Hello everyone,
The purpose of this letter is to inform you about the current situation of the crypto-asset market as well as recent news in this field. This letter is not investment advice, but merely a sharing of my personal point of view.
News
Follow the SEC's crusade against cryptocurrencies in real time. The US Securities and Exchange Commission (SEC) has confirmed its intention to declare war on the crypto ecosystem on US soil. Follow the evolution of the situation opposing the SEC to the crypto ecosystem in the United States at the link above.
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Republican Warren Davidson introduces a bill to fire Gary Gensler«. The did not mince words against the SEC chairman: «US financial markets must be protected from a tyrannical president, including the current one. That is why I am introducing a bill to address the ongoing abuse of power and ensure protections that are in the best interest of the market for years to come. It is time for real reform and to fire Gary Gensler as SEC Chair.»
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Vitalik Buterin presents 3 transitions for Ethereum to undertake. In his latest blog post, Vitalik Buterin outlined 3 areas of improvement that Ethereum (ETH) must urgently undergo to achieve mainstream adoption. While these ideas are still at the reflection stage, they could lay the foundations for the future face of the famous blockchain.
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France: Binance Pay and Lyzi make cryptocurrency shopping possible at 440 merchants. Binance Pay has partnered with payment app Lyzi to enable cryptocurrency spending at 440 merchants in France. In addition, 330 points of sale are also in the process of being integrated across Europe.
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The Judicial Commissioners of the Paris Court of Appeal will henceforth use NFTs for their official documents and acts. The Judicial Commissioners of the Paris Court of Appeal are turning to blockchain to secure and authenticate their documents. They have just announced a partnership with Unikbase, which will allow them to create NFTs on a dedicated blockchain.
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Japan's largest bank is preparing to launch stablecoins on the Ethereum ecosystem. Banks with a growing presence in Web3? The Japanese group MUFG has spoken out about the launch of its stablecoin platform, the assets of which will be deployed notably on the Ethereum blockchain. This is yet another step by the banking sector toward Web3, thereby consolidating the solutions and applications developed around blockchain technology.
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Polygon (MATIC): 100 million dollars in tokenized bonds by Defactor Labs. If there is one promising future, it is the tokenization of real-world assets on the blockchain. The startup Defactor Labs has announced the tokenization of 100 million dollars in bonds on the Polygon (MATIC) blockchain. This will make bond investments more transparent, faster, more accessible, and less costly.
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Nearly $10 billion in ETH destroyed: who contributes the most to the burn on Ethereum? With nearly 3.37 million ETH burned for $9.8 billion, this is an opportunity to review Ethereum's burn functions. Who contributes the most to reducing issuance on the network? Since the implementation of EIP-1559 on Ethereum in August 2021, the number of burned ETH continues to grow. This trend was accentuated by the success of The Merge, which sometimes even tends to make the asset deflationary, depending on the current activity on the network.
Fundamental Analysis
Source : https://www.coingecko.com/fr
At the time of writing, the price of Bitcoin is 26,000$ (on 06/14/23).
Market Apathy :
We can describe the current market as being in a state of apathy: it is a state of indifference or insensitivity. Indeed, on this Glassnode chart below, we can notice that all the Bitcoin coins currently sent to exchanges were acquired at a price very close to the current range (€18k and €32k) and were purchased very recently. They are therefore likely held by investors in the STH (Short-Term Holder) category.
The closer the green and red curves are to the average (horizontal line), the less incentive investors have to sell due to the proximity of the current price to their purchase price.
Glassnode
The graph above bears witness to a relatively high degree of investor confidence regarding the ongoing regulatory attacks in the USA, as well as investor apathy—that is, a lack of incentive to sell near their purchase price.
Thanks to these profit or loss levels (relative to recent investors' purchase prices), the sell-side risk ratio has fallen to historically low levels. You can see this in the chart below which compares the market-aggregated profit and loss compared to the market realized capitalization value.
The realized market capitalization is a variation of the traditional market capitalization that values each UTXO (transaction) based on the price at the time of its last movement. This realized capitalization reduces the impact of lost and long-dormant coins, and weights coins according to their actual presence in the economy of a blockchain (Bitcoin for our example).
The total value of these profits and losses is extremely small compared to Bitcoin's realized capitalization (which stands at $391 billion). Low values of the sell-side risk ratio have historically occurred during periods of heightened investor apathy, typically during the long periods between Bitcoin market cycles.
Glassnode
We can also see below that the overall transfer volume is trading at cyclical lows. This week, we saw a relatively low overall transfer volume (at around $2.85 billion per day). However, this volume represented a very high amount during the previous cycle in 2020.
Glassnode
In summary, the market remains flat, inert, and bored waiting for the next cycle despite the regulatory environment in the US remaining hostile. Short-term investors likely sold in fear, and the almost nonexistent reaction from long-term holders suggests that many investors were not surprised by the SEC's latest attack.
The global adoption of digital assets worldwide:
As we can see in the graph below, the adoption of digital assets worldwide is still in its infancy. Compared to internet adoption, it is as if we were in 1998 or 1999. We still have 20 years of development and adoption ahead of us. The landscape of the ecosystem can still change radically.
What is interesting to note is that we are on the same adoption speed as the Internet, perhaps even slightly faster. Many projects could still appear in the years to come and dominate the market in 20 years, much like Google (YouTube), Facebook, Twitter, Netflix, Amazon, etc.
Report by Boston Consulting Group, Bitget, and Foresight Ventures
It is relevant to compare the adoption of digital assets with that of the Internet, because cryptos are a continuation of the Internet: they are in a way an extension of what we can do with the Internet. Here is a sentence we believe in:
«Blockchain will be to banking, law, and accounting what the Internet was to media, commerce, and advertising.»
You can also find a Global Crypto Adoption Index with a country ranking on the Chainalysis website. We can see that France is in 32nd position (in 2022).
Source : Chainalysis
572,000,000,000 $ added to the US national debt in two weeks :
According to the latest figures from FiscalData, as of June 15, the U.S. national debt stood at $32.03 trillion, an increase of $572 billion from June 1 ($31.46 trillion). The total debt now exceeds the combined GDP of China, Japan, Germany, and the United Kingdom.
At current interest rates, the United States pays more than $2 billion a day in interest payments, and even if every American household contributed $1,000 a month to pay down the debt, it would still take 20 years to pay it off.
The United States debt currently stands at $31 trillion. Is it more likely to reach $50 trillion or $25 trillion? It is more likely to reach $50 trillion than $25 trillion. The situation therefore persists.
Ray Dalio, the founder of the world's largest hedge fund, Bridgewater Associates, also recently stated that the United States is entering what he calls a «very classic late-big-cycle debt crisis.».
It is for this reason that we believe that in the long term (+20 years), the value of the dollar will have continued in its direction of losing purchasing power, and the phenomenon will likely even have amplified. There are only two possible solutions for our Western economies: repaying our debts through work and production (living below our means to repay) or inflation that will destroy our debt denominated in a currency that we will continue «to print» (continuing to live beyond our means).
We believe our economies are heading toward the second option, which will mean long-term inflation and a decline in the value of our Western currencies.
The same observation applies to Europe and the euro zone.
Our service
We offer a portfolio management service under mandate specializing in digital assets. We provide comprehensive, personalized support in this space by tailoring your portfolio allocation to your risk profile and situation.
Our turnkey management allows you to take advantage of this sector's growth without worrying about choosing the digital assets to put in your portfolio, conducting in-depth token research, dealing with volatility, or handling rebalancing, etc. All you have to do is read your monthly reports and invest regularly with a long-term horizon (4 years and more).
We do not engage in algorithmic trading or day trading; we invest for the long term in projects that we know and understand. We make monthly rebalancing adjustments in the portfolios and conduct in-depth research on the assets (especially their tokenomics) that we include in our portfolios.
Check out our website: https://www.mereau-finance.com/
If you have any questions, comments, or would like to know more about our service, please feel free to contact us at this email address: tristan.g@crypto-assets-management.com or to schedule a phone appointment with us via this link.
— Warning —
This is not investment advice, no one can predict the future.
You are solely responsible for your investment decisions.
We are not responsible for losses following a decision made on the basis of the information in this letter.
