Monday, March 15, 2021
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J.P. Morgan Announces 'Crypto Exposure Basket'
J.P. Morgan, a global leader in financial services, is set to launch a ‘Cryptocurrency Exposure Basket’. With a basket of 11 companies, the instrument will give J.P. Morgan, and its investors, a proxy to Bitcoin without actually investing directly in the cryptocurrency.
The news comes a few weeks after a report published by J.P. Morgan warning that traditional financial companies are at risk of falling behind in digital finance. Included in the incoming debt instrument are bitcoin-laden companies MicroStrategy (20%), Square (18%), Riot Blockchain (15%), NVIDIA (15%), and seven others. According to J.P., this basket of companies “Operate a business that we believe to be directly or indirectly, related to cryptocurrencies or other digital assets, including as a result of bitcoin holdings, cryptocurrency technology products, cryptocurrency mining products, digital payments or bitcoin trading.”

The SEC filling took place on Tuesday. The notes will come in denominations of $1,000 and will mature in May of 2022. Payment at maturity will be the principle plus Basket Performance minus the 1.5% deduction fee. So if the basket gained 20%, investors would look to gain 18.5% on their investment. This will be J.P. Morgan’s first filing for a crypto-related debt issuance.
The debt issuance is further evidence that Wall Street players are increasingly looking to give buyers exposure to the growing interest in cryptocurrencies. Over the past few weeks, we have seen Goldman Sachs restart its crypto trading desk, BlackRock offer a Bitcoin futures funds, and BNY Mellon announce plans to manage digital assets.

J.P. Morgan stressed that "the notes do not provide direct exposure to cryptocurrencies and the performance of the basket may not be correlated with the price of any particular cryptocurrency, such as bitcoin." However, we believe Forbes hit the nail on the head with their article titled; JPMorgan Bitcoin Exposure Basket Could Be ‘Gateway Drug’ For Clients. If the companies, and overall basket, perform anything as Bitcoin does in the following months, skeptical investors who have their feet wet may very well take the full-out plunge.

Ethereum Devs and Miners Feud Over EIP 1559
Earlier this month, the Etheruem developer community voted to confirm EIP 1559. EIP 1559 is an Ethereum Improvement Proposal submitted by Eric Conner (@econoar). The upgrade is slated to take effect during the London Hardfork event in July of this year. The protocol improvement will do two main things:

(1) Establish “the market rate” for block inclusion (transaction fees)
(2) Burn the majority of the ETH in the transaction fee

This means that transactions on the Etheruem network will eventually have a set price (+/- a tip for the validator). The new "market-rate" for gas on the Ethereum network will help to reduce transaction fees and create a more predictable and stable price for transactions on the network. On top of creating price stability, the proposal suggests that most of the gas fees paid on the network will be burned as opposed to being paid out to miners. This reduction in supply will create a deflationary pressure on the Etherum monetary policy. This, in theory, should raise the value of the asset.

While this move seems to be of benefit to Ethereum users and holders, miners have voiced their opposition to the upgrade as they would no longer be the beneficiaries of the exorbitant transaction fees on the Etheruem network. Today, miners receive 100% of the gas fees paid in transactions. When the EIP 1559 fee burn comes into effect, miners will stand to lose more than 50% of their profit margin. With that said, much of the developer community, including Etheruem founder Vitalik Buterin, believe the network is currently overpaying for security and would rather those proceeds be used elsewhere. In the case of a fee burn, the benefit of the reduced currency supply is indirectly distributed to all the users and owners of the network as opposed to just miners.

As a form of protest, several miners who provide hashpower to the network are staging a protest. Mining pool Red Panda Mining has taken to social media to coordinate a "show of force" in opposition to the upgrade by moving their hashpower to Ethermine for 51 hours on Apr. 1. Ethermine is a mining pool that opposes EIP 1559. It should be noted that this "show of force" is not meant to be an attack on the Etheruem network, it is merely meant to be a demonstration that miners can coordinate and protest for what they believe in.

While miners have every right to voice their opinion and protest the upgrade, they are clearly fighting a losing battle. The development of ETH 2.0 is already well underway. ETh 2.0 will bring Ethereum from a Proof-of-Work to a Proof-of-Stake protocol. In effect, this upgrade will eliminate the need for miners entirely. We hope that when the dust settles the divisions within the community do not lead to any further "forking" of the protocol and the community can settle its differences and continue working towards the common goal of decentralizing the world. Until that time, it is clear that miners are not going down without a fight.
PayPal Acquires Digital Asset Security Firm Curv
Last week, the payments giant PayPal purchased Israel-based digital asset security firm Curv (not to be confused with Defi protocol Curv finance). The price of the acquisition wasn't disclosed, but Calcalist, an Israeli media company, said the deal was between $200-$300 million with CNBC reporting it to be shy of $200M. The acquisition is set to be complete before the third quarter of 2021 and is part of PayPal's initiative to support cryptocurrencies at some point this year.

The acquisition follows PayPal's expansion plan into the crypto space. Last October, the company announced that in 2021 it will allow customers to shop with cryptocurrencies at any merchant in its network. Initially, the payment giant will be supporting Bitcoin, Ethereum, Bitcoin Cash, and Litecoin. Payments will be settled through fiat while PayPal takes care of the conversion with Paxos powering the back-end infrastructure. In October, PayPal also became the first company to receive a conditional “Bitlicense” from the New York State Department of Financial Services. With over 346 million active accounts and $222 billion in volume processed in Q2 2020, PayPal is one of the largest mainstream companies to enter the crypto space.

Trusted by industry leaders such as Etoro, FalconX, and Genesis, Curv aims to provide security and peace of mind in the Digital Economy. It is a cloud-based wallet that gives users 'bulletproof protection, instant availability, and total autonomy.' Notably, Curv looks to distribute protection and eliminate a public key's single point of failure. Jose Fernandez da Ponte, the VP and General Manager of Paypal's crypto division, explains "The acquisition of Curv is part of our efforts to invest in the talent and technology to realize our vision for a more inclusive financial system."

Bitcoin Breaches and Holds $60K!
Bitcoin rallied over $9,000 last week and pushed its way past another major milestone. After a $4,000 move on Saturday, Bitcoin reached a new all-time high of $61,781, and as of the time of writing, it has been holding up nicely above the big even number of $60K. All signs look bullish for this rally to continue as Bitcoin is now once again in price discovery mode. With on-chain metrics looking bullish, and miner selling decreasing we expect the short-term outlook on Bitcoin to remain bullish. From a macro perspective, the recently approved US stimulus package should be a welcome sign to Bitcoin holders as more of that newly printed money will flow into hard assets like Bitcoin.

View the chart here.
Alt-Coins Bleed During Bitcoin Rally
As we have pointed out numerous times in the newsletter, the entire cryptocurrency market is very closely tied to Bitcoin. Alt-coins tend to do well when Bitcoin volatility decreases because capital flows to where it can find the highest yield. When it is not finding yield in Bitcoin, it flows downstream to find greater yield in the alt-coin space. However, last week, that was not the case. As Bitcoin pumped, investors piled into the leading currency, and liquidity was sucked away from smaller cap coins. We saw this play out in the alt-coin dominance chart. After pushing sideways in a relatively indecisive pattern, last week brought a substantial correction for the alt-coin market relative to its Bitcoin valuation. If this trend continues, we suspect alt-coin dominance could go as low as 34-35% before recovering back to the 40% range and attempting to break out of its horizontal pattern.

View the chart here.
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Stacks (STX)
Stacks is an open network for decentralized apps and smart contracts on Bitcoin. Stacks connects to Bitcoin, enabling you to build apps, smart contracts, and digital assets that are integrated with Bitcoin's security, capital, and network. With the mass adoption of Bitcoin becoming inevitable, it will be imperative that we begin to build financial protocols on top of the Bitcoin network. Smart contracts on top of Bitcoin would enable a world of possibilities as it relates to enterprise usage of blockchain, global foreign exchange, and much more. Stacks (formerly Blockstack) is the leading protocol building towards that end. STX has recently broken out of a more than one-year sideways trading pattern vs Bitcoin and looks like it may be ready to push higher.

View the chart here.
Ocean (OCEAN)

Ocean Protocol is a decentralized data exchange protocol to unlock data for AI. Through blockchain technology, smart contracts, and tokens, Ocean Protocol connects data providers and consumers, allowing data to be shared while guaranteeing traceability, transparency, and trust for all stakeholders involved. Ocean protocol has been setting higher highs and higher lows vs. its Bitcoin valuation for the entirety of 2021, yet it is still roughly 60% down vs its all-time high Bitcoin valuation. With data being the most valuable commodity on earth and the development of AI systems growing at warp speed, we expect the future of Ocean Protocol to be bright for the remainder of this bull run.

View the chart here.
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We at CryptoWeekly are not Financial Advisors. None of the content or opinions expressed in this newsletter should be considered financial advice. We highly recommend that you do your own research before investing in any project within or outside the cryptocurrency space.