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The Ethereum Investment Case Has This Unexpected Achilles’ Heel

With the next crypto bull run on the horizon, investors have speculated that Ethereum will be one of this cycle’s best investments. As reported by Bitcoinist previously, Chris Burniske, a partner at Placeholder Capital, said that he thinks Ethereum could rally to $7,500 in the coming years: “If BTC goes > $50,000 in the next cycle, and ETHBTC returns to its former ATH, then expect to see ETH > $7,500. To the mainstream ETH will be […]

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With the next crypto bull run on the horizon, investors have speculated that Ethereum will be one of this cycle’s best investments.
As reported by Bitcoinist previously, Chris Burniske, a partner at Placeholder Capital, said that he thinks Ethereum could rally to $7,500 in the coming years:
“If BTC goes > $50,000 in the next cycle, and ETHBTC returns to its former ATH, then expect to see ETH > $7,500. To the mainstream ETH will be the new kid on the block — expect a frenzy to go with that realization,” Burniske explained, showing how a 3,000% Ethereum rally in the coming years may be feasible.  
Yet there is a potential “Achilles’ heel” to the ETH investment case that could limit upside, especially if gains are measured against that of other top cryptocurrencies.
This Factor Could Prevent Ethereum From Growing Rapidly
According to cryptocurrency investor and commentator Humboldt Capital, the Ethereum investment case’s “biggest Achilles’ heel” is the fact that you don’t need to invest in ETH to benefit from the growth in on-chain applications.
That’s to say, one can capture more upside by investing in, say, MakerDAO’s MKR token than ETH itself.
“An investment thesis for ETH centered on continued growth of DeFi, is like advocating to invest in the S&P 500 vs just the Tech sector. So far, the biggest Achilles’ heel for ETH is the fact you don’t need to invest in the protocol layer, you can just invest in the best apps.” An investment thesis for $ETH centered on continued growth of DeFi, is like advocating to invest in the S&P 500 vs just the Tech sector. So far, the biggest achilles heel for $ETH is the fact you don’t need to invest in the protocol layer, you can just invest in the best apps.
— Humboldt Capital (@HumboldtCap) June 14, 2020 DeFi Itself Is Likely to Slow Down
Not only may Ethereum not strongly benefit from growth in DeFi, but the adoption of decentralized finance may peter out.
As reported by Bitcoinist previously, Multicoin Capital’s Kyle Samani sees the growth of this segment of the Ethereum ecosystem “plateauing” in the near to medium term. Referencing ETH’s slow block times (compared to the internet, which traditional finance is based on) and the potential for high transaction costs, he explained:
“You just can’t build global scale trading systems for lots of users on POW chains. It just doesn’t work. High latency –> all kinds of negative second order effects. So I think for now we are near a plateau for DeFi – measured in ETH terms (not USD) – until the core latency problems are solved.”
Samani’s comment came in spite of the fact that there’s been a recent eruption in DeFi adoption.
DTC Capital’s Spencer Noon observed that certain decentralized finance applications, like MakerDAO and Synthetix, have seen usage strongly increase in recent weeks.
Not the Only Reason Why Investing in Ethereum Isn’t a Good Idea: Fund Managers
Steven McClurg and Leah Wald, partners of Exponential Investments, explained that Ethereum’s lack of consistent monetary policy, the mentality of its investors, and the way the which the blockchain is structured makes ETH a poor investment.  Ether is digital tungsten to BTC's gold. @stevenmcclurg and my latest piece deep dive into why institutional investors should be wary of investing in $ETH. https://t.co/1KgGzEgKzO @BeExponential
— Leah Wald (@LeahWald) June 11, 2020 Featured Image from Shutterstock price tags: ethusd The Ethereum Investment Case Has This Unexpected Achilles’ Heel Source: https://bitcoinist.com/the-ethereum-investment-case-this-unexpected-achilles-heel/?utm_source=rss&utm_medium=rss&utm_campaign=the-ethereum-investment-case-this-unexpected-achilles-heel

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Grayscale invests $300m in a day to grow its crypto portfolio

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Grayscale Investments continues to grow its cryptocurrency portfolio by adding $300 million in assets under management (AUM) in a day

Grayscale Investments revealed that it had added $300 million worth of cryptocurrencies to its digital assets portfolio over the past 24 hours and over $1 billion in the last week. This information was relayed by Grayscale CEO Barry Silbert via a tweet yesterday.

The crypto fund manager noted that it had $6.3 billion in AUM as of October 15. However, it has added $1 billion in cryptocurrencies over the past week, and the company now controls $7.3 billion worth of digital assets.

Silbert stated that the company “Added a cool $300 million in assets under management in one day. The additional sum brings the total assets held under management to $7.3 billion”.

The funds are held in the company’s trust for Bitcoin (BTC) and Ethereum (ETH), in addition to Grayscale’s digital large-cap fund. This latest development comes less than 48 hours after PayPal announced its entry into the cryptocurrency market, with Bitcoin surpassing the $13,000 mark afterwards.

Each Grayscale report is delayed by 24 hours, which means that this data refers to the previous day’s figure.

The cryptocurrency funds manager reported that its Litecoin (LTC) Trust recorded the highest growth since the last report. Grayscale reported that its LTC Trust increased by 7.5%, while their Zcash (ZEC) Trust increased by more than 6% over the past 24 hours. Grayscale also has extensive holdings in other cryptocurrencies such as Ripple (XRP), Ethereum Classic (ETC), Bitcoin Cash (BCH), Horizen (ZEN) and Stellar Lumens (XLM).

Grayscale might be increasing its cryptocurrency holdings after raising massive funds in the third quarter of the year. Grayscale’s financial report for Q3 2020 revealed that it had bought over $1 billion in investment across all its cryptocurrency trusts. This year, Grayscale has raised $2.4 billion, which is more than twice the total amount they obtained for the years 2013 – 2019.

The investment firm revealed that 81% of investment in the third quarter came from institutional investors, while another 57% came from people investing in multiple products.

With the crypto fund manager now holding over $6 billion in AUM, it means that Grayscale controls around 2.5% of the total Bitcoin supply, currently above 18,000 BTC. The Bitcoin supply is capped at 21 million, which means that roughly 2.5 million bitcoins are left to be mined.

Grayscale isn’t the only company that is increasing its stakes in cryptocurrencies at the moment. MicroStrategy recently bought $425 million worth of Bitcoin, and Jack Dorsey’s Square Inc. invested $50 million in Bitcoin.

Source: https://coinjournal.net/news/grayscale-invests-300m-in-a-day-to-grow-its-crypto-portfolio/

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Stellar to skip Protocol 14; Cites issue with validator crashes

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In an announcement, Stellar said that the Stellar public network will no longer upgrade to Protocol 14 on October 28, skipping straight ahead to Protocol 15.

Protocol 15 is reportedly the same as Protocol 14 but fixes an issue that could have caused validators to crash, reports Stellar.

After the Stellar testnet upgraded to Protocol 14, the Stellar Development Foundation (SDF) continued testing and discovered that two rare, specifically constructed transactions could have caused validators to crash.

Fortunately, Protocol 14 was not yet live on the public network, and no one submitted either transaction on the testnet, so no validators actually encountered the bug.

The SDF stated that,

“This discovery is exactly the kind of thing the testnet is designed to bring to light: long before we suggest a change to the public network, we thoroughly test it in a sandbox environment, and leave plenty of time to root out and correct potential problems so they never go live in a production environment.”

There is a scheduled validator vote to upgrade the public network to Protocol 15, which is already live on the testnet, on November 23.

While this may seem like a delay, the date was intentionally pushed back by the SDF in order to ensure that those running Stellar Core or Horizon have enough time to install Protocol-15.

Reportedly, those running Stellar SDK and have a Protocol 14 version installed don’t require an update.

Protocol 15, brings with it two new features – Claimable Balances and Sponsored Reserves which will allow apps and services built on Stellar to appeal to a much broader audience.

For instance, onboarding users is now a lot easier using these new features along with Fee Bumps.

Previously, users had to find a third-party exchange in their jurisdiction to buy XLM and transfer that XLM into their wallet, accounting for the need to maintain sufficient reserves to cover trustlines and offers. This was exceedingly difficult for the non-crypto literate user.

Protocol 15 addresses this pain point with the introduction of these new features, as highlighted by the SDF,

“After Protocol 15, a wallet can offer in-app deposits via a Stellar anchor, who can accept a user’s funds in their local currency and immediately create a Claimable Balance.  The wallet can then cover lumen reserves and transaction fees on behalf of a user, so the user can start using the app pretty much immediately without knowing anything about blockchain or cryptocurrency.  The user experience is seamless, and makes sense to crypto-enthusiast and the non-crypto literate alike.”

Source: https://eng.ambcrypto.com/stellars-protocol-15-fixes-issue-that-could-have-caused-validator-crash

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Top Macro Investor Expects Bitcoin-S&P 500 Correlation to Break Down

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Bitcoin has pushed seriously higher over the past few days despite some mixed performance in the S&P 500. The leading cryptocurrency is up around $2,000 over the past seven days, having rallied as high as $13,250 after bottoming at $11,200 last Thursday.

Prominent macro analyst Raoul Pal expects that BTC will continue to outperform other macro markets in the future.

Bitcoin to Decouple from S&P 500, Dollar: Prominent Macro Analyst

Pal recently went as far as to say that he thinks that Bitcoin will seriously decouple from the stock market and the U.S. dollar.

This comment comes after Bitcoin has had varying degrees of correlation with these two markets over the past few months. For instance, when the U.S. dollar spiked massively by 10-15% in March, BTC plunged by over 50% in the span of 24 hours.

On how he expects the correlation to play out, Pal wrote:

“Gold is breaking down versus bitcoin, as expected cc: @michael_saylor. Everyone take note. The next thing I’m expecting is the correlations between BTC and the dollar and BTC vs equities to break down too… let’s see.”

Bitcoin breaking higher while the U.S. dollar isn’t dropping but actually gaining slightly is a good start. But when the full decoupling will take place remains to be seen.

What Will Drive BTC Away From the S&P 500?

Pal is a former head of hedge fund sales at Goldman Sachs, a hedge fund manager, and the current CEO of Real Vision. His voice carries a lot of weight in the world of macroeconomic analysis.

He recently said that he thinks that the growing institutional interest will allow the coin to break seriously higher in the years ahead. Speaking in an interview with Stansberry Research, Pal commented:

“Just from what I know from all of the institutions, all of the people I speak to, there is an enormous wall of money coming into this. It’s an enormous wall of money — just the pipes aren’t there to allow people to do it yet, and that’s coming. But it’s on everybody’s radar, and there’s a lot of smart people working on it.”

Pal has said in the past that he thinks Bitcoin may be the best investment of the current macro environment, so much so that he said all other assets may be “inferior.”

The investor is putting his money where his mouth is: he said that he has over 50% of his net worth in Bitcoin right now, along with some exposure to Ethereum.

Featured Image from Shutterstock
Price tags: xbtusd, btcusd, btcusdt
Charts from TradingView.com
Top Macro Investor Expects Bitcoin-S&P 500 Correlation to Break Down

Source: https://bitcoinist.com/top-macro-investor-expects-bitcoin-sp-500-correlation-to-break-down/?utm_source=rss&utm_medium=rss&utm_campaign=top-macro-investor-expects-bitcoin-sp-500-correlation-to-break-down

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