Weekend ETH Prices – 09.13.2021
ETH Friday at 5pm: $3,542
ETH Weekend Low: $3,184
ETH Weekend High: $3,467
ETH Price as of posting: $3,200
Performance YTD: +336.27%
Weekend BTC Prices – 09.13.2021
BTC Friday at 5pm: $45,424
BTC Weekend Low: $44,440
BTC Weekend High: $46,363
BTC Price as of posting: $44,187
Performance YTD: +50.08%
Welcome back to the Digital Asset Weekend Round-Up and be sure to read all the way until the end with learning opportunities! This weekend we saw a lot of international news dominate, which is important since this is a global asset class, as well as the continuing rise of alternative smart contract platforms to Ethereum. Polkadot, Solana, Algorand, Avalanche, Cardano, and Tezos all have been making significant strides recently becoming larger players in the smart contract platform segment of the digital asset ecosystem all with $5 Billion + market caps. You may be thinking to yourself, “I’ve barely wrapped my mind around what smart contracts are and Ethereum as an asset, let alone a bevvy of competitors now.” Let us help make some connections.
Koibanx, a leading Latin American asset tokenization and Blockchain financial infrastructure company, announced on August 31st it has partnered with the government of El Salvador, which made the historic step of adopting BTC as legal tender this past Tuesday, to develop the country’s blockchain infrastructure utilizing the Algorand blockchain. Cardano has been establishing roots across African nations, most notably in Ehtiopia, and formally released the highly anticipated Alonzo hard fork Sunday, which brings smart contract capabilities to life on the Cardano blockchain. Solana has come out as one of the fastest executing blockchains that can handle the burgeoning DeFi and NFT segments of digital assets. Avalanche is showing its teeth in its ability to also compete in the DeFi space with the launching of its DeFi incentive program on August 18th allocating $180 to protocols that want to migrate from Ethereum to Avalanche. Also giving Avalanche some momentum is it’s new relationship with Topps (the popular collectible and trading card maker) and Major League Baseball to be the blockchain in which to launch it’s “2021 Topps Major League Baseball Inception NFT Collection.” To round this out Polkadot and its parachains structure are getting involved in the NFT and gaming space with Effinity. “Effinity is a purpose-built blockchain developed by Polkadot with substrate development support from Parity Technologies. In effect, it is a cross-chain token connection to enable the widespread adoption of NFTs.” as reported by Akash Girimath of FXSTREET.
What is also important to note the how smart contract platforms as a segment has been de-coupled from BTC correlation with prices moving extremely high while BTC has been in a downward trend since $52k resistance. As the digital asset class continues to evolve we will look for of this type of de-coupling as BTC has very different use cases and value accrual relative to other digital assets, like ones specific to building smart contract platforms.
Questions we are spending energy on: Will ETH 2.0 render many of these projects obsolete? Will these alternative smart contract platforms find a niche and survive? Which networks have the highest probability to come out alive and on top?
Well, we don’t know. The take away here is that there is much more to this space than Bitcoin and Ethereum. We believe there is room for more than one smart contract network to achieve significant network effects. This is why we have a specific segment to our actively managed portfolio designated to “Smart Contract Platforms and Scaling Solutions”. Are you curious and want to know more? Get in touch via LinkedIn or our website and happy to have a conversation.
ESMA & BIS weigh in on digital assets
As reported by Sandali Handagama from Coindesk, “Crypto assets and distributed ledger technology (DLT) topped the European Securities and Markets Authority’s (ESMA) 2021 financial innovation scoreboard, according to a new report published by the institution. The 110-page report, titled “Trends, Risks and Vulnerabilities,” treated cryptocurrency as a trending financial innovation as well as a threat to sustainable finance due to its “soaring” environmental cost, particularly in relation to crypto mining. The report suggested that crypto asset volatility, along with the rise of decentralized finance (DeFi), central bank digital currencies (CBDC) and stablecoins, are contributing to increasing risk across all asset classes.” See below for link to the article and full report from the ESMA.
We aren’t surprised by this (on a previous round up we dove into how stablecoins and CBDC’s are on top of regulators mind on a global scale and seen as a threat to the current system) but would be remiss not to highlight that the regulatory risk is very real in digital assets. What did take us by surprise is the recognition that digital assets are a trending financial innovation. Especially when you consider that around the same time Benoît Cœuré, head of the BIS Innovation Hub, said during a speech on Friday at the Eurofi Financial Forum in Ljubljana, Slovenia, “Central bank money will have to evolve to be fit for the digital future.”
Also reported by Sandali, “According to Cœuré, central banks around the world are coming together to work on CBDCs. Cœuré also said that central banks need to consider a number of implications including how public and private money should coexist in new ecosystems, and if central bank money, for instance, should be used in DeFi rather than private stablecoins.”
“A CBDC’s goal is ultimately to preserve the best elements of our current systems while still allowing a safe space for tomorrow’s innovation. To do so, central banks have to act while the current system is still in place – and to act now,” Cœuré said.
These stories are critical to understanding digital assets as a global asset class. While many only see digital assets from the perspective of the US regulatory environment, this ultimately is a mistake. What this also does is make digital assets that much harder to understand. This means if you are allocating capital to digital assets the need for trusted resources that understand the space as a whole is integral to the success of your overall investment strategy.
Switzerland and Sweden take different stances…
While Swiss stock exchange SIX was given regulatory approval to launch an exchange and depository for digital assets, Sweden’s top central banker, Stefan Ingves had some pretty pointed thoughts on BTC and digital assets, “Personally, I wouldn’t put my money into it, but clearly, some people think it’s a good bet,” Makhlouf said. “Three hundred years ago, people put money into tulips because they thought it was an investment.”
Never heard that one before! But on a serious note a good read on the history of speculative mania’s, tulips included, see below (spoiler alert: the tulip bulb speculative mania was totally different than what we are experiencing now):
Our takeaway from these weekend stories, which continue to evolve, is that we are so early in digital assets still and nation states will continue to establish their positions. What is clear is nations will have to decide whether or not they will regulate themselves out of, what we believe, is the next stage of financial innovation. Also clear is that even if some nations do decide to not participate digital assets are here to stay.
Blockchain & Digital Asset Learning Opportunities
Real Vision Crypto Gathering 2021.5
This Friday, September 17th from 10am-6:30pm EST Real Vision will be hosting a digital asset event diving into, “2021 has been an explosive year for digital assets. Join Real Vision for an electrifying one-day online event where crypto rock stars answer the questions, “Where are we NOW, where are we going, and how do you stake your claim on the future of everything?”
This is an update of sorts to the gathering hosted back in March. We will be there with bells and whistle on and hope to see you there!
Crypto for Advisors by Coindesk
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Stay safe, healthy and happy!
*all pricing data provided by Messari.io