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Bitcoin Wallets Should Hit 1 Billion to Tackle Inflation, Says Scaramucci

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Although Bitcoin (BTC) remains a desirable asset, according to Anthony Scaramucci, CEO of Skybridge Capital, it has not yet attained the “wallet bandwidth” necessary to qualify as an inflation hedge.

During a Monday Squawk Box segment on CNBC. In order for Bitcoin to start functioning as an inflation hedge, it needs to be kept in around one billion wallets, according to the CEO of a worldwide investment management company.

“Until you get into the billion, billion-plus zone, I don’t think you’re going to see Bitcoin as an inflation [hedge] as it’s still an early adopting technical asset.”

The popularity of Bitcoin wallets

Although the precise number of Bitcoin wallets worldwide is unknown, estimates put the figure at around 200 million.

Given its fixed number of 21 million coins, some hailed BTC in its early years as a potential inflation hedge. This story has evolved over time, though, as more evidence has shown that Bitcoin and the stock market are becoming increasingly connected, according to a recent IMF analysis.

Scaramucci stated that he was still bullish on BTC and the wider cryptocurrency industry, citing recent actions taken by BlackRock to introduce a new private spot Bitcoin trust with Coinbase as the custodian as evidence of the substantial institutional demand for the market leader.

According to Scaramucci, there are presently a ton of short bets in the markets, which might lead to tremendous people having “their faces ripped off when they least expect it.”

BTC’s price is currently $21,383.97, down 68.01% from its all-time high of $68,789 on November 10 of last year.

Meltem Demirors, chief strategy officer at Coinshare, said she anticipates that BTC prices will remain stable throughout the third quarter as long as the price correlation between tech shares and cryptocurrencies persists in her appearance on Squawk Box on Monday.

JPMorgan Begins Utilizing Blockchain for Collateral Settlements

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JPMorgan Chase & Co, a multinational investment bank, is apparently testing the use of its own private blockchain for collateral settlements.

JPMorgan performed a trial transaction on May 20 in which two of its businesses transferred a tokenized version of Black Rock Inc. money market fund shares, according to Bloomberg.

A money market fund is a form of mutual fund that gives exposure to liquid and short-term assets such as cash, cash equivalents, and debt instruments with excellent credit ratings, making it a low-risk investment.

JPMorgan’s bigger ambition for its private blockchain, according to the bank, is to allow investors to put forth a wide range of assets as collateral that may be used outside of typical market conditions.

“What we’ve achieved is the friction-less transfer of collateral assets on an instantaneous basis.” BlackRock wasn’t a counterparty, but it has been heavily involved in the initiative “since day one and are exploring use of this technology.”

Stated JPMorgan’s global head of trading services Ben Challice

JPMorgan has been into blockchain and crypto for long

JPMorgan has been interested in crypto and blockchain technology for a long time, and in late 2020, it launched Onyx Digital Assets (ODA). The project is a “blockchain-based network that facilitates the processing, recording, and Delivery-versus-Payment (DVP) exchange of digital assets across asset classes,” according to the description.

While it’s unclear whether JPMorgan used the ODA in this case, it’s set up to swap cash for various types of tokenized collateral, provide intraday liquidity, and provide access to the bank’s digital payment infrastructure token JPM Coin.

Tyrone Lobban, head of JPMorgan’s Blockchain Launch and the ODA, said the bank is attempting to foresee a scenario in which a greater range of traditional financial services will be offered.

BNP Paribas, a European bank, completed its first trade through the ODA earlier this week to test tokenized fixed income market trading.

BNP Paribas Global Markets managing director and head of US repo trading and sales Christopher Korpi commented on the decision, emphasizing the importance of being able to optimize its procedures using blockchain technology.

Goldman Sachs and Barclays Spearhead $70M Funding Round For A Crypto Fintech

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Leading investment banks Goldman Sachs and Barclays are among the few to lead a $70 million funding round for a UK-based crypto trading platform Elwood Technologies, which valued the firm at around $500 million, according to a report by Financial Times.

The funding exercise was supported by crypto-friendly German bank Commerzbank, digital asset investment manager Galaxy Digital and Dawn Capital. Elwood was founded by billionaire British hedge fund manager Alan Howard.

The latest backing is another example of the growing adoption of digital assets despite the prevailing market condition.

Speaking on the financial round, Elwood Technologies CEO James Stickland said the fundraising was “another validation of the longevity of crypto” brushing off the falling prices from the last few weeks:

We’re getting investments from financial institutions that aren’t expecting to get massive returns in 15 minutes. They’re investing in the infrastructure, I think it’s a reassurance message.

Elwood Technologies provides a crypto portfolio management system with crypto market information and trading infrastructure for institutional investors that features an interface that connects to crypto exchanges, liquidity providers, and custodians.

Commenting on the deal, Goldman Sachs’ global head of digital assets Mathew McDermott, stated that the investment reflects its “continued commitment” to cryptocurrencies. He then added

“As institutional demand for cryptocurrency rises, we have been actively broadening our market presence and capabilities to cater to client demand.”

Goldman Sachs’s Massive Crypto Push

Last month, Goldman Sachs [GS] offered its first bitcoin-backed loan which signifies Wall Street’s deepening crypto ties. The banking giant claimed its’s secured lending facility enabled a borrower to use bitcoin as collateral for a cash loan.

Goldman, which has a dedicated digital assets team, traded its first over-the-counter bitcoin options to Galaxy Digital in March.

Looks like the investment firm is following in the footsteps of other traditional finance giants moving further into crypto. A few months ago, Cowen launched a digital assets unit and BlackRock [BLK] participated in the  $400 million funding round for USDC stablecoin creator Circle.

With regards to Elwood, the firm will continue to have Howard as the majority stakeholder, who had been one of the UK’s most prominent investors to take the plunge into crypto markets.

FTX exchange raises another $420 million, following a $900 million round

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Earlier this year, the popular crypto exchange FTX raised $900 million in a Series B round with a valuation of $18 billion, which included as many as 60 investors. In today’s announcement, FTX declared that it had raised another $420 million after a Series B-1 round.

The Series B-1 funding round involved as many as 69 investors, including giants like BlackRock and Tiger Global, who have now come on board. FTX attained the largest-ever investment round back in July and now aims to maintain a global presence.

The exchange also reported in the announcement that the firm witnessed a surge of 48% in the number of users after July while the trading volume rose by as much as 75%. Now, the exchange is on its way to being a worthy contender for the top spot.

FTX plans to expand into more countries

FTX exchange has huge plans for the future, as the CEO of the firm, Sam Bankman-Fried, claims. The exchange moved its headquarters from Hong Kong to the Bahamas because of the regulatory pressure from authorities. This movement was planned to increase the influence of the firm in other crypto-friendly nations.

“FTX is committed to maintaining a close working relationship with local regulators to help promote the growth of crypto and is furthering its commitment to providing all our clients with a safe, trustworthy and compliant exchange.”

FTX Spokesperson to CoinDesk

Also, the CEO told CoinDesk in a telephonic interview that the firm is looking to create new openings through acquisitions, projects, and partnerships. With a great deal of money flowing in, the firm has already implemented half-billion dollars in acquisitions.

The company’s growth has been surprising to its rivals as it has invested a lot in summertime marketing through advertisement deals with Major League Basketball. Furthermore, the firm has been actively involved in deals regarding crypto futures derivative products.

MicroStrategy Acquires Another $15M Worth of Bitcoin

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The business intelligence firm, MicroStrategy just bought an additional $15 million worth of Bitcoin. According to the tweet by the firm’s CEO Michael Saylor, approximately 253 BTC for $15 million in cash at an average price of nearly $59,339 per Bitcoin.

With the latest purchase, MicroStrategy reportedly holds nearly 91,579 BTC that were acquired for almost $2.226 billion which was at an average cost of $24,311 per Bitcoin, as of 5th April. Since the Nasdaq-listed firm’s first bet, it has remained incredibly bullish on the crypto-asset and has made several purchases over the last few months.

Bitcoin’s meteoric rise was accompanied by an avalanche of institutional involvement and mainstream embrace which has continued even as the crypto-asset was stuck below the coveted $60,000-mark. MicroStrategy, for one, became the first publicly-traded company that, according to Saylor, made a “material investment”. Following its suit was the Jack Dorsey-led financial services and digital payments company, Square then California-based car manufacturing giant Tesla followed.

Over the course of the last financial year, several global corporations, for instance, BNY Mellon, Goldman Sachs, Visa, BlackRock, MasterCard, and PayPal have championed the cryptocurrency that was once touted as a bubble. Owing to this embrace and the rising institutional demand, Bitcoin managed to deliver an astonishing return of more than 800% during the financial year 2020-21.

Not Everyone Sides With MicroStrategy’s “Gamble” On Bitcoin

However, the latest high-profile Bitcoin buying spree by MicroStrategy did not sit well with a lot of traders who consider the foray of big players will lead to centralization. The concerns do not end there. Michael Saylor’s bid to diversify the portfolio of his company originated from the argument of a potential devaluation of the US currency.

But according to Marc Lichtenfeld, chief income strategist at The Oxford Group, the bitcoin acquisition strategy adopted by MicroStrategy is an “irresponsible” move. On that note, Lichtenfeld has earlier clarified,

“I think MicroStrategy is being completely irresponsible with shareholders’ capital by putting so much of their assets into a very speculative and volatile asset,” Lichtenfeld said in an interview with the Washington Business Journal. “I have never seen a company do this. This is beyond the excesses I have seen during the dot-com boom, and I think it makes them very, very vulnerable.”

Watching Institutions Set Their Ambush For Bitcoin

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Thinking bitcoin will not go exponentially higher is betting a $44 billion empire will fail.

For the last eight months of this crypto nuclear winter, I’ve watched this dance of the red candles on the chart and just grimly smiled.

Instead of continuing to build the $USD value of my portfolio, I’ve realized that’s not the important number. The portfolio value in bitcoin (BTC) is the key and that is still strong — this is a long war, be patient.

This was reinforced a month ago reading about Mr. Sprecher, the owner of the New York Stock Exchange (NYSE).

He went from buying his first exchange for $1 or $1,000 — he says he doesn’t remember which. He used his house as collateral, and built that into a $44 billion empire.

I’ve read the article five times.

A lot of people talk about winning, but few get in the arena. He’s not building Bakkt because he needs more money, he’s building it because he likes the challenge — the thrill of the win.

It’s a feeling that once you’ve experienced it, almost makes the rest of life means less without it. I get it.

Fortune article on NYSE Owner — bitcoin exchange startup

I then circled November 1st on the calendar, which is when the Bakkt exchange goes live with futures contract being physically backed with BTC.

The Fortune article was a call to arms, telling the other institutions they have three months to get into position.

Once Bakkt is live, betting BTC won’t go exponentially higher is betting a $44 billion empire that owns the NYSE and has been a silent partner with Coinbase since 2015, is going to fail at launching a crypto exchange aimed at institutional clients.

Doubt it.

Think about Bakkt having been a silent partner with Coinbase since 2015.

I thought I was brave the first time I hit send on a $10,000 buy order and vaporized money from my bank account into the matrix to buy bitcoin.

But nope, turns out I wasn’t that cool, cause here’s Mr. Sprecher, just quietly in the back of Coinbase xeroxing their entire operation and building Bakkt a year ahead of me in 2015. Just absolute respect for that move.

There are patterns to everything. Ian Fleming said it first – twice is a coincidence, three times is enemy action.

I started looking for other data points, to see if they lined up and if a pattern would start to form.

I didn’t have to wait long.

Three days later on August 6th, Business Insider reported Goldman Sachs was looking at offering a custody solution for investors.

Goldman Sachs crypto custody

I immediately searched for other institutions looking to offer custody solutions and saw an article I had missed.

On July 31st, Bloomberg had written the 129 year old bank, Northern Trust, was testing proof of concept for crypto custody.

Northern Trust crypto custody

I find it hard to overstate the importance of Northern Trust coming into this asset class.

Northern Trust is a private wealth bank who has never, in 129 years, had even a whiff of impropriety. Their average private wealth client is worth $900 million. They serve 25% of the Forbes 400 wealthiest families in America.

Think about that, have $900 million in your accounts at Northern Trust? Half the clients there have more money than you.

And now they are announcing a bitcoin custody solution.

There’s just no hiding what that means. Institutions are coming, and they’re bringing trillions with them. Get set.

Northern Trust Private Investment statistics

Probably the most talked about ETF proposal in the space is the CBOE ETF. Not really going to say much about this other than the link below is a great breakdown of the proposal. It goes into detail on what makes the CBOE’s proposal vastly superior to the other offerings to date which the SEC has not approved.

CBOE ETF breakdown

On September 8th, Coinbase announced it was joining the crypto ETF arms race and seeking help from BlackRock.

To be fair, BlackRock in the past has said they have no interest in crypto, but we’re talking about a $6 trillion dollar asset manager. They aren’t going to tell anyone what they’re doing before it’s done.

For an example of scale, the entire gross domestic product produced by Germany, the powerhouse of the European Union, is 3.467 trillion (2016).

BlackRock manages almost twice that at $6.3 trillion.

Coinbase exploring ETF

On September 9th, Citigroup, one of the big four banks in the U.S. (JPMorgan, Wells Fargo, Bank of America, and Citigroup) announced it had developed an instrument it was calling a DAR (Digital Asset Receipt).

The DAR would work similar to the American Depositary Receipt (ADR) most institutions currently offer for investing in foreign markets.

Citigroup is currently one of the largest issuers of ADR’s in the world. They have a long established track record at this practice, issuing ADR’s since 1928.

As one of the big four banks in the U.S., Citigroup holds over 8% of total U.S. deposits by itself ($893 billion out of $10.7 trillion).

So essentially Citigroup is going to use a similar strategy for offering bitcoin and other digital assets to their customers in a product which will look and feel very similar to an ADR — which customers are already familiar with and has been used for the last 90 years.

Business Insider — Citigroup Digital Asset Receipts

On September 13th, Mike Novogratz called the bottom of this bear market. He took a screenshot of his Bloomberg terminal and showed the BGCI chart on twitter…don’t read the comments on his post unless you want to lose faith in humanity…People who have no idea the BGCI is proprietary to a Bloomberg terminal, which has a yearly subscription cost of $24,000 were throwing shade at Mr. Novogratz for no other reason than they were just emotionally bearish.

Most people don’t realize that Mr. Novogratz was one of the original backers of his friend from Princeton, Dan Morehead.

Mr. Morehead launched Pantera Capital in 2013, making the call to buy bitcoin at $103.

The Pantera Bitcoin Fund is up over 10,000% now.

Point being, these are data driven, very successful gentlemen who have built fortunes. So when someone of Mr. Novogratz’s stature is taking a screenshot of his Bloomberg terminal and publicly calling a bottom, that’s another data point lining up with the pattern.

Mike Novogratz calling the bottom on the 13th

Also on September 13th, Mr. Tom Lee, from Fundstrat, was speaking at the ETC Summit 2018.

I found their livestream on Youtube and watched Tom Lee’s presentation three times. It begins at 5:05:38.

Tom Lee’s callsign should be SteelRain — always on station with no emotion and accurate data on rapid fire.

He drew some very interesting comparisons against other recessions, showing the important metric was the 100% retracement of the last parabolic move up, not the timeframe it takes to retrace.

The fact that Mr. Lee and Mr. Novogratz were essentially saying the same thing, on the same day, half a world apart. Whoa, we’re danger close now.

Tom Lee’s presentation

So if you’re like me, been in the market for a couple years, great. The best thing I can think to do now is nothing. Keep getting some gains in the gym, and get out and live life. There’s a lot more to it than candles on a chart, and this is a long war.

If you bought BTC at $18k last winter, stay calm. Yeah you’ve been hurt, but you aren’t going to bleed out. November is around the corner. Be proud that you’ve waited out a longer bear market than the Baby Boomers did in 2008. You’re a veteran now.

And if you don’t own crypto yet, but see the value in it, and are waiting for a cheaper point to get in…may your wifi connection be fast, and your exchange not go offline.

You’re going to be in a crowded knife fight with everyone and their mother at $5,000 and below. Look at the PBV (Price by Volume) chart.

Just something to consider. None of this is financial advice.

I’m betting a $44 billion empire doesn’t lose. See you in 2019 — Radigan