Hi investors, this has been quite a busy week in crypto, let's review what's been happening.
Bitcoin.
Orange Coin is trading at around $9500 USDT (Binance) at the time of writing.
Trading volumes are at their historical highest...
... and the price has not (yet?) registered a significant change since the May 11th "halving"...
... which goes to support the theory that Bitcoin markets are efficient and that without a significant uptick in underlying demand a supply shock alone cannot be conductive of pumping the price to infinity like some models seem to suggest.
Speaking of demand, this week saw a complete bombshell of a news with macro investor Paul Tudor Jones announcing that Tudor Group is adding Bitcoin futures to their investment portfolio and Jones himself revealing that he personally holds (vanilla) Bitcoin.
I highly recommend you read Jones' letter to his investors, it's concise and beautifully lays out the case for Bitcoin as a hedge against monetary inflation.
Another great news came from Wall Street with JP Morgan taking Coinbase and Gemini as its first crypto exchange customers.
Although this was mostly eclipsed by the buzz around the halving, this is some major news for the crypto industry (which has a history of being underbanked).
The involvement of JP Morgan will surely fuel many boardroom discussions on Wall Street and continues to legitimize crypto assets among traditional financial circles while providing more banking opportunities for crypto projects.
As more and more major players dip their toes into crypto, I believe we will see a shift from contempt to FOMO as not diversifying into solid crypto assets like Bitcoin will be seen as the new career risk.
This ship will be slow to steer but institutional money is coming
For more on who the institutionalized players are and what it would take to lure them into diversifying into crypto I recommend this great piece by Nick Price (Coinbase).
Macro.
On a more macro level, I would recommend you pay attention to this conversation between Cullen Roche from Orcam Financial and Anthony Pompliano about the real impact of Quantitative Easing (QE) on the economy.
Roche takes the counterargument here and defends the view that QE actually has a marginally deflationary effect on the economy because it takes leverage out of the economy by swapping yield-generating treasury bonds for zero-yield reserve.
Roche surely has history on his side here. Despite all the fear-mongering back then, the unprecedented QE of 2008 did not create hyper-inflation and inflation rate in the US actually went down on balance until 2015.
Roche point is that the FED's monetary policies don't actually have as much of an impact on the economy and that the causes of inflation are much deeper and more complex that is believed and doesn't obey the simple equation of:
more money = more inflation
My take on this is that I agree with Roche that simple narratives are generally wrong. We humans are wired in such a way that we find direct cause-and-effect narratives extremely appealing but often at the price of straying away from root causes.
I also believe that the mechanics of inflation are too complex to make simple assumptions about what causes it and I doubt QE will create hyper-inflation in the US. However it will be interesting to see if this narrative holds in other economies like the EU and what the impact of QE will be there.
That's it for this week, we will be back next weekend for more crypto markets insights,
Until then,
F0x