State of the Market #68

10/5/2020 - 10/11/2020

Texas Blockchain’s State of the Market

10/5/2020 - 10/11/2020

Keith Asmussen, Joshua Ebedes 

Txblockchain.org

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Market Summary

Dotted lines represent non-trading days (weekends, holidays, etc.)


Top Stories

Square just bought $50 million in bitcoin

CNN Business

In an investment representing 1% of Square’s total assets, the company acquired 4,709 bitcoins at the price of $50 million. Derived from the company’s belief and stated purpose, Square announced that it believes “cryptocurrency is an instrument of economic empowerment” and provides a way for the world to participate in a global monetary system. This isn’t the first time Square has taken a financial interest in crypto.  In 2018, they expanded their launched bitcoin trading with Cash App, which enabled the buying and selling of bitcoin even for users without a bank account. In August, the company reported that bitcoin trading revenue from Cash App rose 600% from the previous year to $875 million.

Crypto Long & Short: A U.K. Ban on Crypto Derivatives Will Hurt, Not Protect Investors

CoinDesk

The Financial Conduct Authority (FCA) has published its final rules banning the sale of derivatives and exchange-traded notes (ETNs) that reference certain types of crypto assets to retail consumers. Under the guise of consumer protection, the U.K. financial regulator presented five main reasons for the ban:

  1. No reliable basis for valuation

  2. Prevalence of market abuse and financial crime

  3. Extreme volatility in crypto asset price movements

  4. Inadequate understanding of crypto assets by retail consumers

  5. Lack of legitimate investment need for retail consumers to invest in these products

The ban will affect “the sale, marketing and distribution” to retail investors of any derivatives contract or ETNs that linked to “unregulated transferable crypto assets.” Derivatives play an important role in efficient markets encouraging liquidity by offering downside protection. ETNs offer safe onramps for new investors instead of dealing will custody arrangements. The ban will make it harder for small investors to hedge their positions, and will push investors to less regulated offshore platforms. 


Chart of the Week

This chart was retrieved from Jameson Lopp (@lopp) on Twitter. The chart depicts the number of combinations that can be made given a certain number of bits, and uses those numbers to compare the probability of winning the Powerball to the probability of guessing a random or specific Bitcoin private key. 


Top Tweets

@Breedlove22. Celebrating the Feds 2020 monetary policy. See video below for a good explanation of what Robert meens.

@hasufl. A new take on yield farming

@CryptoCharles.


Video of the Week

Why This CEO Made a 425 million Dollar Bet on Bitcoin: Stansberry Research

Michael Saylor has been making the rounds in popularity in the Crypto world. In just the last few days a music video about him has been viewed over half a million times, and  he was even featured in last week's SOTM video. This short interview with Michael Saylor explains some of the important macro economics behind his 425 million dollar bitcoin purchase. He explains that when you run the numbers there is closer to 8-20% inflation on dollars he holds and how that incentivized him to look for somewhere else to invest. He also makes the case for Bitcoin over gold.


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Texas Blockchain’s ‘State of the Market’ is a student-led editorial. None of the views expressed by the authors should be taken as the view of the University of Texas at Austin or the Texas Blockchain organization. Furthermore, none of the views expressed should be taken as financial advice in any circumstance.