Week of Nov 30, 2021

How The First-Ever Bitcoin Sovereign Bond Could Change The Game

How the first-ever bitcoin sovereign bond could change the game, the fed's hot take on Stablecoin regulation, and ConstitutionDAO paid ~2% in gas fees.

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Bitcoin closed its first losing week in November, down -10.43% to close at $58,678. It was one of the few double digits down weeks for bitcoin in the year so far. 

From a technical standpoint, it is currently trading near it’s $56,000 support level. If this level does not hold, the next stop might be the $52,000 level. 

It was another landmark week in Bitcoin history. The President of El Salvador announced the country would be issuing the first-ever sovereign bond backed by Bitcoin. 

Half of the bond’s proceeds would be used to purchase bitcoin - the other half would be used to build a new city. “Bitcoin City”, is apparently planned to be near a volcano and will include bitcoin mining infrastructure. 

The project is very ambitious - and while it may look juvenile to some, the implications of this bond offering could be very serious. 

If El Salvador is able to bypass regulated bond markets and tap into $1 Billion worth of debt to fund its infrastructure development, it may  undermine the International Monetary Fund’s position. If successful, it will likely be quickly followed by others…

Yesterday the news also broke that MercadoLibre, Latin America’s largest company by market capitalization, announced that it would start allowing its clients to buy and sell crypto currencies.

The feature was rolled out to a small group of beta clients in early November and it will be rolled out to the rest of its Brazilian clients in the coming weeks.

The news is meaningful as it could be a step towards letting merchants accept crypto payments. This would be a huge step towards a circular economy built on digital currencies.

Separately, Jack Dorsey and Square released a whitepaper for Project TBD - a decentralized bitcoin exchange. 

While the project is still in its infancy, it tackles several important issues, such as decentralized identity, liquidity options for bitcoin onramps worldwide, and the need for these to comply with financial regulations. We will continue to monitor the developments around this protocol. 

In terms of price-action, some market indicators are signalling that  bearish conditions will continue. 

Funding rates for perpetual futures, often used by speculators to obtain high leverage, are currently negative, which means that more investors want to be “short” the contract than “long”. 

Similarly, Monday’s options flow has shown more put buyers than sellers, and more call sellers than buyers. A sign that investors are seeing limited upside and are interested in downside protection. 

It’s Thanksgiving week in the U.S. and we will be heading into some days of low trading volume and shortened trading weeks for capital markets. In bitcoin and digital assets, this could translate to higher volatility for the week ahead. 

S&P 500

U.S. Equity markets continue to defy gravity. The S&P 500 booked a fresh new all-time high last week, closing +0.30% at 4,702. It has moved even higher as of Monday’s trading session and looks poised to head into Thanksgiving at a new record. 

The Nasdaq also booked a fresh all-time high last week, finishing +2.31%, and the Dow Jones did not fare as well, giving back -1.38% last week - and partially recovering some losses so far on Monday.

Perhaps the most sobering sign from last week was the fact that the Russell 2000 small cap index dropped back into the range where it has been trading since March 2021. 

As it tracks small cap companies, this index is more representative of “middle America” - and it’s been struggling to rise like its larger peers. This is very much a representation of what is happening in society between those who are wealthy and own assets, and those whose savings are smaller .

A perfect example of this is what is happening in the U.S. housing market. Home sales are on pace to have their biggest year in more than 15 years - and home prices are 13% higher than a year ago. Inventory is also dwindling - at the current pace, all available homes in the U.S. would be sold in 2.4 months. This has created a tight market that is quickly  pricing many out. 

In China, news broke last week that Evergrande would be selling its stake in a Telecom company in order to stay solvent. 

Given what we know, there’s a high probability that this deal is political and not necessarily driven by market forces. 

It seems as though the $1.2 Trillion infrastructure bill that was approved appeased markets beyond the Fed’s tapering process. While we are heading into a short trading week, investor positioning on the week back from Thanksgiving may give us a clue as to where investor sentiment is heading as we  close the year.



Gold finished last week down -1.04% at $1,845/oz, and continued selling off aggressively on Monday after Jerome Powell was nominated for a second term as President of the Federal Reserve. 

The move to nominate Powell was interpreted by markets as a signal that the Fed is likely to continue the course with the current tapering plans. 

The yields on U.S. treasury bonds were incredibly volatile last week, and have soared after Monday’s announcement. The surge in the yields has driven the real return of U.S. treasury bonds higher, which hurts gold and helps the dollar.

As we’ve covered here so far, the real returns of U.S. treasury bonds are poised to improve due to the Fed tapering. Provided that inflation does not spiral out of control, this should create a tailwind for the dollar and a headwind for Gold and other commodities.


It was an active week in the world of DeFi and alternative coins. The FTX DeFi index finished lower by -6.69% and has remained under pressure to start the week. Noticeably, COMP tokens are trading near the lows of their ranges - and Solana has been trending lower for the last 2 weeks. 

Another interesting note from last week’s Fed speech on stablecoins, was the fact that Fed Governor Waller expressed that only allowing banks to issue stablecoins would limit innovation. 

This is a very progressive posture and one we hope gets the traction and attention that it deserves. Creating a new framework for stablecoin issuers and operators would be much better than trying to fit them into centuries-old legislation. It would also position the U.S. as a leader for stablecoin issuers globally and potentially draw an enormous amount of investment and press.

Another trend we wanted to draw attention to was that last week a Venezuelan politician offered a series of Scholarships and Axie Infinity training programs to its constituents. 

The promise was made in the middle of an electoral campaign, and the proponent is a member of Maduro’s regime. Play-to-earn has become incredibly popular in countries with suppressed economies. While they cannot create real jobs for their people, authoritarian regimes are experts at spinning opportunities to their advantage. As crypto continues to grow, its benefits can and will be used by some for political gains - whether we like it or not.

Speaking of politics, last week Hedge Fund Billionaire Ken Griffin outbid an Ethereum DAO, ConstitutionDAO, in a bid to purchase a copy of the U.S. constitution. 

While this is a crazy headline and a movie will likely be made about this, the crazier part is the fact that ConstitutionDAO raised over $40 Million, and paid $800k in fees. This works out to a 2% transaction fee on average for the contributors. 

To add insult to injury, participants would have to pay roughly the same to get their money back. While it was an incredible social experiment, it highlights how expensive it is to use the Ethereum chain, and why so many are motivated to try new blockchains. 


Not much has changed!

Not much has changed on the difficulty front, the next adjustment is scheduled for this coming Friday and is projected to bring difficulty higher by just under +1%.

The mempool continues to be in good shape. Transaction costs and speeds remain optimal.  

What's Ahead

I and a few members of the Ledn team had the opportunity to travel to El Salvador last week to attend LaBitconf. It was an absolute pleasure to shake hands with so many of you that have supported us over the years. And it was incredible to see how the entire country has embraced bitcoin. We came back incredibly inspired with a desire to keep building. 


The bold moves that El Salvador is taking are both inspiring and courageous. At the same time, if the bond offering is successful, it will effectively remove the country from a lot of checks and balances. This could change the geopolitical landscape forever and could also have unintended consequences.

While bitcoin is apolitical, politicians will definitely try to capitalize on it.

We believe that bitcoin has the potential to change the lives of many for the better. And believe the lives of many in El Salvador will be better in the future as a result of the recent decisions. 

However, bitcoin should not be married to any one political party, and we must ensure that the power that bitcoin can create is used for the benefit of everyone. 

As always, we wrap up with a summary of the upcoming economic data and earnings reports for the week:


8.30 AM EST - Initial & Continuing Jobless Claims 

8.30 AM EST - U.S. Gross Domestic Product Revision 

10 AM EST - U.S. Personal Income & Real Disposable Income. (Interestingly, both dropped by more than -1% last month, and should continue to drop given the negative effects of inflation on real disposable income).

10 AM EST - U.S. Core Inflation & 5-year inflation expectations. (While these numbers are not that important in the eyes of the Fed, high inflation numbers could provide for a punchy headline going into Thanksgiving - setting the stage for dinner conversations all over the country).

2 PM EST - FOMC Meeting Minutes. Investors will be reading through the minutes to see any new additional details in the Fed’s tapering plans. Again, any new information could set the stage for Thanksgiving dinners all over America.


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About the author

Mauricio Di Bartolomeo

Mauricio is the co-founder and Chief Strategy Officer of Ledn.io. He grew up in Venezuela where he and his family learned about Bitcoin. Now based in Canada, Mauricio holds HBA and MBA degrees from the Richard Ivey School of Business in London, Ontario in Canada.