🧘‍♂️ALERT: Crypto Mystery Answered

Market Meditations | January 28, 2022

After Two Long Days of Waiting

Dear Meditators

An eventful week to recap on.

Today’s Meditations:

  • Top Crypto Headlines

  • FOMC Meetings x Their Crypto Market Impact

  • Our Podcast with Zain, Founder of Dafi Protocol

  • Latest on Regulations

Read, enjoy and share with your network. Let’s all build wealth together.

⏰ In A Rush?

Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool. 

? What’s Chain-ged? 

Yesterday marked the conclusion of the hotly anticipated January Federal Reserve Meetings. To summarise the main announcements:

  • Following a two-day policy meeting, Federal Reserve policymakers have decided to maintain key interest rates at the current record level of 0% – 0.25%.

  • However, they have stated it will “soon be appropriate” to raise rates. 

  • The FOMC also decided that it will continue to reduce the pace of its bond-buying stimulus programme, ending the asset purchases in early March.

You can find the statement and press conference here

If we take a look at on-chain data, we notice a bit of relief amongst bitcoin investors.

Note the most recent sharp red line trending downwards. That line represents more than 18,000 bitcoin worth $670 million leaving centralized exchanges on Thursday.

This is the biggest single day net outflow we have experienced in over a month. 

  • Net outflows tend to be bullish crypto. 

  • This is because most investors prefer to transfer their cryptos off of exchanges when they want to have direct custody of coins. 

  • In other words, when they are planning to hold them for a longer term. 

  • Of course, they do not always just hold them.

  • In fact, during more bearish market conditions, many participants take the opportunity to lend their assets and earn income. More on this in our Passive Income Guide

So it seems the Fed meeting has calmed crypto nerves. At least for now. These markets are, afterall, notoriously volatile. What’s more, we ought not decisively change our conviction or outlook until bitcoin reclaims the $40k level. 

? How to Be Successful in Crypto with Zain

? Click Here to Listen

Zain is founder of Dafi Protocol and public blockchain speaker.

❓Regulation Remains Cryptic

Cryptocurrency remains at the forefront of the regulatory conversation in Washington. The scope of proposed regulation continues to oscillate between degrees of power while the Biden Administration takes a new approach to securing oversight into the cryptocurrency industry. 

A source familiar with the White House’s potential course of action told Barron’s that an executive order would be included in a national security memo. 

  • President Joe Biden’s memorandum aims to assign certain government entities to “study crypto, stablecoins and non fungible tokens (NFT)” with the goal of developing a workable regulatory framework.

  • The anonymous source described the incoming measure: “This is designed to look holistically at digital assets and develop a set of policies that give coherence to what the government is trying to do in the space.”. 

  • The justification for the executive order’s inclusion of crypto as a national security issue focuses on the fact that crypto assets are a cross border tool for shifting money.

This news breaks on the heels of a proposition by House Democrats on January 25th, the American COMPETES Act, which includes a provision granting the Treasury Secretary the power to ban crypto exchanges from operating without any prior notice. 

The infrastructure bill signed into law last November was our first taste of this administration’s approach to regulation. While a group of bipartisan lawmakers asked for clarification on the definition of “broker” Wednesday, a response has yet to be received.

Things are heating up in the regulatory kitchen. The United States will see some major changes to the government’s approach to cryptocurrency assets sooner rather than later. 

Nexo is one of the most user-friendly crypto lending and earning platforms in the industry.

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??‍♂️✍️ Stories in this newsletter were written by Kyle F., Max P., Nick T., Kimia K., Ellen B. and Koroush AK. Graphics were produced by Ellen B.

Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here. 

Disclosure. Some of the links we’ve included are affiliate, they give you rewards and discounts and earn us a commission. Additionally, the Market Meditator writers hold crypto assets. See our investment disclosures here.