Guess what this is...
That my friends is gold plated copper and the foundation for the biggest gold counterfeiting scandal in recent history which just went down this week.
In Wuhan (that city just keeps giving), 83 tonnes or 4% of China's gold reserve and 22% of its annual production was found to be fake.
What's worse, is it was used to collateralize $20 billion yuan or $2.8 billion USD in various loans for property, etc. over the last five years.
How much do you want to bet this it the tip of a very large iceberg?
That's a $9 trillion dollar market that you don't even know what's real or fake.
In comparison, Bitcoin is PROVABLY scarce.
All you need is a smart phone to see that what you own are indeed real Bitcoins and this extends to the entire cryptocurrency market.
Gold bugs have been touting a return to the gold standard but this will never happen for the very reason above - zero trust in the stated gold reserves between governments.
Maybe this is why the Bank for International Settlements (BIS) just announced a partnership with major CBs around the world revolving around fin-tech - central bank digital dollars are coming.
However, what they don't understand is that simply putting s*itty dollars on a blockchain doesn't make the dollars more valuable - for that you need true digital scarcity like with Bitcoin or Ethereum.
In fact, allowing central banks 100% insight into your spending allows them to extract even more rent through taxes and fees squeezing the middle class and creating the seeds of revolution.
Now that the cheerful stuff is out of the way, let's do a recap...
Recap
This is officially the 10th post in this series which we started in late April. I hope you've enjoyed the journey so far and have been able to take some action to get started.
In our first post, we talked about how Bitcoin was the first true form of digital scarcity and how this was a zero to one invention that would change money as we know it. We then looked at some models for valuing Bitcoin which we'll have a look at again today.
I then walked you step-by-step through purchasing your first cryptocurrency - a stablecoin - and then we made our first trade using a decentralized exchange - Uniswap. We then talked about saving time by dollar cost averaging into the market and our next two posts were about earning.
We started with simple deposits in DeFi where you could earn interest - 8.6% APR lending your USDC and 12% APR providing your crypto as liquidity on decentralized exchanges.
Next we setup your first offline wallet and talked about security and with last weeks post, we jumped into liquidity mining where you can still today earn over 60% APR on your assets.
I know it seems pretty daunting but start one week at a time as each exercise only takes 5 minutes to complete and could mean a jump start when adoption really happens.
Start of a Bull Run?
I wanted to bring your attention to a post by Santiment Network entitled "BTC Long/Short MVRV difference indicates an end of the bear cycle".
In it, they used the market value to realized value we explored in a previous post but made it time-bound with a 365 day (long) vs 60 days (short) and compared the two.
Yellow line indicates the ratio of long (365 days) to short (60 days) crossed 0
As a refresher, market value is the market cap (quantity of tokens x price) while realized cap is the price at which the coins last moved giving an indication of how in profit investors are.
As a ratio, MVRV tells you when investors are in profit YET still hold for more upside.
During a bull market, the 365 day ratio is bigger and vice-versa in a bear market. You can consider it a proxy for investor wide intent - 365 day ratio is long-term holder vs 60 is short-term traders.
365-day (purple) vs 60-day (yellow) MVRV
You can see from the image above - the green line signals a move to a positive trend or bull market while a red line signals the start of a bear market.
We just printed a green line and this indicator has beat a buy-n-hold strategy in backtesting.
Of course, none of this is investment advice but these positive trends coupled with the fundamentals of institutional demand and activity in DeFi lend themselves to the start of a bull market.
Building the optimal portfolio
After last week's post, I got a message from a reader who was following along from the beginning but was overwhelmed by all the content and options in an already complicated industry.
He proposed that I put together a $10,000 portfolio and invest it like I was new to the space - where would I allocate my capital? What DeFi products would I use? etc.
From that, anyone reading could watch the address and see what moves I was making on a weekly basis and we could watch the portfolio grow together over time.
Moreover, you would be able to take action as I do in real time following or possibly participating in making investment decisions within a DAO.
Let me know in the comments if this is something you're interested in.
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Across the Space
BAL token launch, explodes in value and is hacked
The BAL token is provided for liquidity mining on the Balancer Protocol where you can earn 60% APR today lending USDC and ETH. Soon after the launch, the token exploded 300% in a matter of hours with AUM rising to $120M. After a series of useful upgrades, the platform was hit with 2 flash loan attacks that took over $500K. The DeFi space is moving at a lightning pace and it's expected a few things will break in the process. In the long term, exploits will get patched and the whole space will be more resilient for when the average person joins in on the fun.
Augur 2.0 sets a release date of July 28th
Augur - a permission-less prediction marketplace where you can bet on almost anything including sports, entertainment, politics, news like covid infection rates and much more - is set to launch a more robust version 2.0 at the end of next month. Predictions market have historically been a more accurate predictor of outcomes for everything from elections to sports and Augur presents an intriguing price and outcome discovery mechanism for everything from gambling to insurance.
Institutions were 88% of Grayscale inflows in Q1 2020
Grayscale Investment Trust, the primary method institutions use to get exposure to Bitcoin, has exploded to over $3.5B in assets under management (AUM). Notably, institutions, primarily hedge funds, accounted for 88% of new investment inflows as compared to 56% two years ago. Moreover, these new funds were heavily weighted towards offshore investors. As we enter a bull market in crypto, it's always a good idea to keep an eye on where smart money is putting in capital.
yCOMP tokens allow shorting of COMP
One of the parts of DeFi I am most excited about are derivatives markets that allow you to trade any asset class worldwide. You can already trade Silver, Gold, FTSE, Nikkei, GBP and a handful of short positions on major cryptocurrencies on Synthetix. They will soon be adding oil as well with a price feed from ChainLink. UMA protocol is another platform for synthetic tokens and soon after the COMP token launched they allowed people to take short positions on it with the yCOMP. These are important mechanisms in traditional finance as they allow people to hedge risk and allow anyone worldwide to participant in markets that traditionally were only available to an exclusive class of investors.
ETH fees are near record highs as miners spam the network
If you've made any transactions over the last few weeks, you will have noticed that you've been paying crazy fees to transact on the Ethereum network. It looks like miners have been sending 100s of thousands of tiny transactions to the network to clog it up. The reasoning is unknown at this time but could be an attempt by miners to collect more fees. I expect more and more volume will have to move onto layer 2s like OMG Network, ZkSync, Loopring, Matic and Matter Labs.
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Disclaimer: Statements on this site do not represent the views or policies of anyone other than myself. The information on this site is provided for discussion purposes only, and are not investing recommendations. Under no circumstances does this information represent a recommendation to buy or sell securities.