Is this a New Crypto Winter??

It’s been a rough start to the year…

And, with the Fed looking like it’s raising rates in March, there are concerns that we could be entering that Bear market.

However, what’s even more concerning than this is the prospect that this crypto bear market could translate into a longer crypto winter. One that sees subdued prices and lackluster interest for a year or more.

So, are we headed to a cold crypto winter?

Well, one of the best ways to judge this is to compare and contrast the market conditions now to those that preceded the previous crypto winter. That was back in 2018 & 2019. Two long and hard years in the crypto space. One that many of us had experienced first hand.

In my video today, I am going to be taking a look at the two different periods and analysing if there are any similarities or differences. I will also take a look at what is driving the market now and give my perspective of whether the market rout that we have seen will continue.

You can watch my latest video here.

📊 Main Portfolio 📊

No changes to the portfolio since last week. Pretty happy with my allocation at the moment. Although, I am looking at potentially picking up some more FTM if levels justify it.

I am also considering picking up a small allocation of LUNA but think we may have more attractive entry points in the coming days. I will be covering Terra in much more detail in a video I have coming - so keep your eyes peeled.

As always, I will keep you updated with moves in my Telegram channel. My updated portfolio is:

ETH 29.19% | BTC 23.35% | SOL 10.46% | DOT 10.14% | ATOM 6.38% | FTM 5.06% | HNT 3.14% | MATIC 2.32% | ADA 2.06% | RUNE 1.66% | USDC 1.27% | AR 1.09% | INJ 0.96% | UST 0.95% | LINK 0.94% | YGG 0.79% | XDEFI 0.26%

🖼 NFT Portfolio 🖼

MAYC 95.23% | Meebit 4.76%

📈 Thoughts on Market 📈

Last week I mentioned that this week would determine which way the crypto market is headed in the short to medium term. This was primarily because of the Federal Reserve’s press conference on Wednesday, and the worries of what they would say about raising interest rates. Luckily, it looks like they’re sticking to the original schedule, so the crypto and stock markets didn’t crash.

But the markets didn’t exactly rally either, at least not until Apple released its record high quarterly earnings on Friday. Apple is the largest company by market cap, and it’s believed that Bitcoin and other cryptocurrencies are correlated to tech stocks such as Apple. As such, it looks like Apple carried the crypto market and the stock market into the green.

This isn’t a stretch to say either, because Apple also announced their own metaverse plans. Recall that Apple CEO Tim Cook holds crypto too. Speaking of which, Tim also said that Apple is seeing supply chain issues ease as countries drop pandemic restrictions. This is seriously good news, because most of the inflationary pressures seem to be coming from supply chain disruptions.

So consider this…

If the Federal Reserve is raising interest rates to fight inflation being caused primarily by supply chain issues (or so they say), then what happens if, say, the World Health Organisation suddenly declares the pandemic is now more of an endemic?

This would mean that countries would no longer have a leg to stand on when it comes to these restrictions. The more countries that lift these restrictions, the less bottlenecks in the supply chain. While it may take some time for it to clear the current backlog, the positive sentiment around this announcement could help to lift the markets.

This is one of many “white swans” on the horizon that could lead to a nice recovery across the board. By the same token though, there are some black swans that appeared last week as well. The most significant of these is probably the upcoming executive order on cryptocurrency that’s expected to be signed as soon as next week (covered below)

There are also ongoing concerns about energy shortages around the world, including in the United States. This has resulted in many countries cutting off crypto mining operations to preserve power, and it’s possible that this could happen in some US states. An upcoming video I’m doing will analyze what US politicians have been saying about crypto mining, so stay tuned.

For what it’s worth, the charts and fundamentals are looking damn good. BTC balances on exchanges continue to fall, and we seem to be seeing some actual momentum to the upside for the first time in weeks. There’s of course no guarantee that this will continue, but it’s the best sign we’ve seen in a while.

🃏 DeFi Drama 🃏

Of all the innovations in cryptocurrency, decentralised finance is arguably one of the most important. The ability to trade, borrow, lend, and save without a middleman is the pinnacle of financial freedom. The proof is in the pudding - the protocols that power this technology have hundreds of billions of dollars in total value locked. If only they were truly decentralized.

Regulators such as SEC Chairman Gary Gensler have said that most DeFi protocols are centralised enough to face the scrutiny of regulators. There is no denying that there is truth to this statement, and it’s one that unfortunately applies to many crypto projects as well. The intense competition in the crypto space has made centralisation tempting, after all.

Regulations aside, the fact of the matter is that centralisation increases risk because humans are corruptible. This was put on full display during a recent fiasco involving a DeFi protocol on Avalanche called Wonderland. In short, Wonderland is a fork of Olympus DAO, a DeFi protocol on Ethereum that’s essentially aiming to be the central bank of cryptocurrency.

Like Olympus DAO, Wonderland was infamous for providing insanely high yields to users who deposited funds into the protocol (one of the many red flags of a scam). Wonderland was also famous because of its prolific founder, Daniele Sestagalli, who is a well known DeFi developer that’s worked closely with the likes of Andre Cronje (Yearn Finance founder).

Wonderland wasn’t a one man show though. There was another DeFi personality who went by the pseudonym 0xSifu. Nobody knew who he was (another red flag), until another DeFi sleuth named ZachXBT revealed that 0xSifu was the co-founder of Quadriga CX, a cryptocurrency exchange that shut down in 2019 after its founder disappeared with the crypto.

If that wasn’t bad enough, Michael Patryn (0xSifu) has a history of financial crimes, which left the crypto community wondering why Daniele chose to partner with this individual. The answer seems to be money. Michael was an early investor in another DeFi project Daniele had founded. Daniele also claims to this day that Michael is not the same person he was before.

The Wonderland community didn’t buy it though, and they voted to remove Michael from the project not long after the news broke. There is also a vote that is currently running to entirely close down Wonderland and give the funds back to the community. Even so, this saga has no doubt attracted the attention of regulators around the world.

Let this be a lesson to the crypto community and DeFi community. If we do not regulate ourselves, then the real regulators will come in, and it will not be pretty. Luckily there are a lot of actual crypto journalists out there who are keeping tabs on what’s going on, but the best medicine is prevention. What’s the solution? Better governance. Let’s hope it comes soon.

Speaking of regulations…

🇺🇸 Regulators on The Attack 🇺🇸

Just when you thought some of those politicians in DC were done with their attempts at regulating crypto, they come from left of field with a raft of measures and proposals.

One of these was a provision that was snuck into a House bill (the COMPETES Act). The Act is legislation that is aimed at increasing economic competitiveness with China. However, it has now served as a trojan horse for this seemingly unrelated and toxic provision.

More specifically, the provision would give the treasury arbitrary powers to block all US financial institutions from interacting with a crypto exchange, jurisdiction that has crypto exchanges, crypto exchanges by a non-US miner or even transactions coming from non-US custodial wallets.

This provision aims to greatly expand existing laws that the treasury already has to impose restrictions on transactions like this. The only difference is that those laws have to come with consultation of the Fed and numerous other federal regulators before doing so. Moreover, there is a time limit on these restrictions and they could lift it in 120 days.

So, quite simply, this provision will give Janet Yellen’s Treasury department arbitrary powers to impose on exchanges when it sees fit. Impositions that do not need to be discussed with anyone else and can last indefinitely.

It should also be noted that this provision has been inserted by the same member who tried to insert a similar provision into the National Defense Authorization Act last year. This was an essential bill that kept the US military funded which thankfully did not pass with the provision as it was struck just in time.

It’s pretty alarming to me when these politicians jam unrelated provisions into must-pass bills. Let’s also not forget that this happened last year with the infrastructure bill. Indeed, if it wasn’t for the efforts of the blockchain lobby, many more of these laws would have made their way through congress. It also makes me wonder how many laws are being passed on a regular basis without anyone in the voting public actually knowing about it until the enforcement hits them in the face.

Then, to add to the rumblings on Capitol hill, the White House also threw some FUD our way with news of a potential Executive Order by Biden on cryptocurrencies…

The exact details of the Executive Order are yet to be announced, but according to sources, it would be issued in a national security memorandum. It would assign some government entities to study crypto, stablecoins and NFTs with the goal of developing a workable regulatory framework.

The fact that this EO will be placed in the context of “national security” goes to show that the fear stems from the cross-border payments for potential illicit activity. It’s therefore no surprise that this is coming at about the same time as the aforementioned provision which gives Treasury control of these cross border payments.

Of course, it’s a lot easier to convince people of the need for regulation and control when it is done on the grounds of “National Security”. Fear sells and even though illicit activity plays a miniscule role in overall activity, it’s the narrative that is important.

That aside, the COMPETES Act has a long way to go and my hope is that the provision will be removed when it heads to the Senate. Indeed, a competing lawmaker has already introduced an amendment that simply eliminates the provision altogether. As it relates to Biden’s incoming EO, I will be keeping my eyes peeled and my ears to the ground.

Yet, as I made clear in my video today, the mere fact that these regulations have made their way into the halls of congress and beyond is because crypto has become such a transformative force. We can only hope that there are more politicians that are on our side who are able to stand guard at the gates and defend the progress we have made.

📱 I’m Going Live 📱

In case some of you didn’t know, I have been holding weekly livestreams on my TikTok every Friday. These have been really exciting and it's a unique opportunity for me to interact with all of you. I also really enjoy these as they give me more time to talk about crypto and hear more diverse perspectives.

If you do miss any of these livestreams, I will also be uploading them on my Instagram and Clips channel for later consumption.

So, be sure to join my TikTok if you haven’t already. I will be announcing the time of the next livestream for you sometime this week!

🔥 Deal of The Week 🔥

Those hodling with diamond hands have been in for a bit of a bumpy ride this year. However, some crypto aficionados out there have fared better than others, even if they held exactly the same altcoins and the same amounts.

But how is that possible?

Well, one crypto dabbler just held their crypto in a wallet and the other popped that crypto on a lending platform and earnt up to 18% APY whilst keeping all that exposure to the markets. But where is this Eldorado? Well, that would be Nexo!

Yep, Nexo is a top place to earn passive crypto income. But unlike other competitors like BlockFi, interest payments are actually paid daily! That’s pretty useful if you want the flexibility to take out your crypto from the lending platform at any time.

👉 Sign Up To Nexo & Get Up To 18% Interest!

🔮 Video Pipeline 🔮

  • Mining Senate hearing: Cause for concern?
  • Terra Update: Where is LUNA Heading?
  • Cosmos Update: ATOM still out of this world?
  • How to interpret a crypto whitepaper?
  • Top 10 crypto Telegram groups
  • Top 10 Types of NFTs
  • Gaming Guilds: Complete 101 Guide
  • The Biggest Bubble of All!

🏆 What's New At This Week? 🏆

Explaining Bitcoin and Crypto To Your Family

Will GameFi be Bigger than DeFi? Blockchain Gaming Levels Up

That’s all for this week’s newsletter. As always, I’d like to thank you for supporting our work here at the Coin Bureau! It means the world to us.

Guy your crypto guy

Guy Turner

Guy is one of the founding members and face of the Coin Bureau. Like many of us, he is just an average joe who became “crypto curious” back in 2013. After recognising the potential of blockchain technology, Guy set off on a mission to create crypto educational content, working with others to start the Coin Bureau website and released our first video on YouTube in 2019. You can learn more about him in his Who is Guy? blogpost.

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