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Worthy Insights / Opinion Pieces / Advice
FT – Watch the Fed’s balance sheet, not interest rates – Gillian Tett 6/7
- “The US central bank’s unwinding has contributed to turmoil in emerging markets.”
FT – China is winning the global tech race – Michael Moritz 6/17
FT – Donald Trump’s trade tirade shows his mastery of the message – Rana Foroohar 6/17
Polygon – What if Star Wars never happened? – Kevin Lincoln 6/7
- “Imagining a world where George Lucas’ space fantasy didn’t revolutionize Hollywood.”
Markets / Economy
WSJ – Daily Shot: indeed – Older workers are the gig economy 6/18
Energy
FT Energy Source: BP – World Fuel Sources by proportionate share – Ed Crooks 6/17
Finance
WSJ – The Finance Industry’s Incredible Ability to Keep the Money Rolling In – Paul J. Davies 6/15
- “Banks, brokers and money managers have kept their revenue steady for 130 years.”
Cryptocurrency / ICOs
FT – Who really owns bitcoin now? – Hannah Murphy 6/7
- “Initially in the crypto space, you had people who really understood the technology. Then there was a typical bandwagon investor situation and you know how it ends — and it did.” – Campbell Harvey, finance professor at Duke University and an investment strategy adviser for Man Group.
- “But how many have gained — and lost — from the bitcoin bubble? Exclusive data from blockchain research company Chainalysis seen by the FT provides some tantalizing answers.”
- “The Chainalysis data quantifies this distinct shift in the make-up of bitcoin owners from longer-term investors — those who held the asset for more than a year — to short-term investors who have traded more recently, by analyzing how regularly coins have changed hands.”
- “Last November — before December’s pricing peak — the amount of bitcoin held for investment was roughly three times that held by traders.”
- “However, by April 2018, the data show the amount held by investors — about 6m bitcoin — was much closer to the amount held by short-term speculators, with 5.1m bitcoin.”
- “Indeed, Chainalysis estimates that longer-term holders sold at least $30bn worth of bitcoin to new speculators over the December to April period, with half of this movement taking place in December alone.“
- “’This was an exceptional transfer of wealth,’ says Philip Gradwell, Chainalysis’ chief economist, who dubs the past six months as bitcoin’s ‘liquidity event’.”
- “Mr Gradwell argues that this sudden injection of liquidity — the amount of bitcoin available for trading rose by close to 60% over that period — has been a ‘fundamental driver’ behind the recent price decline. At the same time, bitcoin trading volumes have now fallen in tandem with the prices, from close to $4bn daily in December to $1bn today.”
- “So will the price of bitcoin ever surpass December’s peak? Part of the answer lies in who holds bitcoin now that the hype has died down.”
- “Born in 2009 in the wake of the financial crisis, bitcoin is rooted in a libertarian quest for a means of exchange that is unshackled from the central banking system. Proponents — among them, computer experts and political activists — heralded the arrival of an alternative monetary system that could replace fiat currency.”
- “But despite the recent crypto boom, there are few signs that this is happening. According to research published this month by Morgan Stanley, only four of the top 500 US e-commerce merchants accepted cryptocurrencies in the first quarter of 2018, compared with three at the beginning of 2017.”
- “Chainalysis notes that the ‘vast majority’ of transactions it analyzed showed bitcoin being received from exchanges and rarely sent to merchant services to pay for goods or services.”
- “Only a finite number of coin — 21m — can be created. Of this, about 4m are yet to be mined. Just as physical coins can be lost down the back of a sofa, so can bitcoins if users lose or forget the passwords needed to access their online wallets. The Chainalysis data separates out coins it deems to be lost or unused for years — which total 3.7m bitcoin, worth about $28bn.”
- “’Speculation remains the primary use case for these digital assets; merchant or institutional adoption does not appear to be a primary driver of price,’ says Preston Byrne, an English structured finance lawyer and cryptocurrency observer.”
- “Given this breakdown in bitcoin owners, most market watchers do not rule out another rapid price run-up. However, they say this would likely be the random movement of pure speculation or market manipulation rather than anything else.”
- “’It’s very important to stress, this is not in any sense a rational market,’ says David Gerard, the author of Attack of the 50 Foot Blockchain.”
- “’It’s very thinly traded, very badly structured . . . and it’s stupendously manipulated,’ he adds. ‘Anyone who goes in not realizing just how manipulated the crypto markets are will get skinned.’”
- “The Chainalysis data also show that the bitcoin marketplace is skewed in terms of wealth distribution. A small cluster of investors — known colloquially as ‘whales’ — capture a hefty proportion of the market, which stands at odds with bitcoin’s mission to democratize finance. This brings its own risks.”
- “Overall, some 1,600 bitcoin wallets — managed by both speculators and investors — contained at least 1,000 bitcoin each in April, according to Chainalysis, collectively holding nearly 5m bitcoin, or close to a third of the available total.”
- “Of those, just under 100 wallets owned by longer-term investors contained between 10,000 and 100,000 bitcoin — so between $75m and $750m at today’s prices.”
- “Nevertheless, some point out that the excitement and influx of fresh funds into the market has allowed its infrastructure to mature — albeit gradually — which could be a boon for those looking to trade bitcoin more safely in future.”
- “Much of the future of bitcoin trading will depend on the approach that regulators take, experts say. There are stirrings across the world, though to date, little coherence. Asian financial centers such as Tokyo are now regulating crypto exchanges, while China has banned them outright. Meanwhile, the US Securities and Exchange Commission last month announced a criminal probe into potential bitcoin price manipulation.”
- “Banks in particular have been reticent to engage with cryptocurrencies and the companies that handle them, partly due to the difficulty of conducting anti-money laundering checks on transactions.”
- “’Bank compliance officers really, really hate cryptos . . . be prepared to demonstrate the provenance of every penny from every crypto,’ says Mr Gerard.”
- “Any more widespread adoption of bitcoin would need regulators, central banks and tax regulators to allow the transfer of wealth movement from the current financial system into the new one, says Gavin Brown, senior lecturer in financial economics at Manchester Metropolitan University and director of cryptocurrency hedge fund Blockchain Capital.”
Environment / Science
China
FT – Beijing leans on lenders to back debt-hit HNA’s bond sale – Lucy Hornby and Sherry Fei Ju 6/15
- “Chinese banks have been urged by government officials to ‘support’ bonds issued by HNA as the troubled finance-to-aviation conglomerate tries to extricate itself from a massive debt burden racked up during an acquisition binge.”
- “HNA plans to issue Rmb4bn ($620m) in domestic bonds, paying interest of 6.5-7.5%.”
Other Interesting Links
WSJ – Daily Shot: Plastic Surgery Portal – Most Searched Plastic Surgery Procedures by State 6/18
