Pay Close Attention to This… 👀

Janet Yellen, the US Secretary of the Treasury, recently got grilled by politicians on Capitol Hill on the state of the international financial system. What she said revealed some shocking things.

In her annual appearance before the House Committee on Financial Services, Janet was asked questions on a range of topics, including Ukraine, ESG, the banking crisis, Russian sanctions, CBDCs and even golf. If ever a hearing revealed how the world really works, this was likely it.

Janet’s answers to this multitude of questions revealed many of the issues that face the global economy. You may have already seen the headlines about her confirmation of the decline of the US dollar, but believe me, there was a great deal more tea spilled than that.

In today’s video, we summarise Janet’s testimony and discuss some of the issues it raised. The coming years look set to get pretty crazy and so, along with what you need to look out for, we also give some tips as to how you can protect yourself from the turbulence ahead.

You can watch that video here.

📈 Crypto Market Forecast 📈

Another fascinating week is hoving into view. In case you haven’t noticed, BTC recently hit 30k for the first time in two months. The charts suggest that it still has room to run. Technical analysis indicates that BTC could rally as high as 36 to 38k in the coming weeks. You will see why in tomorrow’s weekly crypto review, at least from the technical side.

Of course, there’s more to price action than technicals. The fundamentals matter too, and in this case the fundamental question is: who has been buying so much BTC? Well, CryptoQuant CEO Ki Young Ju believes that billions of TUSD have been flowing into BTC and ETH due to supposed redemption issues. This is certainly one possibility.

Another possibility is that institutional investors in the US have started buying in anticipation that BlackRock’s spot Bitcoin ETF application could be approved. There seems to be on-chain evidence of this; one Coinbase Custody wallet saw its balance increase by 2.5k BTC after the announcement. We’ll come back to the spot Bitcoin ETF later. For now though, we need to talk about ETH.

As amazing as BTC’s rally has been, ETH isn’t looking nearly as good. In fact, it’s looking pretty bad. If you take a peak at the ETH/BTC on the monthly chart, you’ll notice that it’s been getting absolutely clobbered. What’s concerning is that this weakness has been accompanied by a series of genuinely concerning announcements around Ethereum.

For starters, there’s been speculation that the SEC will soon crack down on DeFi. The SEC signalled its intentions to do this back in April, but has yet to follow through. A recent tweet by Uniswap founder Hayden Adams has led to speculation that a crackdown is imminent. This could be one reason why ETH has experienced weakness against BTC lately.

There also seem to be increasing concerns about Ethereum’s centralisation. These were highlighted by Flashbots co-founder Alex Obadia in his resignation letter, which he posted to Twitter. Given that Bitcoin now has similar token standards to Ethereum, it would make sense for ETH to lose dominance to BTC based on this; Bitcoin is more decentralised (arguably).

Finally and most importantly, there have been plenty of concerns around stablecoin issuers, particularly Tether and TrueUSD. It’s easy to forget that stablecoins make up a significant chunk of Ethereum’s transaction volume, as well as its total value locked. A crackdown on an offshore stablecoin could do outsized damage to Ethereum’s ecosystem, including ETH.

To be clear, ETH weakness against BTC doesn’t mean that ETH’s price isn’t going to go up. In fact, it’s almost guaranteed that ETH will rally alongside BTC (if the rally continues). However, ETH being weak against BTC sends a signal that alts are suffering, and the Bitcoin dominance chart suggests this suffering has only just started (Pepe notwithstanding).

On a more positive note, there’s only one macro factor you’ll need to pay attention to this week, and that’s the PCE print for May (due on Friday at 8:30am EST). If the PCE comes in cooler than expected, then the current crypto rally will likely continue. Even if PCE comes in hotter than expected the rally could continue. Crypto seems to have decoupled, for now.

🤔 Bitcoin ETFs: Could This Be It? 🤔

There’s no doubt that the surge in bullish sentiment that we have seen is closely related to a regulatory filing made by the world’s largest asset manager: BlackRock.

Specifically, BlackRock, which has over $9 trillion in assets under management (AUM), filed an application to launch a spot Bitcoin ETF called the iShares Bitcoin Trust.

Given BlackRock’s impressive track record of getting ETFs approved by the SEC - a whopping 575 approvals versus 1 rejection - it’s perhaps no wonder the market is going crazy.

BlackRock’s application even prompted other issuers whose applications had previously been rejected - such as WisdomTree and Invesco - to immediately re-submit those applications for the launch of their own spot Bitcoin ETFs.

This suggests that other potential issuers believe BlackRock’s application has a decent chance of getting approval. So, what exactly makes BlackRock’s application so special?

That question only gets more relevant when you consider that the SEC is yet to approve a single spot Bitcoin ETF product in the US. Some estimate that the iShares Bitcoin Trust filing is at least the 28th attempt at launching such an ETF in the US and that BlackRock is the 20th company to file for one.

Well, according to a CoinDesk article, the secret weapon in BlackRock’s application seems to be something called a ‘Surveillance Sharing Agreement’ (SSA).

To give some context, the SEC’s primary reasoning for rejecting previous ETF applications seems to be its concerns surrounding market manipulation practices related to Bitcoin prices.

In order to address this particular concern, BlackRock has proposed bringing in Nasdaq to enter into a surveillance-sharing agreement with an operator of a spot trading platform for Bitcoin. This is expected to mitigate market manipulation by allowing for the sharing of information regarding market trading activity, clearing activity, and customer identification.

However, not everyone believes this makes a difference to the viability of BlackRock’s ETF application.

TradFi veteran Austin Campbell stated on a recent episode of the Bankless podcast that all other applicants in the past have also been willing to enter into an SSA, with the only difference being that BlackRock actually codified it on paper. Campbell went on to state that, barring that difference, BlackRock’s application is basically a clone of the other ETF filings.

He believes that the underlying merit in BlackRock’s application is the asset manager’s status as an industry leader; with its application serving as an expression of confidence in its ability to offer spot Bitcoin ETFs safely.

Viability aside however, there is another question that comes to mind when discussing BlackRock’s application: why now?

Well, there are a couple of reasons. Firstly, the EU just successfully passed MiCA, its landmark crypto regulatory framework. This puts pressure on financial institutions in the US, as their European counterparts race ahead with product launches in a jurisdiction that offers well-defined regulations for digital assets.

Secondly, the SEC seems to be showing a willingness to grant approvals to other TradFi players. Specifically, EDX markets, a crypto exchange backed by Fidelity, Charles Schwab and Citadel Securities recently launched in the United States. Meanwhile, Prometheum, a New York-based ‘crypto’ firm, also received approval as a licensed Special Purpose Broker-Dealer from FINRA.

Could this be a sign of changing tides?

📊 Personal Portfolio 📊

BTC 37.91% | ETH 31.31% | USDC 16.68% | USDT 6.68% | USD 3.37% | ATOM 2.87% | DOT 1.18%

🔥 Deal of The Week 🔥

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🔮 Video Pipeline 🔮

• FedNow Explained: What you need to know!
• EU AI Regulations: The First of Their Kind
• BlackRock’s ETF Application: This Time it’s Different!!
• UN Digital ID Report: The start of a dystopian future? 
• BIS Future of the Financial System: Time to panic?

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

✅ Binance Exchange Security 2023: Is Binance Still Safe?
✅ How to Signup on Binance: Step-by-Step Guide

📖 Quote of the Week 📖

Part of the reason why BlackRock’s ETF application was so surprising was because of the previous stance that its CEO Larry Fink once took on crypto. In 2017, he labelled Bitcoin an “index of money laundering.”  

“Pay less attention to what men say. Just watch what they do” - Dale Carnegie

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.