Low Crypto Prices Force British to Cancel Tea Time
Did the new British PM buy the dip? Could FTX Sam be spreading FUD? Three reasons why you should thank a trader, and more!
Welcome to the WealthUnion Insider newsletter. Crypto news, financial market moves, & company spotlights.
What we're covering this week...
Did the new British PM buy the dip?
Is FTX Sam spreading “FUD” and becoming crypto king?
Three reasons why you should thank a trader
The latest on the market's big bounce
HODL into the Apocalypse
🛍️ DID THE NEW BRITISH PM BUY THE DIP?
Crypto bros rejoiced with "one of us!" as Rishi Sunak was appointed the UK’s new Prime Minister.
Earlier this year, while serving as Chancellor of the Exchequer, Sunak shared his desire to make Britain a global center for cryptocurrency innovation by spearheading the passage of crypto-friendly measures. Sunak said: “It’s my ambition to make the UK a global hub for crypto asset technology, and the measures we’ve outlined today will help to ensure firms can invest, innovate and scale up in this country.”
The new measures include regulations for stablecoins, which will open up their usage in the UK as a recognized form of payment. And the measures even have the Royal Mint working on Non-Fungible Tokens (NFTs).
After the news of Sunak's appointment, Adam Jackson of Innovate Finance, a UK tech industry body and crypto advocate, described him as a “champion of FinTech” and added that Sunak would benefit the crypto sector.
It sounds like the Brits won’t have time for tea and crumpets anymore; they’ll be too busy buying the dip along with their PM.
👑 DETHRONED! SBF IS NOT THE KING OF CRYPTO
[Updated November 16, 2022: Sam Bankman-Fried, known as SBF, is not the king of crypto but a financial criminal. This article was written before the failure of his crypto exchange, FTX. We've changed this article's original title and image to reflect reality. The rest of the article remains largely unchanged to serve as a reminder that SBF had so many people fooled.]Sam Bankman-Fried, the CEO of the crypto exchange FTX, has stated that FTX will launch a stablecoin. Could it be called the "Fried Universal Dollar," or "FUD" for short? FTX already allows its customers to use a variety of US dollar-pegged stablecoins as collateral, but now it seems they want to push the competitors off a cliff in favor of FUD.
While plenty of crypto exchanges have their own stablecoins, Tether, which has the same owner as the Bitfinex crypto exchange, is the big dog with a market cap of $69 billion. Binance launched its BUSD stablecoin in 2019 and, in only three years, has a market cap of $21 billion. USDC, a stablecoin that Coinbase and Circle jointly launched in 2018, has a market cap of $43 billion.
Sam sent FTX on a shopping spree for struggling crypto companies. FTX made a partial purchase of Robinhood, and a complete acquisition of BlockFi, for $240 million. FTX is currently raising $1 billion, so they can acquire more crypto companies.
Sam believes Coinbase is losing billions of dollars due to its high overhead. Coinbase primarily serves the US market and caters to retail traders. FTX appeals to more hardcore traders. The majority of FTX’s revenue comes from derivatives trading. Swallowing up Coinbase would give FTX the additional exposure to the US market it wants.
Sam recently published his thoughts on possible digital asset industry standards, which include a centralized system for freezing the crypto wallets of criminals and even paying criminals part of the funds if they return the majority stolen. In response, the crypto community was up in arms because the thought of a centralized party freezing crypto wallets is counter to the ideals of decentralization. But centralization is good for FTX because it is a centralized platform. Moreover, such ideas put FTX and Sam in the good graces of financial regulators that want to impose controls on the movement of crypto.
In summary, FTX’s FUD stablecoin may become a heavyweight in the battle of the stablecoins. In addition, the FUD coin would undoubtedly be the preferred option for the businesses FTX owns, which might end up including Coinbase. And FTX is making friends with regulators, which could lead to broad adoption of its stablecoin on and off crypto exchanges. With all his moves, Sam Bankman-Fried might be waving his FUD stablecoins as the undisputed king of crypto when the dust clears. [As mentioned, this article above was written before the spectacular collapse of FTX. SBF is definitely not the king of crypto.]
🤔 THIS WEEK'S CHALLENGE
What did Elon bring to Twitter headquarters on his first day?
Cookies for the executive team
A kitchen sink
You'll find the answer later on in the newsletter!
3 REASONS WHY YOU SHOULD THANK A TRADER
It’s time to call up your favorite crypto trader and thank them for their service. Or, pat yourself on the back if that's you because we are diving into three reasons you should thank a trader for their contributions to the cryptocurrency market.
1. Price Discovery
A new asset with no price history leaves little confidence for big money to invest, so traders step in to help price a new asset. Price discovery occurs when the buyers and sellers find an equilibrium in the asset price.
2. Efficiency of Markets
Traders help to make markets more efficient by competing against each other. Think of it as a game of chess. One trader makes a move, and another tries to counter that move. This process helps to create an efficient and fair market for all participants.
3. Providing Liquidity
In financial markets, liquidity refers to how deep an order book is, meaning the volume of dollars in bid and ask offers.
Low-liquidity markets are inefficient because they're volatile and have too much variation between the bid/ask price, known as slippage.
To buy and sell, quantities of an asset must be available, so some traders specialize in making assets available to trade. Making an asset available to trade is called providing liquidity.
Market makers are a type of trader that provide liquidity by keeping active buy and sell orders in such a way that they’re constantly filling both and making a profit on the delta between the bid and ask prices. In short, we need traders to provide the assets we want to trade.
Well, that’s a wrap. Thanks for reading the three reasons to thank a trader. Now we suggest you say Thank You, Danke, Mahalo, and Merci, to your favorite trader.
"Rich people have small TVs and big libraries, and poor people have small libraries and big TVs"
- Zig Ziglar
📈 THE TRADING CORNER
All eyes are on Bitcoin and Ethereum this week. Following Bitcoin’s move, Ethereum has broken upwards to retest its all-time high trendline. Now we are waiting for a market reaction, but getting through resistance this strong can take time, and the price can reject multiple times on the trendline. A bullish scenario will be consolidation in price near the trendline or staying above $1,500, which will create stable support and signal a higher chance of a price breakout. A bearish scenario will be a break below $1,480, leading to more downside price action. Over the next few months, WealthUnion expects a move back to $2,400 if the price breaks above the bear market trendline.
Bitcoin has broken out of the wedge on William %R, shown by the two yellow arrows on the far bottom indicator. Breaking out of the wedge on William %R signaled the end of the 2018 bear market. However, it took weeks before there was momentum to the upside in 2018. So is the signal telling us things are on the way up, or is the current crypto market sentiment still too weak for a price boost? We’ll wait to see if history repeats.
How did you like the Insider content this week?
Chain Challenge Answer: A kitchen sink
Elon Musk showed up at Twitter HQ with a kitchen sink on his first day as CEO.
🤪 JOKE OF THE WEEK
If a hot girl sends you a DM about crypto...
😂 COMIC OF THE WEEK
That’s a wrap for this week. If you want more, follow us on Twitter (@Wealth_Union)
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