2,188Chairman MetalPay / Proton Blockchain. Ex-arbitrage trader (Salomon Brothers, GCM).
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Let's assume, for argument sake, that the growth of Tether is largely unbacked by actual fiat in a bank account. If that scenario is correct, how much of BTC's recent rise does it explain?
Currently, there are 900 Bitcoins mined each day -- let's call that 35 Million USD. That's the new new supply. It's been reported that Square and PayPal are now consuming about that number. These are both massive companies, so that makes sense.
But what about Tether?
Well on Dec 25, there were 20.689 Billion USDT out there. 16 days later, on Jan 10, there were 24.222 Billion USDT. On average, over those 16 days 220 million Tether were minted each day.
This is between 6 and 8 times the daily volume of new BTC mining. This is a big number. If this went into BTC and other high volume crypto (ETH and now LINK), you would expect a big move. And during that period: BTC rose from 25.8 to 39.5 a 56% increase.
Now I have absolutely no inside information either way on whether this actually happened. But it's a consistent argument.
I think all of us in crypto have to at least understand that there is a non-zero risk that this is what is going on.
Something I have a bad feeling about is this idea of non-collateralized crypto lending. There are two recent projects going in this direction:
Both of these projects "whitelist" certain borrowers that can tap into pooled funds, presumably voted in by governance tokens. But language like "Users will ultimately be able to obtain 90x leverage on stablecoins or 80x leverage on ETH to farm SUSHI, CRV, ALPHA." scares me.
Key new fact: Tether balances can't be explained by Deltec Bahamas.
From January 2020 to September 2020, the amount of all foreign currencies held by all the domestic banks in the Bahamas increases by only $600 million — going from $4.7B to $5.3B. (The table is in Bahamian dollars, but the Bahamian dollar is pegged to the US dollar, so 1 BSD = 1 USD.)
But during the same period, total issued Tethers increased by almost $5.4 billion — going from $4.6B to $10B!
As 2020 draws to a close, here's how I would rate Real Vision 's calls
Mega Winner 10/10: Long Bitcoin. Clearly this was said, and it was said loudly. If you followed Real Vision, you invested in Bitcoin. If you were already invested, you bought more. This was the trade of 2020. Thanks @Raoul Pal
Mega Winner 10/10: The guests (not Raoul) who said buy Stocks. Several of them clearly had the conviction. In particular Kyle Bass. I wasn't a big believer in this stock story -- and while i wasn't net short, there was opportunity cost.
"Meh" 3/10. Gold Prices. Gold is net up over the Pandemic but not much. Considering how much focus was on Gold, it was a distraction.
Loser: Mild Conviction to Short Banks 0/10. While Raoul was careful not to make too many short calls, he did articulate a major negative vibe on banks. I lost some money on this trade, but water under the bridge.
Mega Loser: Long Dollars 0/10. This was a really bad trade in retrospect, based on the idea that there was too much dollar debt. Didn't matter. The US fumbled the pandemic, and lost the confidence of the world stage. I never bought into this logic, but will always remember the "dollar milkshake" theorists on RV.
- Fine Art: 67 Billion
- Diamonds: 78 Billion
- Bitcoin: 350 Billion
- Tesla: 600 Billion
- Amazon: 1.6 Trillion
- German Stock Market: 2 Trillion
- India Stock market: 2 Trillion
- Apple: 2.2 Trillion
- Japan Stock Market: 6 Trillion
- China Stock market: 10 Trillion
- Gold: 10 Trillion
- US Commercial real estate: 17 Trillion
- US Residential real estate: 33 Trillion
- US Stock market: 36 Trillion
- World Stock market: 96 Trillion
- Everything: about 250 Trillion.
First of all kudos to @Raoul Pal for clearly articulating the case for BTC at about 45% of current prices. I know a lot of us here have used this to add to our BTC conviction. I certainly have.
And now to the rest of crypto, and regulation.
This last two weeks have been an intense time for those in the crypto space. We have three separate new regulatory angles to deal with:
- First, FinCen is going to be requiring exchanges and MSBs to keep track of the identities of large unhosted wallet withdrawals. This is a BIG DEAL. It means that you are going to need to somehow verify that you own any withdrawal address, and that you are in fact, you. The anonymity angle of crypto is closing.
- Second there is new talk of adding KYC to stablecoins. This is not yet law, but confirms the intent of the first point, which goes directly against DeFi in its current incarnation
- Finally, there is the case against Ripple by the SEC. This came as a surprise to most of us. It's very Ripple specific, but adds to the general sense that regulation is coming from all angles.
Bitcoin has benefited from a flight to quality as all three of these affect other crypto more than BTC. In general regulation is coming. The sector is growing quickly and this is not a bad thing.