March 6, 2023

🥛 5 major threats to crypto

GM. This is the Milk Road. The daily crypto newsletter with more legendary drops than a DaftPunk album.

Here’s what we’re serving up to start the week:

  • 5 major headwinds in crypto

  • Are NFTs making a comeback?

  • Binance allegedly offered Gary Gensler an advisory role

Today's edition is brought to you by Consensus, the Milk Man's favorite crypto event.


Crypto is battling a 5-headed monster right now. Each one of those "heads" represents a narrative that could affect the industry in the near term.

Today, we're gonna give you a quick rundown of each narrative and why people are so worried. We'll also rate them from 1-10 on the Milk Road Worry-Meter.

(1 = Ain't Worried Bout Nothin', 10 = Curdled Milk)

Let’s get into it…

1. Mt. Gox Repayments

What’s happening: Mt. Gox is set to return 142,000 BTC back to its creditors. That’s ~$3B+ worth of tokens set to return to the crypto market.

Mt. Gox was a Japanese crypto exchange that handled over 70% of all Bitcoin trading at its peak. Then, customer funds got hacked and it was forced to file for bankruptcy back in 2014.

After a long legal journey, Mt. Gox creditors will start getting repaid on March 10th.

Why people are worried: It’s a red pill vs. blue pill moment for Mt. Gox creditors.

Red pill: Sell for a big profit. When Mt. Gox went down, BTC was worth ~$600. Today, BTC is ~$22.5k (a 37.5x increase).

Many people fear creditors could be tempted to sell, lowering the BTC price.

Blue Pill: HODL. Mt. Gox customers have been waiting 8+ YEARS to get their funds back, so some people might just keep on holding.

Milk Road Worry-Meter: 2

We aren’t too worried about this because…

  • Crypto investment funds have bought many creditor’s claims. Investment funds are more likely to hold onto the BTC because their returns won’t be as juicy (they bought creditor claims closer to the current market value of BTC).

  • There won’t be any second order effects from Mt. Gox creditors selling. This isn’t an FTX or 3 Arrows Capital contagion situation. Mt. Gox creditors are insulated to Mt. Gox creditors.

2. Ethereum’s Shanghai Upgrade

What’s happening: Ethereum’s next big upgrade (Shanghai) is scheduled for later in April. This means stakers will finally be able to unstake their ETH.

Why people are worried: There is currently 17.5M ETH staked, worth ~$27B at today’s prices. That’s a lot of stakes.

Many think that the Shanghai upgrade could lead to a big sell-off, as some people have been waiting as long as 2 years to access their staked ETH.

Milk Road Worry-meter: 4

We aren’t too worried because only ~16% of ETH stakers are in profit positions. That means that most people are underwater on their investments since they first staked their ETH.

If most people are in the red on their investments, will they be rushing to sell? Unlikely.

3. Silvergate Goes Down in Flames

What’s happening: One of the largest crypto banks, Silvergate, is on fire. (and not in a good way).

Turns out, everything is not fine…

  • Told investors it needs to delay the filing of its annual financial report

  • Revealed a ~$1B loss for Q4

  • Major customers like Coinbase, Galaxy Digital, Gemini, Circle,, and Paxos have cut ties with the bank

Why people are worried: Silvergate was a major “bridge” for crypto. It set up the "Silvergate Exchange Network" (SEN) – a network that enabled institutional investors to move fiat to digital currency exchanges and trading partners 24/7 in real-time, at no extra cost.

The crypto bank had ~1,600 clients that handled ~80% of all funds that flowed into and out of the crypto markets. Now…

🎵Silvergate is falling down,

falling down, falling down.

This is… sh*tty.🎵

Milk Road Worry-Meter: 7

The companies connected with Silvergates are the big dogs of crypto:

  • USDC ($43B market cap)

  • Coinbase (largest exchange in the U.S.)

  • Tether (largest stablecoin in the world)

  • and many others

Now, they’ve all cut ties with Silvergate and will need to find new banks to help with on-ramping & off-ramping client funds.

Plus, banks might second guess getting into business with crypto companies after what’s happened with FTX, Celsius, etc. Too many stinky farts and people leave the room.

4. Macroeconomic Outlook

What’s happening: Last week, CPI (Core Price Inflation) and PCE (Personal Consumption Expenditures) data came in above expectations. This means…

  • People are still spending money

  • Inflation is not going down fast enough

Why people are worried: That means the Fed’s interest rate hikes are not working as quickly as intended, and they may have to increase interest rates again.

Milk Road Worry-Meter: 5

We’re a little worried about this because the possibility of additional rate hikes continues to increase.

And higher interest rates are a bad thing for growth stocks and crypto.

Why? Higher interest rates make it more expensive to borrow money to invest into speculative assets like crypto.

Also, government bonds end up paying a higher “risk-free” yield, which makes crypto look worse by comparison. Are you as likely to dump your net worth into Dogecoin when US Treasuries are paying 6% yields? Probably not. And unfortunately, the data agrees:

Even so, we aren’t pushing the panic button just yet. Things tend to change fast, and next week we will get a new jobs report and a Jerome Powell speech. We’ll know more about the Fed’s thinking and strategy then.

5. Regulation

What’s happening: Regulators around the world are cracking down on crypto. The SEC, NYDFS, CFTC, etc., all came after crypto last month. 

  • Krakens staking service was shut down (they were also fined $30M)

  • Paxos was forced to shut down its issuance of BUSD tokens (the 3rd largest stablecoin)

  • Binance.US is being probed for operating an “unregistered security exchange”

February is now FEDruary.

Why people are worried: Unnecessary and uneducated regulation will stifle innovation and handcuff projects and investors.

When the top players in the space are forced to pay 8 figure fines, withdraw from markets, and suspend projects, it’ll cause companies and VCs to invest less money into crypto and/or flee the U.S markets entirely.

Milk Road Worry-Meter: 8

We need regulation and clear rules to invest in digital assets, but Gary Gensler and the rest of the SEC are stricter than my 5th grade hall monitors.

If the regulators make it their mission to kill crypto, it could get ugly out there. Out of all the threats on the list, this is our biggest worry.

We aren’t hitting the panic button on everything yet though. We think a few events like Mt Gox & Ethereum’s Shanghai upgrade are just noise & won’t actually affect price in the near term. But, investors should keep a close eye on some of the others like the Silvergate fallout and future regulatory crackdowns.

And of course, keep your eyes peeled on emails from Milk Road – we’ll always give you the rundown on the latest news & what regulators do next. Stay thirsty, my friends.


Consensus 2023 is less than 2 months away.

The agenda has arrived and folks… it’s a doozy.

It’s packed with tough conversations, talks from some of the biggest names in crypto, and expert analysis so you know how to navigate this market.

Here’s the TLDR:

  • "FTX: What Happened?” will unpack the FTX saga with former FTX US President Brett Harrison and Anthony Scaramucci

  • Workshops geared towards building a better future for crypto and Web3

  • Presentations and analysis from 11 of the biggest blockchain protocols (Bitcoin, Ethereum, Polygon to name a few)

  • Future Web3 exploration with Richard Widmann of Google, Yat Siu of Animoca Brands, Daniel Alegre of Yuga Labs and more

  • An entire day dedicated to Web3 marketing or finance depending on your preference (Pro pass only)

The list goes on.

Consensus is crypto’s biggest, longest-running and most influential event.

View the Consensus 2023 Agenda here oh and…

Click here to get a 25% discount right now using code MILKROAD.


The results are in, and February was a huge month for NFTs. For the first time since May 2022, there was more than $2B in monthly NFT trading volume. That’s a lot of JPEGs.

Here are the top 8 collections that led the way:

Here are the takeaways:

  • Blue Chips leads the charge. BAYC, MAYC, Otherdeed, and Azuki continue to dominate the leaderboard.

  • Blur’s marketplace pumped trading volume. Blurs marketplace made up ~65% of the entire market’s trading volume. The secret to their success? Rewards & free airdrops.

  • New faces make some big noise. SewerPass, Checks, and Opepen Edition NFTs all launched this year and have quickly climbed the charts.

If you wanna keep up with all the latest NFT action check out Unleash NFTs – an NFT analytics platform provided by our partner, bitCrunch.


In a recent investor letter, Multicoin Capital’s hedge fund revealed it lost 91.4% in 2022. From up big → down bad… this is crypto’s version of the Falcons blowing a 28-3 lead in the Super Bowl.

Leaked texts show that Binance had a plan to avoid U.S authorities and allegedly offered Gary Gensler an advisory role. The plot thickens…*Dun dun duuun*

Uniswap Labs is trying to drop its new mobile wallet, but says that Apple won’t give the thumbs up on the App Store launch. Uniswap will launch a limited early release on TestFlight until they get the green light for the full launch. Who knows if that ever happens though… Tim Cook is blocking crypto shots like his name was Dikembe Mutombo.

The U.S. Department of Justice has proposed new bail conditions for Samuel Bankman-Fried: No video games, he can only use a flip phone (no smartphones that allow chat or voice comms), and he can only use websites like Wikipedia, YouTube, Netflix & DoorDash.

Yuga Labs launched the auction for its first Bitcoin NFT collection, TwelveFold. The auction will end later today at 3pm PT.



That's a wrap for today. Stay thirsty & see ya next time! If you want more, be sure to follow our Twitter (@MilkRoadDaily)


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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.