by 4% due to inflation affecting their input costs. General Mills produces goods such as Cheerios, Yoplait yogurt and Annie’s mac and cheese. Other CPG companies encountering the same issue saw their stocks decline as well - Campbell Soup is down 11%.
More on Macro
Inflation Crashes the Holidays, Shrinking Menus and Spoiling Traditions
Turkey Has Calmed Its Economic Crisis for Now. Here’s What Could Restart It.
MEDIA
Preston Pysh: The System Is Rigged. Will it Crash?
Bitcoin and crypto adoption is here to stay. Don’t let your friends and family miss the opportunity of a lifetime.
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