Crypto Weekly: 3/3/2021
Coinbase, Kraken, Gemini, and other Crypto Exchanges Must Embrace DeFi to remain Competitive
Coinbase’s direct listing on Nasdaq is a watershed moment for the crypto industry. It will be the first public crypto company with pure and dependable cash flows that is on par with some of the largest and most established exchanges in the world. Coinbase generated 2020 revenue of $1.3 billion, compared to CBOE’s $1.2 billion, Nasdaq’s $2.9 billion, and CME’s $4.9 billion. Despite launching a myriad of products such as Commerce, Earn, Custody, staking, and others, trading fees make up the lion’s share of Coinbase’s $3.4 billion LTD revenue, at approximately 96%.
Coinbase, Kraken, Gemini, and other exchanges are thriving, but what will happen if decentralized exchanges (“DEXs”) continue their spectacular growth, fundamentally threatening to disrupt their centralized counterparts?
DEXs are a type of crypto exchange within the decentralized finance (“DeFi”) ecosystem that allow for direct peer-to-peer transactions to take place without intermediaries. By utilizing decentralized smart contracts encoded on public blockchains, users always retain their private keys which removes counterparty risk inherent to centralized exchanges.
DEXs such as Uniswap, Sushiswap...Reports you may have missed
BUYERS ON STRIKE Last week, we discussed our immediate-term cautious approach to the crypto market, highlighting recent geopolitical tensions, tax-related selling, negative fiscal flows, and the persistent rise in real yields as reasons for a more risk-averse positioning (albeit relative, as holding 7.5% in cash and the rest in crypto is hardly considered risk-averse in most circles). This uncertainty has persisted into this week, evidenced by what we consider an...
Fiscal Dominance, Flows from China, Plus Some Thoughts on Global Conflict (Core Strategy Rebalance)
WHAT BTC SHRUGGING OFF CPI SAYS ABOUT CURRENT FISCAL SITUATION The most significant piece of macro data this week was the CPI. Headline CPI registered at 3.5%, surpassing the anticipated 3.4%, while core CPI remained steady from last month at 3.8%, also above the expected 3.7%. This increase was largely attributed to rising costs in auto insurance and shelter. Consequently, interest rates saw a sharp rise, with the 10-year Treasury...
INFLOWS RESUME On Monday, market sentiments were rattled by a surprisingly strong manufacturing PMI figure, marking the first expansionary reading in 18 months. This led to a rise in rates, with risk assets across the board experiencing selloffs amid renewed inflation concerns and fears that the Federal Reserve might need to implement further measures to cool the economy. However, in our crypto comments video on Tuesday, we outlined a couple...
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