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Dwindling Future Expected Returns: Could Crypto Be the Magic Bullet?

Check out past issues of the newsletter along with more interesting crypto content as well as our rec

Satoshi&Co Daily Crypto Newsletter

June 12 · Issue #193 · 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

From the bottom of the 2008 financial crisis, the US equity markets have surged back, with the S&P reporting >3x growth over the past decade and showing 8 years of positive returns over the same period.
Much of the growth in the S&P 500 index can be attributed to the Fed-monitored QE program that printed new dollars and suppressed yields to near-zero levels, resulting in money flowing to riskier assets such as equities. In a low-yield environment, investors are willing to pay up for earnings growth and that pushes them further out on the risk curve. However, with valuation multiples looking stretched, the possibility of a recession, and the uncertainty over the future impact of trade wars, projections for future equity returns don’t look all that great. If the equity returns for the next decade are expected to be underwhelming as compared to that of the previous decade, where will investors go to for returns?      
S&P 500 Historical Returns. Source: morningstar
S&P 500 Historical Returns. Source: morningstar
The historical US Treasury yield curve has been on persistent downwards trend since the late 80s and now we are in a new business cycle paradigm and investment cycle where 2% yields are the new normal. As yields keep going down, institutional investors looking for returns are left chasing riskier asset classes in search of higher returns for their clients.
We had opined earlier on how pension funds, with over $16 trillion in AUM, are underfunded and how crypto could perhaps be the magic bullet for pension funds to achieve yields that are required to meet their future obligations. Institutional investors around the globe will need to eventually consider allocating a part of their portfolio to digital assets if they are to meet target returns for their capital. What could potentially trigger their foray into digital assets is the impending series of rate cuts in the next 18 months or so, according to market estimates.  
Source: CME
Source: CME
Meanwhile in Crypto Wonderland....
“First Limited Liability DAO Launches”
dOrg, a blockchain development cooperative, announced today that it is now the first legally established Decentralized Autonomous Organization (DAO) under United States law. After deploying its DAO to the Ethereum blockchain, dOrg formed a Blockchain-Based Limited Liability Company (BBLLC) in Vermont, dOrg LLC. By linking the DAO to this BBLLC, the DAO has official legal status, allowing it to enter contractual agreements and offer participants liability protections. dOrg’s legal DAO is only the first step in a wider research collaboration to develop best practices and software that automates DAO legal formation. dOrg hopes that these efforts will catalyze a new wave of DAOs that can interoperate with the broader economy.
“STP Raises $750k Through Bittrex IEO”
A token sale for Standard Tokenization Protocol (STP) raised $750,000 and sold out within eight seconds, a news release claimed on June 11. The project says it offers an open-source, decentralized standard for the tokenization and issuance of any asset. As well as being collected as fees and used for gas to help pay compliance validators, STP says its tokens can be staked and “fuel an incentivized governance model that keeps validators efficient and honest.” A total of 75 million STPT tokens were sold during the IEO. As reported by Cointelegraph last month, Standard Tokenization Protocol earlier raised $7 million through two private rounds led by prominent venture capitalists.
“Brazil President Publicly Opposes Bitcoin”
Brazil’s President, Jair Bolsonaro, has come out publicly in opposition to bitcoin. In an interview aired on national television, the Brazilian president commented on cryptocurrency being used to bank indigenous people in Brazil. During a conversation centered on the challenges of his new presidency, Bolsonaro talked about projects created by his predecessor’s administration. One of the efforts was a $11.5 million project that aimed to create an “indigenous cryptocurrency.”
“Coinbase Rolling Out Crypto Debit Cards In More Countries”
Following its launch in the UK in April, Coinbase is rolling out its cryptocurrency debit card to more European countries, despite users reporting numerous problems. The cryptocurrency exchange will be launching its Coinbase Card in six more European nations. As of today, the crypto-funded debit card will be available to users in Spain, Germany, France, Italy, Ireland, and the Netherlands. The debit card lets users spend the cryptocurrency they hold on Coinbase anywhere in the world, providing the store accepts Visa cards as payment.
Tweet of the Day
Matt Odell
Not your keys, not your coins!

Binance will most likely have similar requirements within a year. They will lock your account and hold your money hostage unless you dox yourself. There are already reports of it happening sporadically. Face scans included. Be aware. Be cautious.
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