🧘♂️IDENTIFIED: Next Big Crypto Trend?
Market Meditations | October 14, 2021
A $121 Trillion Market
With so much institutional and retail money flowing into the crypto markets, many are wondering: what is the next big trend or narrative that will explode?
We’ll keep you up to date with emerging trends as we see them. One such trend is covered today: TradFi products in DeFi.
? Top 5 Crypto Market Events
⚛️ TradFi Products in DeFi: Hot New Narrative?
? Visa x NFTs: All The Details
? Our Bitcoin Puzzle
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⏰ In A Rush?
? Morgan Stanley CEO Says Crypto Isn’t a Fad, Though Not Seeing Much Client Demand
? TradingView completes new funding round with $3B valuation
☄️ Fintech Tala Raises $145M to Launch Crypto Product for Emerging Markets
?? Digital Pound Foundation launches to promote CBDC development in the UK
? Ethereum-compatible developer platform Aurora raises $12 million
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.
? Tools of the Trade
Traditional finance continues to be increasingly usurped by cryptocurrencies. As the evolution continues, we are fortunate to have a template to reference. As many things as TradFi got wrong, it undeniably provided us with some indispensable investment methods.
What Are My Options?
?Calls and Puts – Some of the most popular options in traditional finance, these contracts are bought at a fee (premium) and give the purchaser the right, but not the obligation, to buy (call) or sell (put) an underlying asset at a specific price (strike price) on a predetermined date in the future (expiration date). These methods are already widely used by some crypto traders and investors on platforms like Deribit and Bakkt.
❓Interest Rate Derivatives – IRD make up well over half of the volume in traditional derivatives markets, accounting for $121t (yes, trillion!) in the first half of 2021. Interest rate swaps allow users the choice of either paying a fixed rate or floating rate over a predetermined period to benefit from volatility.
These tools of the trade are immensely popular with good reason. As crypto finance continues to undermine the conventional status quo, seasoned financiers are continuing to demand these methods in the cryptocurrency markets because they introduce new strategies.
Limiting downside risk by avoiding potential liquidations.
Hedging against riskier investment endeavours.
At an advanced level, option combinations can be employed to further mitigate risk of loss.
With interest rate swaps accounting for over 80% of the traditional OTC derivatives market, they’re now making a push to become staples in cryptocurrencies.
These swaps are contracts in which future interest payments at one rate are exchanged for another.
The most common IRS contract is a fixed-to-floating model. In it, one party agrees to pay a fixed interest rate for an agreed upon term. In return, they receive a floating interest rate for the lifespan of the contract.
It’s not that hard to find an exchange offering call and put options, but interest rate swaps are only getting started. STRIPS is an interest rate derivatives exchange on Arbitrum addressing demand for just such a void.
The decentralized exchange will offer interest rate swaps using leverage based on low position collateralization.
With leverage on yield farms, hedging, and arbitrage opportunities, STRIPS is bringing highly demanded traditional finance tools into the cryptoverse.
It also offers staking in its Automatic Market Maker (AMM) and insurance fund to earn passive income.
Calls, puts and futures have all established themselves as staples in cryptocurrency finance. Options and other derivatives are popular for many reasons, though the limitation of downside risk remains chief among them.
The amount of money changing hands using interest rate swaps is mind-boggling. It’s obvious the demand is here. Investors and traders just await the supply.
Interested in derivatives? We’ve got you covered, our Options 101 guide offers a good starting point for those looking to up their game.
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❌ Two Truths and A Lie
Lets see if you can spot the lie!
Bitcoin was made public in 2008
Ethereum was created in 2016
BTC reached all time highs in April 2021 of above $63,000
? Visa Getting Into the NFT Game
Wherever there is money, Visa is always involved. With everything crypto beginning to soar once more, we are seeing the value of NFTs continue to rise and more participants looking to get involved. Visa recently announced that they would be making a program to support digital artists. Let’s take a look at what exactly Visa is launching!
In a press release, Visa said that they are building a “program that will support artists who want to use NFTs to sell their work.”
Artists will have to go through an application process.
Visa will select a small group of creators and help them learn about crypto and the blockchain industry.
Visa has already partnered with MLB player turned NFT artist Micah Johnson. Micah is the creator of Aku, which sold for more than $2 million in 24 hours.
Visa says that the rise in technologies and the crypto ecosystem as a whole is promising for new digital creators to start small businesses. This news comes on the back of Coinbase’s announcement that they would be creating their own NFT marketplace. Though the market seems saturated, the NFT market just passed $10 billion in sales volume in the third quarter (according to DappRadar).
It is nice to see Visa backing NFTs and seeing that they are the future. Visa’s head of crypto wrote, “We believe that we are at the beginning of a digital renaissance in the world of art and content creation.” While we know prices won’t skyrocket forever, Visa’s involvement with NFTs ensures more awareness and consequently adoption of this new exciting digital art sphere.
1. Bitcoin was made public in 2008
That’s right, the lie was this one! It was actually made public in 2009.
The first ever Genesis Block was mined, awarding Satoshi the first 50 bitcoins of the 21 million that will ever be created.
It might surprise you to know that Bitcoin wasn’t always traded. In fact, it was in 2010 that someone decided to sell theirs for the first time.
Actually, they swapped 10,000 BTC for two pizzas! These pizzas set the first ‘real-life’ value for BTC at $0.0025 dollars.
If you enjoyed learning a bit more about Bitcoin be sure to check out our article A Brief History of Bitcoin. You may find out some interesting things you never knew!
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??♂️✍️ Stories in this newsletter were written by Kyle F., Misael Calleja, Nick T., Max P., Kimia K., Ellen B. and Koroush AK. Graphics were produced by Gerasimos P.
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.
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