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The Wolf Den #566 - The Money Printer Goes Brrrrrrrrrr

August 25 · Issue #566 · View online
The Wolf Den Crypto Newsletter
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In This Issue:
  1. The Money Printer Goes Brrrrrrrrrr
  2. Liquid-Staking Tokens - The Best Performing Trade of the Month? IntoTheBlock
  3. Legacy Markets
  4. Mastercard and Visa Are Stepping Up Their Game
  5. Tether Is Not Freezing Addresses… Yet
  6. My Recommended Platforms And Tools
The Money Printer Goes Brrrrrrrrrr
Hello printer my old friend ♫ ♪ ♬ ♪ ♪ ♫ ♩… I’ve come to talk with you again.
If you were awake and ventured near the internet, phone or TV yesterday, then you clearly know that Biden is keeping his promise to lower and cancel student debt. Here’s how it works: $10,000 is forgiven if you didn’t receive Pell grants, $20,000 is forgiven if you did, and forgiveness only applies to those earning less than $125,000. In addition, the student loan pause is extended through December 31, 2022, and if you do have loans, you can cap payments at 5% of your monthly income.
I am not going to argue either side of the debate as to whether loans should be forgiven, but I will fill you in on some facts so that you can make an informed opinion.
The plan will cost about $300 billion.
America’s student loan debtors currently owe $1.7 trillion.
37.9% of Americans have a college degree.
13.1% percent of U.S. adults have an advanced degree.
The student loan payment freeze started in March, 2020.
For the 2021-2022 academic year, the average annual price of tuition and fees came to:
$38,070 at private colleges
$10,740 at public colleges (in-state residents)
$27,560 at public colleges (out-of-state residents)
More than 43 million Americans have federal student debt, with almost a third owing less than $10,000 and more than half owing less than $20,000, according to the latest federal data.
Roughly 60% of the debt canceled would be held by those making $82,400 or less, according to a report from the Wharton School.
According to the administration, “90% of the eligible beneficiaries make under $90,000.
Now that we have the numbers out of the way, we can turn to Dumbo and Horton, the 2 elephants casually hanging out in corner of the room.
1. Does this cause inflation?
2. Who pays?
A CNBC poll found that 59% of Americans believe that this decision will make inflation worse. They are likely right. While student loans are being forgiven, they are still being paid - by the government. The banks are likely the real winners, as the US government is the best possible counter party.
If the government prints money to pay the debt, inflation worsens. And if the government decides to increase taxes, then America as a whole takes on the burden. Either way, we are all paying.
There is no free lunch, so there is no free tuition.
The upcoming inflation prints should give us an idea of how impactful this decision is, although it will take a long time to play out. Since American voters have the attention span of spastic juvenile gnats, it will be long forgotten by the time anyone decides to dig in and figure out the impact.
And considering Biden failed simultaneously announce a plan to increase taxes, it seems as though the government wants to pay.
Do you hear that sound? The money printer is going Brrrrrrrrrrrr.
And whatever they (the government) pay, we pay in terms of inflation. I can see the arguments on both sides of this issue, but any expansion of the balance sheet comes with the cost of inflation.
The government can’t have their cake and eat it too.
They’ll eat our cake instead.
Liquid-Staking Tokens - The Best Performing Trade of the Month? IntoTheBlock
In this report, we bring to you the latest in on-chain cryptocurrency analysis. We look at the blockchain directly and analyze balances, transactions, and the overall activity of market participants. This gives us a unique insight into the future of the market.
This section is written in conjunction with IntoTheBlock (ITB). ITB is an intelligence company that leverages machine learning and advanced statistics to extract intelligent signals tailored to crypto-assets. IntoTheBlock tackles one of the hardest problems in crypto: to provide investors with a view of a crypto asset that goes beyond price and volume data. 
The Wolf Den research team uses IntoTheBlock to dig deeper and get the most important insights about the crypto market.
Liquid-Staking Tokens - The Best Performing Trade of the Month?
It is usually not easy to spot a category of tokens that outperform most of the crypto market. Most of the time, the coins that perform better than Bitcoin tend to lack a common category. The most recent case that we have of an over performing category of tokens was during the bull market of the past year. Metaverse tokens such as $MANA, $SAND and $AXS were appreciating at a ludicrous rate compared to the rest of the market. While the whole market has cooled off, there is a group of tokens that has been outperforming: liquid-staking tokens such as Lido’s $LDO and Rocketpool’s $RPL.
  • These two tokens gained over 25% in the last month while Ethereum increased just 3% 
  • The thesis behind this rally is related to the Ethereum merge that is scheduled for mid to late September of this year. After the merge happens, the ETH fees that are not burnt will be redirected to those staking ETH in order to incentivize greater network security since they will be validating consensus. This will make it significantly more attractive to stake ETH, thus benefiting staking services which are expected to see greater usage and larger revenues
  • The validation of this thesis can be found with on-chain data. If we inspect the historical number of transactions that used Lido’s LDO, we can see these have increased since this summer, from 200 daily transactions to over 2000 in some cases:
LDO Number of Transactions according to IntoTheBlock Network Indicators.
  • This data confirms the thesis that interest for Lido is rising, with a likely increase in the amount of traders purchasing LDO
A similar situation can be observed in the case of Rocketpool’s RPL. As can be seen in the chart below, an ownership analysis of the addresses that hold RPL shows how the number of addresses that have been holding for more than a year (‘Hodlers’) has been increasing, and now account for almost 84% of the total addresses with balance:
RPL Addresses by Time Held according to IntoTheBlock Ownership Indicators.
  • This is likely the result of the long term view that most older RPL investors have preferred to keep holding despite its price appreciation, presumably expecting even larger returns
  • It is equally interesting that we can see a reduction in the amount of traders. This means that the token might not suffer large volatility produced by the usual short term trading that these addresses tend to cause.
Legacy Markets
China Stimulus Lifts Mood in Countdown to Powell: Markets Wrap - Bloomberg
What to watch this week:
  • US GDP, initial jobless claims, Thursday
  • Kansas City Fed hosts its annual economic policy symposium in Jackson Hole, Wyoming, Thursday
  • ECB’s July minutes, Thursday
  • Fed Chair Powell speaks at Jackson Hole, Friday
  • US personal income, PCE deflator, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
  • Futures on the S&P 500 rose 0.5% as of 5:53 a.m. New York time
  • Futures on the Nasdaq 100 rose 0.6%
  • Futures on the Dow Jones Industrial Average rose 0.3%
  • The Stoxx Europe 600 was little changed
  • The MSCI World index rose 0.3%
  • The Bloomberg Dollar Spot Index fell 0.4%
  • The euro rose 0.3% to $1.0000
  • The British pound rose 0.4% to $1.1844
  • The Japanese yen rose 0.5% to 136.40 per dollar
  • The yield on 10-year Treasuries declined three basis points to 3.08%
  • Germany’s 10-year yield declined four basis points to 1.33%
  • Britain’s 10-year yield declined seven basis points to 2.63%
  • West Texas Intermediate crude was little changed
  • Gold futures rose 0.9% to $1,778.10 an ounce
Here is more news on the Chinese Stimulus package.
China announces additional stimulus worth CNY1 trillion to rescue economy
Mastercard and Visa Are Stepping Up Their Game
Latin American Crypto Firm Ripio Launches Prepaid Crypto Card in Brazil
Mastercard and Visa are both working to take over the world of crypto payments. Mastercard’s CEO announced, “we’re working with Binance to let people use their crypto to make purchases at 90m+ stores that accept Mastercard. Launching this week in Argentina and plans to expand from there.” Inflation in Argentina is out of control, so this is a natural starting point.
As for Visa, they have their eyes on Brazil and have partnered with Ripio to create 250,000 prepaid crypto debit cards that earn cashback rewards in Bitcoin. Brazil’s inflation numbers are slightly worse than in the US, but the Real has significantly weakened over time and is volatile. Visa plans to offer their card in Argentina as well, creating healthy competition for the two payment giants.
The two payment giants are throwing a potential lifeline to citizens of countries with economic Issues. Now we will see if they choose to grab it.
Tether Is Not Freezing Addresses... Yet
Tether Holds Firm on Decision Not To Freeze Tornado Cash Addresses, Awaits Law Enforcement Instruction
Tether has not yet frozen addresses tied to Tornado Cash. An official post from Tether stated the following: “so far, OFAC has not indicated that a stablecoin issuer is expected to freeze secondary market addresses that are published on OFAC’s SDN List or that are operated by persons and entities that have been sanctioned by OFAC.”
If OFAC gives Tether the green light, it is likely that Tether will freeze sanctioned addresses.
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The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to “Buy,” “Sell,” or “Hold” an investment.
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