Wen Recession? This You NEED To Know!

When it comes to bad news, the sooner we hear it, the sooner we can start to move past it. Just as Damocles might have wished that damn sword would drop and put him out of his misery, so too with us and the recession we keep hearing is imminent. Can’t we just get it over with?

You’re probably well aware of how one of the factors that contributed to last week’s crash was worrying unemployment data coming from the US. Although the unwinding of the yen carry trade was actually far more consequential, rising unemployment is still something we should be wary of, as it’s a key indicator of economic health. People losing their jobs means things are about to get rough.

So, is the recession about to break over us? Has it already begun? Or is it a big nothingburger with a side order of FUD? In today’s video, we examine the current situation and assess the likelihood of a recession being declared. We also look at the indicator many economists are talking about and whether it has been triggered. And of course, we ask the biggest question of all: if a recession is coming, does that mean stimulus won’t be far behind?

You can watch that video here.

📈 Crypto Market Forecast 📈

The next seven days are likely to be sunny for the crypto market. This depends on two major factors though: one macro, one crypto. Starting with the macro, the CPI for July will be published this Wednesday. If inflation comes in lower than expected, it would boost the markets, as it would further increase the likelihood of Fed cuts in September due to the slowing economy.

The crypto factor is somehow even more esoteric than inflation and unemployment, and that’s the rumour that Trump and/or his sons will announce a DeFi-related initiative as soon as tomorrow. These rumours are based on recent posts made by Trump’s sons, who say they’ve suddenly fallen in love with DeFi and that there are ‘big things coming’ to that effect.

Believe it or not, but this could trigger the long overdue rotation into altcoins, particularly ETH. This ultimately depends on which blockchain this DeFi protocol leverages. Given that Trump has previously issued NFTs on Ethereum, it’s safe to assume that the DeFi protocol will probably be on Ethereum too. Note that Trump also recently promised to release another NFT collection.

This begs the question of whether Kamala Harris will do the same. In case you missed the news, it’s believed that the Harris campaign will be launching its own ‘Crypto For Harris’ initiative at a virtual town hall this week. Even though this will probably amount to a Zoom meeting with Harris campaign staff, it is nonetheless a step towards increased bipartisan crypto support.

On that note, the only thing that US politicians seem to agree on these days is war. This has created the elephant in the room, which is the risk of escalation in the Middle East. Thankfully, this risk seems to be overblown for the time being, but it’s created significant investor uncertainty that continues to weigh on the markets, including crypto.

Speaking of which, another macro factor that was creating significant uncertainty across markets was the so-called yen carry trade, whose unwind appears to have been paused by the Bank of Japan. In short, the BoJ has promised not to raise rates too much going forward, which reduces the risk that investors will have to liquidate trillions of dollars in assets to repay their yen loans.

This is why it’s odd how Japanese investment firm Metaplanet recently announced it had borrowed a few million USD worth of yen to buy BTC. On the one hand, it suggests that the size of the yen carry trade will continue to grow, and underscores the direct impact it can have on the crypto market. On the other hand, it highlights the fact that large investors are buying the dip.

This can be clearly seen in the spot Bitcoin ETF flows, which seem to be slowly but surely turning net positive. It’s a similar story for the spot Ethereum ETFs, and it will be interesting to see if said Ethereum ETFs see an uptick in inflows after whatever DeFi announcement the Trump family makes. It would certainly give us a glimpse into the psychology of ETF holders.

In sum then, the crypto market should continue to recover over the next week for a variety of bullish, crypto-specific reasons. Just watch out for those ever-present and bearish macro factors.

💰 The Consumer Crypto Promise 💰

In crypto, a project’s success is often measured by its ability to make ‘number go up.’

In such an industry, focusing on anything else first may seem unwise and inconsequential. In fact, we often look at a token’s price performance as a direct measure of a project’s success. It doesn’t matter if your crypto project has usage - as long as it remains in the top 100 tokens by market cap, we’re good.

This is partly why finding a crypto project focused on building real ‘value’ (not just the financial kind) can be harder than finding water in the desert.

However, this isn’t necessarily the case in other industries.

If you hop over the fence and take a look at web2, you’ll find that most of the companies/brands that the average Joe calls successful are those that have made the most impact on everyday life. Think Amazon, Meta, DoorDash, Uber, Telegram, etc. Not all of those companies are profitable. The expectation for most web2 startups is that it will take at least two years (sometimes much longer) before profitability.

This isn’t to say finances don’t matter for web2 companies. The point is that the norm there has always been long-term gains.

It’s been the opposite in crypto, where most projects building in our industry have focused on short-term success. Build hype, launch token, enjoy short-term pump and long-term dump. Unsurprisingly, this approach can take quite a toll on some of our brightest builders: remember the whole low-float high FDV meta?

This is why, until now, most crypto investors often treat ‘consumer crypto’ as a child’s fantasy. Unlike traditional DeFi apps, which are purely number go up, consumer crypto apps focus on supercharging social interactions, gaming, and retail experiences via blockchain tech. There aren’t many of them around and the ones that do exist have struggled to gain traction.

It’s why not many speak about consumer crypto with as much fervour as they do airdrops or the new hot L2 with built-in yield generation (Blast).

However, this state of affairs may finally be starting to change. For the first time in a while, serious attention is starting to flow towards this neglected niche.

Over the past year, there’s been a rise in consumer crypto-focused web3 researchers, builders and content creators. These include people like Luca Netz, Peter, Meltem Demirors, and Josh Cornelius to name a few.

VC firms like Manifold and 1kx have also openly announced that they believe consumer-focused projects will be the ones to drive crypto adoption in the future and are almost exclusively investing in this segment.

That said, we’re still a few years away from seeing consumer crypto products whose core USP isn’t tied to financial incentives or tokens. Some argue that elements of tokenisation or financial incentives are crucial for the first cohort of consumer crypto applications.

While we don’t completely agree, there’s some truth to this. The key difference is that the consumer crypto applications that do it successfully use financial speculation as a measure to bootstrap network effects for long-term games. The sole goal isn’t to earn tokens. This makes financial speculation a feature and not a bug.

Notcoin is the most successful example of such a consumer crypto application. The project started as a clicker game on Telegram, hinted at a ‘click-to-earn’ mechanism, onboarded millions of users, and then pivoted to a social discovery application after the airdrop. It even managed to retain most of its initial users and is still seeing relative success.

Examples of consumer crypto applications that failed in this endeavour meanwhile include friend.tech. The project saw great hype in its initial days but failed to retain most of it after its airdrop.

There are also consumer crypto applications that have managed to thrive through second-degree financial speculation. Take for example the adoption of Farcaster that was bootstrapped via hype surrounding the DEGEN memecoin. Another example would be the recent success of the Ronin chain as a result of the Gamefi projects on its network, the most notable of which is Pixels.

In that sense, financial speculation is definitely an important ingredient for the first cohort of consumer crypto applications. Most of them need to pay attention to which chains they build on and where the most liquidity is.

However, in the long-term, tech abstraction will change how consumer crypto grows. Wallet-less onboarding projects like Privy are changing how users are onboarded to consumer crypto projects. Some are even making it easier for consumer crypto to go direct to mobile via Telegram.

Consumer crypto projects like Blackbird are also taking web2 ideas like loyalty programs and making them economically better through web3 incentives. Consumer DePIN projects like SkyTrade seek to allow users to monetise the airspace above their property in order to gain revenue from drone-based businesses. This is an example of a web3 consumer application that doesn’t exist yet in web2.

Some believe this transition to consumer-first products in web3 is inevitable. As 1kx investor Peter notes, the web2 industry of the early 2000s saw a similar trend, where most builders were focused on pouring resources towards tech infrastructure rather than the consumer applications building on top of it.

Fast forward to today, most of the early infrastructure has been replaced with faster and better versions, while the consumer products building on top of them have adapted and grown by migrating to the next best infrastructure.

Web3 isn’t just blockchain, it’s the philosophy of enabling real ownership on the internet.

Read. Write. Own.

🔥 Hot Deal of The Week 🔥

As educators in the crypto space we’ve always been proponents of diving deep into projects, themes. One of the best ways to make smart decisions is levelling one's understanding of it.

There was so much more that we wanted to share with the Coin Bureau community that we couldn’t do on YouTube and that is why we created the Coin Bureau Club. This Club is for more advanced Coin Bureau fans who want access to:

* Our small and mid-cap altcoin reviews
* To vote on the altcoins we review
* Are interested in what's on the minds of our research team at any given time
* What’s in our Team’s personal crypto portfolios
* Exclusive members Discord and much more…

We stand behind the value of our Club content. So much so, that we are happy to give new Club members a no quibbles 30 day money back guarantee! So, there is no reason for you not to check out our exclusive content!

👉 Try the Coin Bureau Club for FREE!

🔮 Video Pipeline 🔮

* Market Outlook For August: What’s on the cards for the markets?
* Government Debt: What it means for you!
* Top 5 Indicators: What indicators we are using to make moves in the markets
* Stock Market Bubble: Is it about to pop?
* Russia’s Crypto Mining Situation: hat the recent legislative changes mean for the markets?
 
🏆 What's New at CoinBureau.com This Week? 🏆

* Mantle Network Review: Leading Layer 2 Solution for Ethereum
* Top Base Wallets For Storage, Staking and NFTs
* Top SocialFi Projects Reshaping the Future of Social Media

📖 Quote of the Week 📖

Did you buy the dip? Or did fear stay your hand? Crypto markets are incredibly challenging to navigate, but the most important thing to be able to do is put aside your fear and take rational action at the most opportune moments.

“Courage is not the absence of fear but rather the assessment that something else is more important than fear” - Franklin D. Roosevelt

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.