Topics this week:
- GameStop, Reddit, Bitcoin … It’s Time to Decentralize
- DOGE-sanity!! The Latest on Abra Trading Volumes and Big Movers
- Thoughts on Bitcoin and Ethereum
- How Interest Accrues with Abra Interest Account
- Tax Documents for Abra US Customers
- Introducing Abra Platinum – Our NEW OTC Trading Service
Join us for Money Talks, Friday (1/22) at 9 am PT.
Friday on Money Talks, we will be taking a deeper dive into the crypto market and covering the topics of the week. As always, we answer all your burning questions about all things crypto and Abra.
Check out our Bitcoin giveaway on Twitter, and you may end up with a $100 Bitcoin surprise.
GameStop, Reddit, Bitcoin…
Stocks and cryptocurrencies are now memes for many on the Internet. Of course, Robinhood, Reddit, TikTok, and Twitter are mostly responsible. You’re all familiar with these memes… GameStop, Doge, AMC, Hertz, and the list goes on. Ask an institutional investor if any of these companies are a wise investment and their heads will spin. Ask the average Robinhood, Reddit, or Twitter user and you’ll get a totally different answer. It used to be that the retail investor would get crushed by the large investors. This is no longer a guaranteed outcome.
There is a deeply entrenched belief, true or not, that hedge funds and banks constantly generate profit at the expense of the people. The 2008 housing crisis, hedge fund failures, government money printing, government lockdowns… the belief is that the response to these events benefits big banks, rich executives and entrenched politicians at the expense of the people. People are tired of it. Many people also have extra free time right now if they aren’t working in an office due to the pandemic. Social media trading has become a common pastime amongst this “enlightened” crowd.
This week a group of Reddit users conspired to “stick it to the man” and drive the price of GameStop up and “through the roof” as they say. Hedge funds that had significant short positions in the stock (a bet that the price will fall) would suffer big losses. As a physical retailer of games during a pandemic where downloading games is trivially easy, it’s easy to see why hedge funds might not be too bullish on GameStop. Irrelevant. GameStop is now a $30B company and will likely raise a huge “at the market” offering to put a LOT of cash in their bank account in the coming hours (if they’re smart.) At that point, GameStop can transition into any new business that it chooses and close all of its stores. A nice outcome for GameStop bad outcome for hedge funds shorting GameStop. Legal or illegal? We’ll see. For an excellent summary of the events of this past week that are still unfolding check out this Verge article on Gamestop and WallStreetBets.
I mentioned in a Clubhouse interview a couple of days ago that I’m worried that some of these Reddit users might be violating SEC rules around stock price manipulation. The SEC doesn’t take kindly to celebrities pumping securities and many social media users have hundreds of thousands or millions of followers. They’ve effectively achieved celebrity status. This too shall pass but with a new appreciation that markets can stay insane longer than you can stay sane.
A friend keeps telling me that Bitcoin represents “schmuck insurance” versus the existing system. Never has that been more apparent than this past month. It’s time to decentralize everything. The Internet and it’s underlying software technology called TCP/IP was designed and built to survive a nuclear attack. The idea would be that a network with no central off switch would be easy to keep alive during such an attack. That idea was correct. The problem is that all the services built on top of the Internet have off switches. Witness de-platforming on Twitter and Facebook, arbitrary trading halts on Robinhood, downtime on Coinbase every time Bitcoin goes up 3% (wtf?), Reddit message boards being taken down at the worst possible time, and the list goes on. There are two big exceptions to this: 1. BitTorrent; 2. Bitcoin. Try shutting down either of these services and you will fail.
Now it’s time to decentralize everything.
Imagine a world where:
- All financial services are completely decentralized – no off switch
- All social media is completely decentralized – no off switch
- All messaging systems are completely decentralized – no off switch
- Governments can’t overregulate that which they can’t shut off – no off switch
- Companies were forced to add value on top of these decentralized services rather than just build their own monoliths – companies have an off switch!
This is exactly the promise of Bitcoin and Ethereum originally shown the way by BitTorrent. I’ve never been more excited about the potential of the future. Power to the builders!
DOGE-sanity!! The Latest on Abra Trading Volumes and Big Movers
The big story today is DOGE. As of this writing, DOGE is up over 140% in the past 24 hours and has been up as much as 250%. We saw a big surge in DOGE trading volume on Thursday morning.
Abra’s transaction volume has grown over 6x in the past 6 months. Trading volume has more than doubled again in just the past few weeks. Wire deposits, as well as crypto deposits from other exchanges, are all showing massive growth at Abra over the last few months. During this time Abra has experienced zero unscheduled downtime. Our team has executed phenomenally well and we’re well-positioned to continue to be the leader in the new crypto banking space.
The biggest movers of the past week include: DOGE (+140%), Compound (+37%), Decentraland (+36%), 0x (+33%), Chainlink (+29%), Basic Attention Token, (+27%), Siacoin (+25%), Algorand (+22%) and Golem (21%). Alts on the move? …I’d say so!
Be sure to check the asset list in the Abra app to see the biggest price movers of the day at any time (In the Abra App …just click on the Add button at the top of the Trade Screen and select Sort by “1 Day % Price Change.”)
Thoughts on Bitcoin and Ethereum
Bitcoin volatility has mostly dried up over the past two weeks compared to December and early January. Generally, these periods of low volatility have been followed by rapid and significant price moves.
Bitcoin has been consolidating towards $31k and appears ready to break out. My guess is that the breakout will be to the upside. Three reasons for my loosely held conviction that we’re headed up in February: 1. most traders I follow are expecting a breakout to the downside; 2. The volume of bitcoin getting locked up at higher initial prices is growing very fast. These new HODLers are in it for the long term; 3. Bitcoin is at the bottom of the channel representing the upward slope required to maintain the stock to flow pricing model.
If this stock to flow model holds Bitcoin will be trading somewhere between $38 and $60k at the end of February. Buckle up!
I’ve been working up a separate article on Lightning and where I think that’s going. I want to do it right and need more time. Hopefully, you’ll agree that it was worth the wait.
Ethereum continues to look bullish. The next breakout will likely see $2k ETH. I’ll talk more about this on Money Talks on Friday. Basically, we’re in a consolidation channel of slightly higher highs and slightly higher lows. The ETH dips just keep getting bought. I wouldn’t be surprised if we see a larger retracement before heading to $2k but I’m not trading this as there is no point, I’m just holding ETH in my Abra Interest Account and waiting.
How Interest Accrues with Abra Interest Account
With Abra, you earn interest daily on your crypto and USD deposits. Interest compounds daily and is paid weekly into your Abra Interest Account.
Every Monday you will receive push notifications to your Abra App for each of your interest payments. Mondays aren’t so bad after all!
For more details on how interest is paid including our interest payment calculator check our Abra Interest Account support page.
Tax Documents for Abra US Customers
If you’re an Abra user in the US, Abra will provide you with two separate reports related to your Abra Interest Account and any trading activity you performed throughout the year for tax reporting purposes.
The IRS considers cryptocurrency to be property, as such Abra’s crypto interest payments are subject to reporting through a 1099-MISC form. Only US taxpayers who have earned at least $600 of interest in 2020 receive a 1099-MISC form, which will be available for download from the Abra App.
Additionally, US taxpayers who traded during 2020 will receive a trading activity form used to report activity. This report is available for download from the Abra App in the transaction history window.
US users should expect to receive a follow-up email on tax reporting in the coming days.
Lastly, we’re excited to announce our new partnership with Zen Ledger to make crypto tax preparation super easy.
For clarity, Abra does not provide tax, legal, or accounting advice. Abra makes no representation and has given you no advice concerning the appropriate accounting treatment or possible tax consequences of any transaction.
Introducing Abra Platinum – Our NEW OTC Trading Service
What is OTC? What is Abra Platinum?
OTC stands for Over-The-Counter services. OTC trades are done off exchange such that you aren’t using the Abra App directly to execute your trade. Abra staff working with our bank partner prime trust are executing the trade on your behalf. The OTC services are designed exclusively for Abra customers interested in any of the following: 1. Performing large digital asset trades, 2. Depositing funds in the Abra Interest Account and swapping between assets in their Abra Interest Account, or 3. Borrowing cash using digital assets as collateral.
Who is eligible for Abra Platinum – OTC services?
Abra Platinum – OTC services are available for Abra customers who are looking to trade or invest a minimum of $50,000 with Abra.
What is the fee associated with the Abra Platinum – OTC services?
The service is available for free for Abra customers that qualify for the Abra Platinum – OTC program.
Who will be my dedicated Account Director?
Your account director will be an experienced professional from the Abra team well averse with the digital asset markets. Your director will be able to guide you every step of the way from onboarding to order execution.
See you on Money Talks on Friday!
Peace and Love,
Disclaimer: Abra Interest Accounts are issued by Prime Trust, a Nevada Chartered Trust Company. Rates for Abra Interest Accounts are subject to change. Digital currencies are not legal tender, are not backed by any government, and Abra Interest Accounts are not subject to FDIC or SIPC insurance protections. Any opinions, news, research, analyses, prices, or other information provided here is a general market commentary and does not constitute investment advice. Abra does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions. Abra will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.