This is a Bigger Deal Than You Think!

One of the most ominous clouds that was looming over the crypto market (and all other markets) has lifted… or has it? After intense negotiations, US politicians finally agreed a deal to raise the debt ceiling. Uncle Sam is free to begin borrowing once again. The debt can keep on piling up.

An ever-increasing mountain of debt is preferable to the alternative though. Without said deal, the US government could have run out of money and begun defaulting on its outstanding obligations. That, it is safe to say, would not have been pretty.

Even so, there are going to be consequences and crypto could be most affected. In the weeks prior to the deal being agreed, the government had been keeping the lights on by spending from the Treasury general account, or TGA. This must now be refilled and that means a whole lotta liquidity is going to get sucked out of the markets in order to do so.

In today’s video, we look at the likely effects of the debt ceiling deal and what it could all mean for crypto. As you’ll see, there’s potentially a lot more to it than a lack of liquidity and things could be about to get even more interesting.

You can watch that video here.

📈 Crypto Market Forecast 📈

If you thought last week was crazy, you ain’t seen nothing yet. There are lots of macro and crypto events coming up that could shake up the markets like James Bond martini. Starting with the macro, the Fed’s upcoming rate hike is front and centre.

Investors are currently pricing in a pause, but the surprise rate hikes we saw from the Bank of Australia and the Bank of Canada have led to speculation that the Fed could surprise in the same way come Wednesday. This ultimately depends on the inflation print the day before - the CPI comes out on Tuesday. If it looks anything like the PCE print from late last month, another hike isn’t out of the question.

That said, it’s possible that the Fed will pause even if there is a hot CPI print. That’s because the Treasury has begun refilling its bank account at the Fed, and this is slowly but surely pulling liquidity out of the markets. Meanwhile, the Bank of Japan has started signalling that it’s considering selling stocks.

Speaking of stocks, US politician Nancy Pelosi and her husband reportedly sold one million dollars of Apple stock (though it appears to have been donated). For context, Nancy is notorious for insider trading to the point that there are Twitter profiles tracking her trades. Her latest sale comes shortly after Apple stock hit its all time high.

This could mean that the markets are about to crash, and the sentiment seems to confirm it. The fear and greed index for stocks recently hit its highest level in years. This tells me that crypto has some downside risk, despite its already low sentiment readings - extreme greed in markets could mean a crash is coming.

Staying with the theme of insider trading, one of Ethereum’s co-founders appears to have sold more than 10% of his ETH holdings. Oddly enough, the Ethereum foundation recently sold some ETH as well. Normally I’d say this is nothing, but there’s a potential black swan that could snap at Ethereum this Tuesday.

The infamous Hinman documents are scheduled to be released by that day, and they could reveal some concerning things about Ethereum and the SEC. This seems more likely than not given that the SEC mysteriously scrubbed Bill’s profile from its website the other day. There’s speculation that they’re getting ready to throw him under the bus.

At the same time, it looks like exchanges in the US that offer cryptos are starting to reconsider the coins and tokens they’re offering to retail investors as a consequence of the SEC’s recent lawsuits against Coinbase and Binance. Some of you may have seen all the headlines about exchanges delisting Filecoin’s FIL because of regulatory scrutiny in recent weeks. What’s scary is that these exchanges have also been delisting DeFi tokens. This might have something to do with the fact that the SEC is in the process of putting together rules that will allow it to go after DeFi protocols. Fortunately, they won’t be able to target those that are truly decentralised.

Unfortunately, it looks like this anti-crypto sentiment has spread to other continents. The crypto crackdown in the US has reportedly ‘reignited’ debates about how coins and tokens should be classified in the EU. A major Australian bank has also announced that it will stop processing ‘certain’ payments made to crypto exchanges.

That said, I have a feeling we could see a ‘white swan’ coming soon, specifically from the Middle East. Saudi Arabia’s sovereign wealth fund has been diversifying its investments with the aim of supplementing its oil income. The Kingdom could turn to crypto, especially since its central bank is already in the process of exploring crypto regulation. Never a dull moment.

🌊 Crypto & Noah’s ARK 🌊

This week, we saw the big bad wolf of crypto, aka the US Securities and Exchange Commission, huff and puff once again at Coinbase. This time it took the form of a lawsuit accusing the exchange of violating federal securities laws.

As one would expect, the market reacted poorly to the news, with the price of Coinbase stock dropping by more than 20% and its bonds tumbling into distressed territory.

The situation seemed to only worsen when a task force of 10 US state regulators decided to follow the SEC’s lead by issuing a Show Cause Order against Coinbase, alleging it also violated state securities laws through its staking program.

This even prompted investment bank Berenberg to declare Coinbase shares as "uninvestable" in the near term and credit rating agency Moody's to change its outlook on Coinbase from stable to negative.

However, while investors were clearly distressed, there was one that did not falter.

Cathie Wood’s Ark Invest. In fact, it seemed even more bullish.

Ark Invest’s funds collectively purchased Coinbase shares worth $21.64 million right after the SEC’s lawsuit announcement. This brought Ark’s total holding of Coinbase shares to $650 million and made the asset Ark's fifth-largest stock holding across its funds.

Moreover, Ark Invest has been a consistent investor in Coinbase, with its purchases getting more aggressive since last year. This is especially impressive considering that the price of COIN has been on a downward trajectory ever since its IPO back in 2021.

At first glance, this seems like a typical case of sunk cost fallacy, however, a deeper look at Ark Invest’s investment thesis reveals a strong conviction behind its decision.

So, what drives Ark Invest and Cathie Wood to believe in Coinbase? Three things.

First: Ark Invest is a firm believer in investing in innovative and disruptive tech. A quick glance at Ark’s top holdings reveals investments in companies across the artificial intelligence, robotics, energy storage, DNA sequencing and blockchain technology sectors. Cathie Wood and Ark believe that there is an incoming convergence between these disruptive technologies that will power the next wave of explosive technological development.

Second: the need for Bitcoin. Wood has gone on record stating that she believes BTC will hit a price of $1 million before the end of this decade. Wood states that the recent “uncertainty and volatility” in the global economy has only increased her confidence in the flagship cryptocurrency. Specifically, she believes Bitcoin is an “antidote” to counterparty risks and a hedge against inflation.

Third: Coinbase’s ability to navigate. Ark believes in Coinbase’s ability to innovate and navigate out of uncertain regulatory environments. In a recent Bloomberg interview, Wood stated that SEC’s recent crackdown on the industry is coming under scrutiny from judicial and legislative arms of the government who believe the regulator might be overstepping its powers.

She believes Coinbase’s previous pursuit for increased regulatory clarity will come to its aid against the SEC’s recent enforcement action. Regardless of the outcome, Wood believes in Coinbase’s ability to innovate and decentralise certain products or operations in the long term. This specifically refers to Coinbase’s recent launch of ‘Base’ - a layer 2 network that aims to scale transactions on Ethereum.

Wood stated that Coinbase’s decision to build and integrate its services into a decentralised crypto infrastructure highlights its “deep alignment with the fair, transparent, and accessible financial services that public blockchains aim to offer.” She also stated that Coinbase will likely benefit financially if its Wallet serves as a trusted on-ramp and access point to applications on the network as it scales.

Quite the bull case, don’t you think?

📊 Personal Portfolio 📊

BTC 35.17% | ETH 31.52% | USDC 18.39% | USDT 7.36% | USD 3.71% | ATOM 2.72% | DOT 1.13%

🔥 Deal of The Week 🔥

With market volatility seemingly on the horizon, some of you may want to hunker down and hodl on. 

Now, the best way to keep that crypto secure is by using a hardware wallet. Our favourite devices currently have got to be Ngrave and Trezor. 

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👉 Grab a Trezor for a cost effective way to store your crypto!

However, if you are more of a trader and would like to take advantage of this upcoming volatility, then you’ll need a top notch crypto exchange to trade on.

Currently, one of our favourite options is Bitget. Not only will you get a wide selection of hundreds of cryptos to trade, but we’ve been able to negotiate a real special deal just for you!

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👉 Why not try out Bitget? Sign up & give it a go!

🔮 Video Pipeline 🔮

• Bitcoin Ordinals Evolution: This you need to know!
• WEF Crypto Regulation: What Are They Planning Now?!
• US CBDC Survey: Here’s What The People Think!

🏆 What's New At CoinBureau.com This Week? 🏆

✅Best Staking Cryptos: Top 7 Cryptos to Earn Staking Rewards
✅Buying Bitcoin on eToro: Complete Guide!
✅Press Release: Proof of Talk 2023
✅Press Release: Live Coin Watch
✅Press Release: Layer One X

📖 Quote of the Week 📖

There is no doubt that the past week has been a challenging one for the crypto industry. Indeed, we’ve endured a number of these over the past year. However, the determination with which the SEC is taking on crypto companies is undoubtedly a cause for concern.

Yet, it’s at times like these that I like to look for the silver linings to the clouds. The instances where crypto is saving lives and changing the world. The technology being built and the people driving the space forward.

“It is during our darkest moments that we must focus to see the light” - Aristotle

Team Coin Bureau

Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.