Sanctions and Crypto: What This All Means!

In the past few weeks, we’ve seen horrific acts of aggression in Ukraine. In response, we’ve seen some of the most stringent sanctions levelled on a country in recent history.

The moves taken by countries in the West to punish Russian aggression are not only cratering the Russian economy, but also having global economic impacts on all of us.

That’s because they’re driving everything from high energy prices to food shortages and supply chain disruptions. It could also lead to an uncontained financial crisis or a collapse of confidence in the US dollar (yes, the dollar).

In my latest video, I take a look at some of these potential unforeseen risks that could present themselves as the sanctions roll on. I also explain what this means for all financial markets - including crypto.

You can watch that video here.
 

📊 Main Portfolio 📊

A few small changes to the portfolio. Sold a bit of ETH & DOT and have put this into UST which I will be holding as dry powder. I also added a bit of AR to my current stack (more on that below).

Then, as I disclosed in my Telegram channel, I was airdropped some Apecoins on account of my portfolio of Mutant Ape NFTs. I am really excited about the potential of the BAYC ecosystem and will no doubt be hodling these (video update coming as well).

Updated portfolio:

ETH 29.28% | BTC 22.91% | SOL 8.19% | DOT 6.86% | ATOM 5.74% | RUNE 4.11% | APE 4.01% | UST 3.87% | LUNA 3.04% | FTM 2.71% | HNT 1.84% | AR 1.77% | ADA 1.53% | MATIC 1.43% | INJ 1.06% | LINK 0.71% | YGG 0.62% | XDEFI 0.32%

🖼 NFT Portfolio 🖼

MAYC 93.83% | Meebit 6.17%

📈 Thoughts on Market 📈

If you’re wondering why the crypto market is suddenly recovering, the answer seems to be Jerome Powell. On Wednesday he announced that the Federal Reserve would be raising interest rates by the expected 0.25%. While the Fed’s tapering roadmap is fairly aggressive, the 6 rate hikes it forecasts is significantly fewer than the 8-10 many market experts were expecting.

This is good news because it means it’s still going to be relatively cheap to borrow for the foreseeable future, and that means we’re going to see more speculative investment into assets including crypto. As I mentioned in my video about Jerome Powell’s testimonies, there’s even a possibility the Fed will resume money printing because of Russia’s invasion of Ukraine.

We have a few macro factors on the crypto side that are pushing up prices as well. Even with the recent rally, the balances of both BTC and ETH on exchanges continue to drop like a rock. ETH in particular is seeing a lot of accumulation, and that’s almost certainly because of the progress being made on Ethereum’s transition from PoW to PoS which could occur sooner than expected.

As far as prices go, I randomly remembered something I read on Twitter, and that’s the theory that we’ve been in an accumulation phase since the beginning of 2021. I know this sounds crazy, but just pull up the price chart of BTC on your favourite exchange, set it to weekly, and zoom out. What you’ll see is a super long horizontal channel between around 30k and 65k.

Assuming this long term horizontal channel plays out, it could send BTC to anywhere between 90 to 140k. The craziest part about this is that the rally out of the pattern would be similar to what we saw in late 2020, meaning 4-6 months of bullish price action. I personally think this is fairly unlikely to occur, but if the Fed is forced to restart the money printer then it is very possible.

I think the most bullish metric of all is the general interest in cryptocurrency at the moment. If you look at Google Search trends for cryptocurrency or any other social indicator, they’re all basically in the gutter. This is despite the fact that prices are, all things considered, looking pretty good at the moment. This means that we could see some serious rallies when retail interest returns.

The last thing about the market that’s caught my eye is how much South Korean crypto projects have been rallying lately. This seems to be because of the recent election of a pro-crypto president in the country. This fine gentleman has promised to reverse many of the aggressive policies around crypto in the country, including zero tax on the first ~US$40,000 of crypto gains!

Going forward, I’m going to be keeping a close eye on any institutional crypto adoption because that seems to have fallen off the radar of many crypto holders. Recall that we’re still waiting for Elon Musk to announce that Tesla will be accepting BTC again, and there are many companies that are considering crypto payment integrations. Keep your eyes peeled for those white swans!

🔐 Importance of Immutable Information🔐

As I mentioned earlier, I’ve added a bit more AR to my crypto portfolio. For those unfamiliar, Arweave is a crypto project that makes it possible to store information in a decentralised manner “forever.” This is primarily done using a mining mechanism that calculates the cost of storage for 200 years, and fees are gradually paid out to miners over that time to ensure they’re profitable.

Arweave’s primary use case in crypto has been to store the massive blockchains of crypto projects, and it has been aggressively integrating with cryptocurrencies to store their transaction histories and NFTs. Most of these integrations have been happening via Kyve Network and the list includes Avalanche, Cosmos, Near Protocol, Mina Protocol and Solana.

As a result of these integrations, Arweave has become the most used infrastructure project in Web3, at least according to the Web3 Index put together by Livepeer. It should come as no surprise then that Arweave’s weekly transactions have been growing exponentially over the last year. It’s not just crypto projects that are leveraging Arweave either.

Arweave has seen lots of usage from regular people who have been storing news headlines, images, and videos from Russia’s invasion of the Ukraine. The latest estimate I could find from late February suggests that Arweave has permanently stored 5 million pieces of data relating to the conflict. Arweave has been used in similar contexts before, notably in Hong Kong last June.

For context, Arweave was explicitly designed to prevent totalitarian forces of any kind from taking over. Arweave co-founder Sam Williams drew his inspiration from George Orwell’s dystopian novel 1984, so much so that the Arweave mainnet was launched on the same day as the book’s release (June 8th) and AR coins are denominated in Winstons (the main character in the book).

Sam believes that the best defence against totalitarianism is to create a decentralised and immutable record of events. This is again based on 1984, specifically the famous quote “Who controls the past controls the future: who controls the present controls the past”. To that end, Sam wants to see everything archived on Arweave, be it “fake news” or “Russian propaganda”.

I could go on about why Arweave is amazing from this philosophical angle, but I’ll sum it up with one of the many headlines that Arweave has referenced when making its case as a crypto project. In 2020, the United States National Archives (which are obviously supposed to archive data) were caught modifying an image they were storing. So yeah, Arweave is very necessary.

🤔 Vitalik Has Some Concerns 🤔

I am sure that many of you have now seen the recent interview of Vitalik in Time magazine. Unsurprisingly, the headline caught my attention: “The Man Behind Ethereum is Worried About Crypto’s Future”.

Despite this title though, it was a really interesting interview and covered numerous topics. Everything from his upbringing, to background and interests. Of course, the parts that got everyone talking were the concerns raised by the man himself.

These were fair concerns and I thought it only made sense to delve into them in a bit more detail.

One of the primary gripes that Vitalik seems to have with the crypto industry currently is the elevated levels of greed we see in the space. Indeed, nearly all of the talk about crypto is centred around the money people are making and less about the tech being built.

For example, this week we had the Apecoin airdrop (which I mentioned above) as well as the Ethereum merge on the Kiln testnet.

Which one do you think made the most headlines?

Of course it was the former. Indeed, given that I was party to the airdrop, I covered it on my Twitter as well as my Telegram. However, the news about the Kiln Testnet merge seemed to have slipped past our news filters. That’s unfortunate because the implications of Ethereum’s transition to PoS are much more consequential than the value of the APE tokens.

Not knocking Apecoin of course - as I’m going to be a long term hodler. But it just goes to show how difficult it can be to focus on the tech when so much magic internet money is being made.

Then, another gripe that he had was about the high transaction fees that we have been facing of late - especially on the Ethereum blockchain. While these are considerably below where they used to be in the past, they are still way too high for the network to be considered efficient enough to function as a realistic medium of exchange.

Yes, there are those who will point to alternative layer 1 cryptocurrencies with lower fees. However, they usually come with a tradeoff of either decentralisation or security - that good old “Blockchain Trilemma”.

When it comes to these high fees on Ethereum, it appears to also revolve around the same concerns Vitalik has about those pursuits of gains. The bulk of the fees are being used in order to take part in NFT mints and earn mind-melting yields in DeFi lending protocols - essentially, use cases focused on making money.

There is, of course, nothing wrong with monetary incentives in crypto. In fact, monetary incentives are what underlie the tokenomics that keep these networks functioning.

But, I think that it’s important to not lose sight of what we are trying to achieve in the crypto space. It’s been on display for the world to see with the over $100m in crypto donations that Ukraine has received over the past 4 weeks. I somehow think that this best illustrates how crypto can change the world - not someone who made 1,000x on their moonshot investment.

So, I do agree with Vitalik’s concerns about the “image” of crypto. However, we can help to shape that image by actively choosing what narrative we should focus on and what stories should be amplified.

🔥 Deal of The Week 🔥

Here’s a question: How much do you spend on exchange fees? 

The answer may surprise you. In fact, every single time you buy or sell a cryptocurrency on an exchange, you will have to pay them a fee or commission. These costs compound over the year and actually have a sizable impact on your returns over the long term.

That’s why the more you save on trading fees, the more you retain long term.

Recently, we have been able to get you guys a trading fee discount over at OKX. For those of you who have not heard of this exchange, they have been around since 2016 and are in fact, one of Asia’s most popular exchanges.

However, they have recently made a big push into the Western Market with extensive fiat support, advanced trading platforms and deep liquidity in over 100 different altcoin pairs.

What’s my deal then?

Well, an exclusive 40% trading fee discount! Not only that, but this deal is good for life!

So, want to give OKX a try?

👉 Sign up to OKX & get a 40% trading fee discount for life!

🔮 Video Pipeline 🔮

• Fractional NFTs: Why You Shouldn’t Touch Them!
• Cryptocurrencies that will survive the bear market
• Arweave update: is there still potential?
• Senate hearing: Crypto’s use in shady activity!
• The most annoying Things in the Crypto Space
• Ethereum: Where to For ETH From Here?
• Apecoin: Is it Worth “APEing” into?

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

✅ MELD Protocol: DeFi Banking on Cardano

✅ The State of Cryptocurrency Tax Reporting in 2022: Report

✅ Alchemix: Real Magic at Work or a Brewing SCAM?

✅ Celsius Network Review: Crypto Lending Personified

✅ Celsius vs Nexo: Comparing the BEST Crypto Lending Platforms

That’s about all for this one guys. Yes, I know those crypto markets have been somewhat tepid over the last month or so and that interest in the space is down. However, in spite of all this, you are still reading my newsletters and supporting the CoinBureau team!

That means the world to us and is why we will continue creating the best crypto content we can no matter what the markets are doing! Thanks so much for all the support 🙏

Guy your crypto guy