Are NFTs The Next Big Thing? #18

Market Meditations | September 23, 2020

Let’s find out why people paying $1000s for digital art, early access to our podcast with The Crypto Dog and much more…

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Today’s Meditations:

  1. Bitcoin-on-Ethereum Token Tbtc Relaunches Following Buggy Debut in May

  2. U.S. Banks Can Hold Reserve Funds for Stablecoin Issuers, Says Federal Regulator

  3. Crypto, Global Equity Markets Rattled During Monday Morning Trading Session

  4. JPMorgan to Move $230 Billion Assets to Germany Under Brexit

  5. U.S. Banks Can Hold Reserve Funds for Stablecoin Issuers, Says Federal Regulator

  6. Investor Buzz Builds Ahead of Ant Group Listing

  7. TheCryptoDog: Venture Capital, Nootropics and Trading

  8. How to Win Even if You Fail

Are NFTs The Next Big Thing?

During a consolidation period in DeFi, non-fungible tokens (NFT) suddenly became a hot topic on Twitter yesterday. Antony Pompliano and Ari Paul, two respected crypto investors came out and announced that digital art and other NFT’s would be a strong focus of their funds in the upcoming months and years. Various tokens related to the NFT market jumped upwards 50-100% in less than a day and suddenly everybody wanted a piece of this upcoming crypto theme. Is this sudden momentum sustainable or were bored investors looking for the next thing to park their money in? Let’s take a deeper look!

  • Bitcoin-on-Ethereum Token Tbtc Relaunches Following Buggy Debut in May. The amount of bitcoin that is trading on the Ethereum blockchain continues to grow and has lately surpassed $1 billion. So far, BitGo’s Wrapped Bitcoin (WBTC) has a big market share but this week a new alternative went live. tBTC, first announced in April but delayed due to a smart contract bug, is now ready for a new start. Users who worry about censorship risk using WBTC are invited to deposit BTC and mint tBTC tokens on the open-source project. Getting bitcoin on Ethereum has become more popular due to the decentralized finance (DeFi) ecosystem on Ethereum. By getting bitcoin on the Ethereum chain, bitcoin holders can gain yields on their holdings in a completely decentralized way. Read more.

  • U.S. Banks Can Hold Reserve Funds for Stablecoin Issuers, Says Federal Regulator.  Transparency is important for trust. National banks and federal saving associations in the U.S. can now hold reserve funds for fiat-backed stablecoins, according to new guidance from the Office of the Comptroller of the Currency.  In a six-page letter, the regulator notes that “stablecoin issuers may desire to place assets in a reserve account with a national bank to provide assurance that the issuer has sufficient assets backing the stablecoin in situations where there is a hosted wallet. For the reasons discussed below, we conclude that a national bank may hold such stablecoin “reserves” as a service to bank customers.”  That said, the letter only addresses stablecoin that are backed on a 1:1 basis by a single fiat currency and warns that banks who take on this kind of business should adhere to anti-money laundering and KYC regulations at all times. Read more.

  • Crypto, Global Equity Markets Rattled During Monday Morning Trading Session. An important (temporary) development this year is the fact that crypto assets and bitcoin and ethereum in particular are no longer an uncorrelated market as they have been in the past. Risk sentiment in stocks and safe haven assets like gold has been increasingly reflected in crypto’s price action over the last few months. With global equity moving downwards on Monday, both bitcoin and ethereum did not manage to hold and corrected over 5% and 10% respectively. In an interview with The Block Edward Maya of OANDA noted: “Surging coronavirus cases and doubts over the next round of fiscal support is triggering a wide range risk averse tone that is sending the dollar higher and sinking gold. Exponential coronavirus growth is a big risk in Europe and that is sending the dollar sharply higher. Dollar strength can go a little further as emerging market currencies have room for bigger declines.” Read more.

  • JPMorgan to Move $230 Billion Assets to Germany Under Brexit. JPMorgan Chase & Co is moving about 200 billion euros ($230 billion) from the U.K. to Frankfurt as a result of Britain’s exit from the European Union, a shift that will make it one of the largest banks in Germany. The U.S. bank plans to finish the migration of assets to its Frankfurt-based subsidiary by the end of the year, people familiar with the matter said. The change could boost its balance sheet enough to become the country’s sixth largest bank, based on the assets of the biggest commercial lenders last year. However, it’s not just Brexit. JPMorgan has repeatedly said that its German unit will seek market share in investment banking, corporate banking and wealth management. While JPMorgan has made the biggest shift to Frankfurt, other banks have chosen to bulk up in Germany’s financial hub, including Citigroup Inc., UBS Group AG and Standard Chartered Plc. Nevertheless, it will be interesting to see whether this has a knock on effect on the ‘attractiveness’ of the UK as a financial investment given not only the concerns regarding Brexit but also the dramatic spike in coronavirus cases (and increased restrictions). Read more.

  • European Stocks Rally on Hopes of More Pandemic Driven Stimulus. European equity markets rose on Wednesday as investors placed bets on more monetary aid for the eurozone’s weakest economies, but Wall Street stocks failed to join in on the rally as tech shares fell. The Nasdaq Composite fell 0.7% in early New York trades, putting it on course to fall for the 6th session in the past seven, as a 7% fall in Tesla shares dragged on the tech-heavy index. The electric vehicle maker’s shares were under pressure after founder Elon Musk pledged to halve the cost of the cars’ batteries but also warned of ‘the extreme difficulty of scaling production of new technology’. Other technology stocks including Apple and Google parent Alphabet came under more modest selling pressure with each down about 1% in early dealings. Read more.

  • Investor Buzz Builds Ahead of Ant Group Listing. An investor scramble is underway to take part in Ant Group’s upcoming initial public offering in Hong Kong and Shanghai, which is shaping up to be one of the world’s largest ever equity raisings. The Chinese technology company’s dual offering could come as early as next month. Anth should face the Hong Kong listing committee by the middle of next week, people familiar with the matter said, after winning approval from regulators in Shanghai last week. The company is expected to offer at least 10% of its shares and secure an overall market valuation of between $200bn and $300bn. Hong Kong based brokers report strong appetite. One wealth manager, which declined to be named, said it was offering loans to clients to increase their investment in the offering. Analysts at Bank of America even valued Ant at up to $318bn, based on a forward price to earnings multiple (a common valuation measure) of about 45, based on expected 2021 profits. Read more.

#8 TheCryptoDog: Venture Capital, Nootropics and Trading

Don’t skip this episode. If you’re a Market Meditations reader you’re here to build a richer life, Dog has done that and continues to do so.

How to Win Even if You Fail

Chance of failure shouldn’t scare us. It always brings something valuable and it teaches us a lesson to prevent us from making the same mistake twice. Having the right system in place to learn from the feedback you receive is important. Each failure and feedback loop brings us a little closer to the truth. Each iteration increases your odds of success. You either win or you learn.

Scott Adams, creator of the widely successful comic strip Dilbert, wrote a book called ‘How to Fail at Almost Everything and Still Win Big’ in which he described how he failed at multiple business ventures before eventually finding success in his life. Looking at his personal experience, he wrote down a template for increasing your odds of success:

  • Scott describes that every skill you acquire doubles your chances of success. Being the best at something is incredibly hard to achieve. Belonging the top 25% on several skills is something almost anybody can achieve when they put in the effort. 

  • Goal oriented people exist in a constant state of failure or waiting for the goal. Systems people win every day just by sticking to their systems. The systems focused people tend to perform better and be happier. Systems people succeed every time they apply their systems.

  • Optimize for personal energy levels. “The way I approach the problem of multiple priorities is by focusing on just one main metric: my energy. I make choices that maximize my personal energy because that makes it easier to manage all of my other priorities.”

In the end, success isn’t magic. It’s generally the product of picking a good system and following it until luck finds you. Threat success as a learnable skill. Figure out the price and pay it.