The Swiss Stock Exchange recently approved an exchange traded product known as the Amun Crypto Basket (a tracker of the top 5 cryptos). Very encouraging volume in the early days of trading versus other commodity type products since launch. Also, trade seems to be institution dominated.
We need more of these vehicles to attract institutional money into the sector, so good to see one going live on a credible exchange.
Jay Clayton of the SEC
SEC Chairman Jay Clayton was interviewed this week at the Consensus conference in New York. He chose his words carefully but this is roughly the summary as far as crypto was concerned:
1. Bitcoin ETF: looks some way off. Custodial solutions needed and SEC investigation into price manipulation needs to conclude;
2. Bitcoin: is not a security;
3. ICOs: in the main are securities unless they have “meaningful use” arguments.
Most encouragingly though, it would be fair to say that he was balanced and certainly didn’t give the impression that he would prefer the whole space was killed off, his emphasis was more on protecting the retail investor.
Venezuela is often used as an example of the damage that hyperinflation can bring to an economy and its people. Mexican start up AirTM raised $7m from VC funds earlier this year. They plan to airdrop $1m of crypto onto 100,000 Venezuelans with accounts before Christmas. AirTM runs a popular money transfer service in South America, a good piece of marketing for both them and cryptocurrencies.
Fed bottles it
Venezuela has proved just how easy it is to lose control of a money supply. Turns out further North the Federal Reserve is finding it hard too, after the Fed Chair Jerome Powell blinked and softened his language. In October the Fed had said it would continue to raise rates until they were neutral, Powell specifically saying rates were “a long way off neutral”. Last week he said rates “remain just below the broad range of estimates of the level that would be neutral for the economy”. In the intervening months official rates haven’t moved at all……….please welcome the ‘Powell put’.
Why does this matter for crypto? Because there is real value in having a asset with a known supply curve, almost nothing on earth has that kind of certainty. We’ve had QE and now QT is proving almost impossible without crashing the economy, that will mean falling relative values for currencies.
Bitcoin Supply now – forever
As you can see for bitcoin, the rate of increase of supply slows with time. The opposite of the Venezuelan experience. Below you can see the US money stock published by the Federal Reserve.
US Money Supply 1980 – November 2018 ($B)
Look at the two graphs. Pick the asset you’d rather hold.