Crypto Newsletter July '22
Bitcoin, SEC, market meltdown links, crypto events & Denver Crypto Club updates
This newsletter covers current headlines within the crypto space, my opinion on them and the projects & people I find interesting. Also included is information about crypto community events; both locally & globally.
Howdy crypto-heads! July edition is a bit late but it has some good content to make up for it. Going to cover Bitcoin price action, the weird SEC case involving Coinbase, some web links for reading up on crypto industry liquidations followed by recent event coverage and finally, updates for the Denver Crypto Club investors group.
BTC vs. USD
Coinbase Insider Trading Attracts SEC
Crypto Market Madness - List of recent crypto news
Recent & Upcoming Crypto Community Events
Denver Crypto Club Investor Group
1. Bitcoin greys out
So what is up with Bitcoin right now? Well…hardly anything is up as a significant market drawdown to just under $18k and a bunch of crypto industry companies and projects ceasing operations has created a perfect storm of negative sentiment for those with exposure to the crypto markets.
In my opinion we are firmly in a bear market and the worst may not be over yet. Regulatory uncertainty (we’ll talk about SEC later on), traditional markets dumping, probable economic recession and the aforementioned crypto companies going kaput all have me feeling down and that a recovery is a ways off.
Adding to that was my theory for 2022 that we wouldn’t break below our ATH from 2017 but unfortunately we’ve gone almost $1,000 under this price. Adding to my bearish sentiment is that the BTC/USD chart indicates another retest of this bottom level is not out of the question.
While I try to be honest about my past calls, I will say that, for now, I’m not too far off predicting a $20k floor but time will tell if this is our true bottom.
I doubt we’ll get all the way to $20k but it’s always good to have a plan! Stay safe out there. ~ Matt on May 9th ‘22
So what are our targets and areas to watch? I believe if BTC can get into the grey “Bitcoin go up good” circle on the chart below by the end of the year we’ll be running with the bulls again. However, breaking and staying over $30k will need to happen first and we’re only now seeing our first small green candle on the weekly.
I’m using a circle as the target because it requires a price increase over time. With our current situation and so much uncertainty in the market I think that some sideways consolidating action is likely (3:1 odds on that IMO) and if the price isn’t building over time I’m doubtful it will provide a good floor for a new rally cycle and bull market.
Currently we are around $23k and if we move up I believe $30k is our next overhead resistance to be cautious of. If we get past that I’m looking at $34k and $40k for more resistance with a big one at $50k (this target feels like a long shot any time in the next 3 months though).
For a bearish continuation scenario (the more likely one as I stated above) some sideways action between $20k-$30k would help establish a nice floor and give a small indication that we’re getting closer to the end of this bear. I’d caution you to be careful trading this though as it’s mostly going to be the pros who are active now with deeper pockets and more experience operating in scary market scenarios.
A third scenario that I view as more likely than rallying up but less likely than consolidating, is if the bears really come out of hibernation and retest the recent bottom near $18k. This could make things ugly very quickly if that level does not hold.
Looking at the chart above there really isn’t much to stop a free-fall from $18k to $12k or even $10k if we get some big cascading leverage liquidations going. Most of what I’ve been hearing from my peers is that $10k is the “absolute” bottom and I tend to agree with that as in past cycles this level served as a significant pivot for traders.
Unfortunately for now the bears will likely continue raiding our portfolio’s as they are definitely driving the bus. If you can, put aside some cash to scoop up any blue chip crypto deals if we take another big dip. Good luck!
** FYI This is not investment advice, merely my personal opinion provided to you for free. Please Do Your Own Research and never invest more than you are willing to lose. **
2. Coinbase “helps” the SEC
Lately it’s been hard to talk with anyone in the crypto space and not mention Coinbase. From their weird statement about your crypto being confiscated to pay back creditors in the event of a bankruptcy to discontinuing their affiliate program and laying off 18% (1,100 people) from their workforce, Coinbase has been moving differently in 2022 and quite a few people have taken notice.
And the crazy thing is, the stuff above isn’t even the most “interesting” thing Coinbase has done this year. For those of you who are not aware, a recent headline stated that a former Project Manager at Coinbase has been charged by the SEC with insider trading. Apparently this person was tipping off friends and family to upcoming cryptocurrencies before they were listed on Coinbase so they could buy early and sell when Coinbase’s huge user base drove the price up later on.
So what makes this a big (and weird) deal that has repercussions for the entire crypto industry? Mainly the fact that, for the SEC to charge someone with insider trading, that person has to be insider trading a Security - and Coinbase has adamantly denied that anything they list is a Security. Hmmm.
Adding to the intrigue is that apparently this criminal charge is the result of an internal investigation by Coinbase. I was unable to determine if they started this and then involved the SEC or if the SEC inquired and as a result Coinbase launched the investigation. Either way though, this seems to be an instance where Coinbase chose to play nice with regulators (probably a good thing for their long term existence) and then were immediately rewarded with a smack in the face for it.
The smack came in the form of a statement where, “The SEC said that it was deeming nine of the digital tokens the men traded in to be ‘securities’.” This caused Coinbase to go on the defensive regarding it’s token listing policies and unleashed a flood of comments about the unusual circumstance where a specific person was charged with insider trading but the entity supplying the insider info (aka Coinbase) did not face any legal action.
While this is an ongoing situation it is a good idea to keep an eye on things as the SEC appears to be stepping up it’s enforcement game. With the XRP fiasco not going the way Gensler and team hoped it appears a new area of focus is insider trading and also utility tokens claiming to not be securities. (See LBRY’s case where a token advertised as a “utility” is being considered a “security” by the SEC).
To be fair, if you were around on crypto twitter the past year or so, you probably saw many prominent people in the crypto space wondering how a few blockchain wallets appeared to purchase the exact list of tokens a few days or weeks prior to Coinbase listing them publicly.
While I do not believe that the Coinbase employee is innocent, it is concerning to me to see a federal regulator choose to bring charges against people and projects in the crypto space without providing prior clarity and a clear path to guide people toward staying on the right side of the “law”.
Everything in crypto is still pretty grey but “regulation via enforcement” stifles innovation and could prevent the U.S. from being a leader in this emerging technology space.
3. A lot has happened since June…
Big market drawdown, insolvent crypto hedge funds, top 10 crypto project imploding, Elon selling Tesla’s BTC…phew. My big picture take on this is that when “number go down” we get a real look at which projects are creating actual value in the crypto space and which ones are full of hot air.
For those of you who haven’t heard the news here is a list of recent, significant events within the crypto world:
Terra (LUNA) cryptocurrency effectively goes to zero in a few days - News link
Bitcoin (and cryptocurrencies as a whole) retrace significantly from ATH in 2021 - News Link
Elon Musk’s company Tesla sells 75% of their Bitcoin - News Link
Celsius and other centralized crypto lending platforms freeze withdrawals for users - News Link
Crypto hedge fund “3 Arrows Capital” (3AC) goes bankrupt and founders disappear for a few days - News Link
Crypto exchange FTX “bails out” bankrupt crypto companies (aka Sam Bankman-Fried will own the entire industry soon) - News Link
4. Recaps and Announcements for Crypto Community Events
The communities for two of my favorite cryptocurrencies recently had some big events that I want to make sure y’all are aware of.
EthCC Paris - July 21st Vitalik presents about Eth 2.0 and Proof-of-Stake going live. This video is a great resource for those curious about Ethereum’s roadmap and future goals. Overall it made me excited for Ethereum in the near/mid term despite Vitalik’s sense of fashion seeming like a poorly trained AI is choosing his looks.
Monero Konferenco 2022 - June 19th Here is the full list of talks and presentations, check them out if you’re a privacy nerd or just want to know what’s happening and coming soon in the world of Monero (Spoiler: its upgrading security, reducing user device requirements and continuing to set new records for daily on-chain transactions)
NFT Party in San Francisco and Denver - Aug 14th for SF & Aug 26th for Denver As part of my advisor duties for the DEIXA.io project I’ll be hosting some in-person events around their upcoming Xastro NFT drops. This NFT will unlock discounts to popular musical artist concerts, festivals and more while also coming with an awesome piece of physical art designed by a world renown artist. Not a ton of info on their website currently (https://deixa.io) but if you’re interested on more info email me via matt@deixa.io
5. Members Only: Denver Crypto Club
We are up in to month four of the Denver Crypto Club and for our voting members I’m happy to announce that June’s capital pool will be deployed on all 3 proposed projects reviewed by the group. This means the UNI, MATIC and LINK have been purchased in equal amounts and moved to secure cold storage.
For July’s meeting we will be reviewing centralized exchange tokens and their investment potential. Anyone is welcome to join us in-person at Smoky Hills Library, Meeting Room A, 5430 S Biscay Cir, Centennial, CO 80015 from 7pm-8:30pm next Tuesday, July 26th.
We have also locked in a date for August’s meeting, it will be the usual place and time (Smoky Hills Library, 7-8:30pm) and held on Monday, August 29th. Hope to see you there!
That’s it for this edition, stay happy and healthy and I’ll catch you soon!
P.S. I heard some rumors (was unable to verify so take it with a grain of salt) that the Kucoin exchange could be insolvent, however, without actual proof I’m hesitant to panic people by including it in the main article.
P.P.S. Totally unrelated to the P.S. above - now might be a good time to move your crypto off of exchanges and into self-custodial wallets that you control.
Much Love,
~Matt