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Bitcoin - Safe Harbor In Turbulent Times?

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Satoshi&Co Daily Crypto Newsletter

June 17 · Issue #195 · View online
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Check out past issues of the newsletter along with more interesting crypto content as well as our recently-launched podcast series with leading crypto industry participants at our newly-launched website

Some time ago, it seemed like cryptocurrency’s inverse correlation with other asset classes was indeed ‘flippening’. That does not seem to be the case any more.
As bitcoin skirts with peaks last seen in early 2018, in the low 9000s, it might not seem so outlandish to pose the question - Is bitcoin benefitting from a flight to quality/risk-off trade in the markers?
Bitcoin, by virtue of its design, protects investors against inflation and currency depreciation, features that are endemic to fiat currencies.
In the wake of increased geopolitical tensions, and as a result of rising trade war risks between the US and China, bitcoin could be potentially viewed as playing the role of an asset to hedge against macroeconomic risks. Figure 1 highlights how the recent rally of bitcoin in early May coincides with the depreciating Chinese Yuan against the US dollar.  Over the period when Chinese Yuan depreciated by about 2.5% against the US dollar, a sizeable move in less volatile FX markets, bitcoin price has rallied upwards from sub $6k to $8.5k. Although China has banned bitcoin trading, the OTC market remains vibrant and is serving a growing number of buyers and sellers everyday. Recent history has time and again shown us investors’ flight to bitcoin as a hedge against currency depreciation; first during the Cyprus banking crisis and also in 2015-16 when the Chinese Yuan depreciated by 10%. This new correlation lends more credence to the narrative of bitcoin as a potential hedge against currency depreciation in the modern world.  
Source: Adamant Capital
Source: Adamant Capital
As can be seen from Figure 2, if you want to diversify your portfolio, consider adding a dash of bitcoin (pun unintended for both Dash fanboys and bitcoin maximalists!), or indeed any of the major cryptos. Even within cryptos (Figure 3) BTC clearly sets the tone, and the price of most of the major alts are linked to the price of BTC.
Source: The Block
Source: The Block
Meanwhile in Crypto Wonderland....
“South Korean To Be Held Responsible For Future Hacks”
Five cryptocurrency exchanges in South Korea including Bithumb have changed their terms of service to state they will be liable for user losses after a cyber attack or system malfunction - regardless of whether they were “willfully or grossly negligent”, Yonhap Press Agency writes. The move follows a recommendation from the Fair Trade Commission last year. Previously, the exchanges would only pay compensation if user funds were stolen as a result of the firms’ negligence. Just last year, 35 billion won ($31.5 million) in cryptocurrencies were stolen from Bithumb.
“TP ICAP To Launch Crypto Derivatives Business”
Facing a slowdown in its core brokerage business, TP ICAP Plc has joined the handful of traditional finance firms opening the door to Bitcoin. The ICAP unit of the world’s biggest interdealer broker is now acting as an intermediary between customers wanting to buy or sell Bitcoin futures. The firm’s new venture, which is run from London by Simon Forster and Duncan Trenholme, expects to add non-deliverable forwards tied to the largest cryptocurrency and then plans to open desks in Asia and the U.S.
“Iceland’s Currency To Be Traded Over Blockchain”
The Financial Supervisory Authority of Iceland (FME) has approved Reykjavik-based Monerium as its first electronic money institution. The designation, announced Friday, means that Monerium has regulatory approval to provide fiat payment services on a blockchain and use it throughout the European Economic Area. Electronic money is a well-established regulatory framework in Europe that’s been in use for years. It’s the first time, however, electronic money has been approved for use over a blockchain.
“Coinbase Custody To Hit the $2B Mark Soon”
Coinbase Custody revealed that it holds $1.3 billion in assets under custody (AUC) and the firm expects to hit $2 billion AUC soon in a Twitter thread published on June 13. In a series of tweets, what is evidently the official Coinbase Custody Twitter account reported that last week the company’s CEO, Sam McIngvale, and its chief information security officer, Philip Martin, visited the United Kingdom. The purpose of the visit was reportedly “to discuss the institutional cryptoeconomy with a range of prospects and clients.”
Tweet of the Day
Conner Brown
Buying bitcoin is betting on other people being smart.

Buying altcoins is betting on other people being dumb.

Choose wisely.
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