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Crypto Insights, Tips and Lessons
We end the week with hot news and a crypto podcast & commentary from an incredibly special guest.
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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.
🎧 Hottest Crypto Trends for 2022 with Ryan Selkis
Ryan is former director of growth at Digital Currency Group and founder / CEO of Messari. He started his first company at 25 and got into Bitcoin early and has been here since.
He started Messari in late 2017 to build a ‘Crypto Bloomberg’; explaining how to invest in crypto and smooth out information asymmetries.
Throughout 2021, Ryan was not surprised that it was an explosive year. He was somewhat surprised to see:
The extent of the rise in Alternative Layer 1s (Terra, Solana, Avalanche, Fantom etc.).
How muted DeFi’s performance was this year.
The magnitude of growth in NFTs.
Ryan’s 2022 thesis shared on Messari is a brilliant article. Within this article, he shared his top 10 trends for 2022. The first trend is an increase in institutional distrust and an increase in trust in crypto.
At the same time, crypto is being de-risked and the technical use cases are being accepted. More people are trusting math, code and tokens that can align incentives.
Preferences are tending towards user based economies that Web 3.0 provides rather than monopolistic controls by big tech and corporations. This will be an important trend in 2022.
That being said, metaversal valuations are heating and there is speculation of top signals. To this, Ryan drew our attention to time to liquidity and the time incentives of a lot of investors.
Whereas in traditional markets investment time frames are 5-10 years at least, in crypto markets there is a much shorter time frame and different value drivers such as public demand.
We ended by asking Ryan about one of our favourite quotes of his: “The time to go all in with crypto on your balance sheet was last year. I’d be more cautious here: 10 year and 10 hour thinking only.”
Ryan reinforced that we shouldn’t be married to any particular position and that the market can go in any direction. Consider long term theses and where the market is heading. Consider these not just from the perspective of where to invest but also where to contribute to.
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🏠 The Bitcoin Mortgage
If all your wealth is tied up in crypto, it may be difficult to get a standard mortgage due to restrictions and banking regulations around crypto.
Crypto lender Ledn aims to solve this dilemma and recently raised $70 million in a Series B round, and they are bringing bitcoin mortgages to market.
According to CEO Adam Reeds, “most people that hold extensive wealth in bitcoin still can’t utilize their assets to qualify for a mortgage at a bank.”
For some crypto investors, the Bitcoin Mortgage may seem a viable option but there are big risks associated with the product as well:
One such risk is liquidation. If the price of bitcoin falls, you could have to sell your collateral or add to it.
Also for the extent of the loan, you have to trust a third party with your bitcoin. As with any mortgage, this is not a decision to be taken lightly, but it is a revolutionary product.
It is currently only offered in Canada but should be available in the US in 2022.
🚀 A Beacon of Hope
An Ethereum contract containing over 8.6 million Ether, worth a staggering $33.5 billion, is frozen until a specific set of criteria is met which will unlock it.
It’s clear that the Ethereum contract will continue to be locked until a hard fork, which hasn’t been written or identified yet, comes to pass.
This contract is a Beacon Chain staking contract launched in November last year.
One milestone which could trigger the materialization of the hard fork terms could be the merging of the Beacon Chain with the Ethereum mainnet.
Beacon Chain is the first step in Ethereum’s migration from proof of work to proof of stake. This hallmark transition is a major shift in how Ether is generated and has wide-ranging implications for its power consumption and overall narrative.
The transition from Ethereum to Ethereum 2.0 tackles some major problems for the market leading network. Most notably, it brings an increase in network speed, efficiency and scalability while heightening security and sustainability.
With competing layer one solutions like Solana and Polygon claiming monikers like “Ethereum Killer”, it’s easy to forget that the age-old powerhouse is still alive and breathing. The developers and community behind the Ethereum network are constantly innovating and improving the original smart-contract.
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.