GM. This is the Milk Road. The newsletter that brings you so much entertainment, news & laughs it should be illegal. Ya know, hypothetically speaking of course.
Here’s what's happening around crypto:
The new stablecoin on the block
Jim Cramer: The typical crypto tourist
The weekly crypto funds report
Meme of the day
FROM THE MAKERS OF USDC…HERE'S EURO COIN
There’s a new stablecoin on the block: Euro Coin (EUROC).
Here’s what you need to know:
It’s the first stablecoin to be backed by Euro’s (1:1)
It’s being issued by Circle, the same company that issues USDC (the 2nd largest stablecoin by market cap)
It has a cool token name – EUROC. Kinda like “You rock”
For now, it’s only available to customers in the U.S…which is weird because Euros are mainly used in… *wait for it*… Europe (go figure).
So why limit it to the U.S? Well, the European Union isn’t the biggest fan of stablecoins. The big reason is because of the negative interest rates that have plagued Europe for a long time.
That, mixed with the chaos caused by UST caused the EU to recently pass a bill where stablecoins would be subject to operation restrictions – including a cap of 200m Euros in transactions per day.
Now stablecoins have been getting a lot of hate recently. But here at the Milk Road, we’re still believers.
Here are 3 reasons why:
1/ TAXES: Bitcoin is classified as property. So every time you use it to buy something, you’re triggering capital gains taxes as if you just sold a stock or piece of property.
2/ VOLATILITY: If you own a store, you don’t want to accept bitcoin because the price can skyrocket or plummet the next day.
3/ FEES: Both Bitcoin and Ethereum have high transaction fees (often $5+ per transaction).
Stablecoins solve these problems because there are no capital gains taxes for transactions, prices are stable at $1, and it’s cheap to transact.
And we’re seeing stablecoin adoption increase all over the world. A few examples include:
Argentina saw ~3x more volume for stablecoins this past weekend after the Economy Minister resigned.
Why? To hedge against the country’s rising inflation and fall of the peso against the USD. Their annual inflation rate just hit 60.7% (!!)
Afghanistan has seen more & more of its citizens turn to stablecoins to keep their assets safe + easily send & receive money.
Why? The local currency has plummeted over the last year, the U.S has imposed new restrictions on banks, and the Taliban took over. People normally kept their money in assets like diamonds & jewelry, but these are getting stolen by the regime.
Stablecoins help solve this. And because of it, there have been almost no remittances in Afghanistan through international bank payments over the last 10 months.
To recap, stablecoins are important because they let us spend without the taxes & volatility that come with crypto. And we expect more people to turn to stablecoins as fiat currencies continue to devalue due to inflation.
JIM CRAMER FLIP-FLOPS ON CRYPTO
You know Jim Cramer right? The guy yelling at you about stocks on TV?
Well, Jim hopped on the crypto bandwagon when prices were going up like a rocketship. Saying things like:
“There are fortunes made in crypto”
“I’m a big believer in Ethereum and Bitcoin”
“Why Bitcoin and Ethereum are the right bets!”
Those are quotes from June (ya know, last month).
Now, all of a sudden, Jim is flip-floppin like a sandal on Venice Beach. Yesterday he came out and said:
“There’s no real value there. What an awful asset – NFTs sold to you. Made up”
Oh, really Jim?!! Should we revisit some of your other big-brain predictions?
In 2008, Jim famously said: “Bear Stearns is fine! Do not take your money out.” Bear Stearns was indeed not fine & 6 days later the price fell over 90%.
Last year Jim created the Magnificent 7, a list of stocks he said could only go up. 6 of them are down more than 60%.
Last month Jim said to buy the dip in oil stocks & stay away from everything else. Oil is down ~25% since then.
This is why there are “inverse Cramer” memes (basically, just do the opposite of what he says and profit).
I call people like Jim crypto tourists. They come to crypto like a teenager going to Cancun for spring break. They think it’s all tequila and wet NFT-shirt contests.
But when the party's over, they go home.
It’s OK to be a tourist. But don’t take advice from a tourist. They will only tell you where to buy the overpriced crap.
At the Milk Road – we listen to the locals. They know all the best spots. They know how to avoid the shady parts of town, and where you can get the best hole-in-the-wall sushi.
But for now, cya next bull run, Jimmy!
WEEKLY DIGITAL ASSET FUNDS REPORT
The results for the latest Weekly Digital Asset Funds Report are in… there was a total inflow of $64m last week.
Here are some of the top takeaways:
A good rebound from previous weeks. After 3 straight weeks of outflows (with a record ~$450m sold off the previous week), we finally get a positive week!
ETH sees back-to-back weeks of inflows ($5m this week). This comes after an 11-week drought of outflows for ETH. Comeback SZN?
A record $51m was invested into Short-BTC products. No surprise here as the first-ever U.S-based short-BTC ETF was launched at the end of June.
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VOYAGER FILES FOR BANKRUPTCY
Voyager Digital, a crypto lender that had over $1.5b in crypto assets, has just filed for Chapter 11 bankruptcy. This comes after 3AC, a hedge fund, filed for Chapter 15 bankruptcy earlier this week.
We don't know how many chapters of bankruptcy there are, but the book of Crypto Bankruptcies is getting bigger by the day.
Why did it happen?
Mismanaged funds: Voyager had burned through ~$200m over the last few months
Domino effect: They had loaned out $650m to 3AC (now bankrupt). This was ~60% of their total loans & created a massive hole in the balance sheet
Steven Elrich (CEO) announced that customers with crypto in their accounts will receive in exchange a combo of some crypto, some money from the 3AC recovery, common shares from the newly organized company, and Voyager tokens.
One thing is clear: this is going to be a long few months for Voyager and anyone that had money with them.
MEME OF THE DAY
It's a rough tread out here, that's for sure 🤣
Stay thirsty my friends, see ya tomorrow!
A Review from the Road…
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.