Ledn announces $2.7 M financing round and completion of first-ever Proof-of-Reserves attestation for a digital asset lender. ETH Futures launch on the CME.
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The Bitcoin Economic Calendar:
Week of Monday February 8th to Sunday February 15th.
SPECIAL ANNOUNCEMENT:
Ledn is proud to announce its most recent financing round, led by White Star Capital, with participation from Coinbase Ventures, Global Founders Capital, CMT Digital, Kingsway and Darrow Holdings.
We are also proud to announce that we are the first lending company ever to complete a Proof-of-Reserves attestation with top-25 public accounting firm, Armanino LLP. If you had a balance on your Ledn account as of January 31st, 2021, your balance at 11:59 PM EST on January 31st, 2021 was included in the report. This is done on an completely anonymized basis, preserving client privacy throughout attestation process.
You can learn more details about our Proof-of-Reserves standards here. Instructions on how to check the results will be displayed automatically on your Ledn dashboard.
Also - WE'RE HIRING! Check out our available job postings here. Feel free to submit an application if you think you'd be a good fit for any one of the available roles! If you think anyone in your network would want to join our team, feel free to send the link!
Market Commentary:
Bitcoin: Another record-breaking week for Bitcoin closing at $38,871, up 17.30% - it's highest weekly close, ever. Among the catalysts during the week was Michael Saylor's Bitcoin for Corporations workshop which drew a great attendance with solid contributions, one being Ross Stevens, who went viral around the Bitcoin community with his takes on central banks and money supply. Elsewhere we saw Elon Musk remove the Bitcoin hashtag from his Twitter profile and tacitly endorse Doge through a meme - which has made the coin more than double. Doge is a meme coin - yet another symptom of excesses by way of financial roulettes, in the markets. To highlight another influential billionaire with a Bitcoin hashtag in his twitter profile, Ricardo Salinas, founder of TV Azteca and Banco Azteca, also has a #Bitcoin on his twitter profile.
To briefly touch outside of Bitcoin, a recent report out of our very own Canada, gives us a great opportunity to see taxation by inflation at work. Check out the findings of the report "From 2005 to 2020, someone owning a two storey home in Vancouver created approximately $600,000 more wealth than someone earning the median income during this time. This is an annual average of $40,000, which actually exceeds the 2020 median income in Vancouver. Just to "earn" as much as a two storey home owner, you needed to earn approximately $80,000 per year from 2005 to 2020." Why does this happen, you may ask? Check out Canada's M1 Money Supply over the last 5 years:
Printing money takes value from non-asset holders and distributes it to asset holders. That's the cost of printing money to stimulate the economy, paying for government deficits, etc. Most countries' money supply end up looking like this - regardless of how well managed their economy is. It is not because there aren't central bankers saying that it's not prudent - but because these central bankers are human, and they are up against political forces much larger than themselves.
We'll also discuss what the options markets are showing for Bitcoin's February expirations along with the futures markets in our Whats Ahead for the Week section below. Ethereum Futures start trading in the CME this week, which could be a catalyst for all crypto markets.
S&P 500: Phenomenal week for the S&P 500 as it roared into a new all-time high, rallying every single day of the week into Friday closing near its intraday high. The index closed the week up 4.65% at 3,886 - its largest weekly gain so far in 2021. Closing the trading session at or near the intraday highs is typically seen as a positive sign and there could be pent-up momentum to start the week.
The index climbed on just about average volume and it did so despite the fact that the dollar index is on the midst of a potential reversal - which typically is a headwind to equities. The fact that it shrugged off a rising dollar perhaps reflects a more interesting point, which is that the GameStop/RobinHood saga seems to be resolving itself without too much more collateral damage. Looking at the high-flying darlings from last week, they have all come back down to normal levels - which is healthy for the market.
Lastly, there is debate in the U.S. government around how the next round of stimulus cheques will be distributed, but the funds will certainly be distributed - we will talk about the potential implications in our What's Ahead section.
Gold: Another bad week for gold, closing down -1.83% at $1,812/oz. It was down significantly more than what the dollar rallied (DXY up 0.51% for the same period). Given the backdrop of an almost certain stimulus package, inflation pressures all around, and commodities such as oil (+9.16% for the same period) also rallying, the narrative that gold is falling "out of favour" for other allocations within portfolios seems to be playing out. Something to keep an eye on as it is a large market where a lot of value seems to be looking to rotate from. Could be a tailwind for other markets such as Bitcoin.
DeFi: Another monster week for DeFi with the index closing up +30.85%. There are many tailwinds for this sector as we have discussed. Greyscale put out a piece on Valuing Ethereum this week, and the Ethereum futures on the CME are launching this week. This could continue to be a tailwind for the sector in general. This is all happening despite gas fees being astronomically high - at some points reaching up to $350 per transaction as reported by some users on Twitter. With attention comes volatility, market participants should be prudent when markets get heated.
Difficulty Commentary
New difficulty all-time high for Bitcoin came in Saturday evening and brought the difficulty to 21.43 TH, a new historical high. Since then, hashrate has continued pouring into the network and the next difficulty adjustment is already showing a potential increase of 3.51% which should take us to a new all-time high in the coming 2 weeks. This is consistent with what we have been writing here as continued increases in hashrate (or mining infrastructure), typically follow large runs in price. The trend is not likely to stop any time soon. While this is good for the mempool, the sheer demand for block-size has kept the mempool at near historical-high levels. This means that transacting is very expensive and can take a long time. Please take this into account when planning your transactions for the week. Remember that transactions within Ledn clients are free!
What's ahead for the week:
Ethereum Futures start trading this week which should be the focus of the industry and could potentially be a tailwind for asset prices. On the Bitcoin Futures side, the curve is showing a "normal" contango with prices topping at the $40k level for the June contracts. On the options front, there is _a lot_ of open interest in the $40k - $48k for the February 26th expiration contracts. Levels to keep an eye on as we enter into the week.
Elsewhere in the macro world, the potential reversal in the U.S. dollar index can have profound ramifications. What's behind the dollar reversal? What is happening in Myanmar (the military has overthrown the government), may have investors reconsidering the political risk of investing in emerging/frontier markets. Global political tensions typically lead to a rally in the U.S. dollar - this effect is typically referred to as a "flight to safety".
There is debate around how to split the distribution of the new stimulus resources in the U.S. Senate - however the pie is split, some of the new funds will inevitably find its way into some financial assets and consumer goods, which should be good for U.S. equity markets as well as the economy in general. This new influx of money into the supply could potentially neutralize some of the effect of a rising and damper the reversal we've started to see. Surely, that's what the Fed would like. The alternative, which is that markets rise with a rising dollar, just continues to delay inflation pressures - and lets assets prices run higher before we see inflation on main street - the wealth gap between asset holders and non-asset holders grows larger. Luckily, more people around the world have access to Bitcoin each day to protect their savings.
As always, we'll keep you posted on any relevant news throughout the new year right here and from our Twitter account @hodlwithLedn
Canadian Central Banking Updates:
Current Target Interest Rate: 0.00 - 0.25%
Current Overnight Money Market Rate: 0.23%
Source: https://www.bankofcanada.ca/rates/
U.S. Central Banking Updates:
Current Fed Interest Target Rate: 0.00 - 0.25%
Current Effective Federal Funds Rate: 0.09%
Source: https://apps.newyorkfed.org/markets/autorates/fed%20funds