GM. This is the Milk Road, the daily newsletter that brings you the best of crypto so you're aways the smartest one at the dinner table.
Here's what’s on the menu for today:
- Bloomberg Drops A 40,000-Word Edition On Crypto
- Here’s Why ETH Is Pumping…
- Meme of the Day
BLOOMBERG DROPS A 40K WORD EDITION ON CRYPTO
Bloomberg Businessweek just dropped a cover-to-cover issue on our favorite topic… Crypto.
Fun Fact: It’s only the second cover-to-cover issue ever released by a single author in Bloomberg’s 93-year history. The first was about computer programming. Big, right?
This one is called “The Crypto Story” and is written by Matt Levine - one of the best finance writers to walk this Earth. This guy could write a post about paint drying and it’d still be a banger.
But here's the catch: it’s 40,000 words long😵 I know, I know...
Lucky for you, the Milk Man just got some new reading glasses. So he read it all in one day. Here are the top 4 takeaways:
1️⃣ Modern life is based on a bunch of databases
If you own stock, it’s actually just an entry on a list.
If you own a house, the ownership is written down in some database or stored in a cabinet in a random county basement.
Video games, software, and even money. They are all just entries on a database. There are 2 problems with this:
- A lot of databases are outdated. Most systems are written in an old programming language called Cobol, and people still make payments through paper checks.
- Databases require trust. We have to assume we can trust the people, companies, and governments that are in control of the databases.
But they’re not always trustworthy. Just look at this guy 👆 I wouldn’t trust him with my Subway order, let alone my money!
2️⃣ Crypto and the blockchain are new ways of keeping databases
- Decentralized - the blockchain is run & controlled by the users themselves
- Verifiable - While most crypto users are trusting that miners & network validators are running the system fairly, it’s also easily verifiable on the blockchain. Unlike a bank where that data isn’t as transparent.
3️⃣ Crypto is being built around how finance systems should work
Traditional finance hasn't changed in decades. Things are "Done How It's Always Been Done."
Crypto is the opposite. There is no "How It's Always Been Done."
It's a blank canvas where new financial systems are being built every day. This is good and bad:
- Good: Crypto is attracting some of the brightest people to build new solutions that tackle old problems
- Bad: Lots of dumb people are falling into the same mistakes as traditional finance
4️⃣ Crypto built a system to make the customers of a business also its shareholders
When you buy Bitcoin you get 2 things:
- Utility: You can buy a coffee. Trade it for a computer. Use it as collateral on a loan.
- Share in the Bitcoin project: The more the Bitcoin network grows, the more valuable your Bitcoin becomes.
Now, of course, there's also a downside to that too. And Matt points out how this model has often led to Ponzis within crypto.
But the biggest takeaway of all: Crypto ain’t going anywhere. Which is why Matt wrote 40k words about it and why Bloomberg dedicated an entire edition to crypto.
If you're looking to get your friends & family to understand crypto & why it matters - send them this piece by Matt. It's a must-read.
3 REASONS WHY ETH IS PUMPING
Yesterday was a good day.
- BTC was up 5%
- The top 30 cryptocurrencies were all in the green
And ETH led the way. It reached $1,500 for the first time in 5+ weeks and was up 13% on the day.
Now you might be wondering why ETH was 🎵 going up, on a Tuesday🎵.
Well, there are 3 possible reasons:
1️⃣ ETH supply continues to decrease + less daily selling pressure
Since October 8th, the ETH supply has quietly decreased by ~12,000 ETH (~$18.5m). It’s about the hit the same levels as before the Merge.
On top of that, there’s a lot less selling pressure because there are no more big mining fees being paid out. In total, Ethereum has saved ~$750m in mining fees since the Merge.
ETH supply going down + daily sell pressure going down = ETH price going up 🚀
2️⃣ ETH Liquidations
Over the last 24 hours, $400m+ in ETH short positions were liquidated.
These are all people that are betting against the price of ETH. But as ETH went up, they lost their bets.
Liquidations are an interesting thing - they can lead to price pumps AND price dumps. And once there's movement on either side, you better hold on because things move FAST.
The third reason ETH is pumping in price is...*drumroll*.....
3️⃣ The McRib is back. I repeat, the McRib is back.
This is big because every time McDonald's relaunches the McRib, the markets pump. Just check it out…
All jokes aside, Mcdonald's only offers it when pork prices are low. So there actually might be a correlation between the cost of producing a McRib and other risk assets.
Will I ever eat a McRib? Probably not.
Am I happy it’s back? Hell yes.
QUESTION OF THE DAY
With the markets having a big green day & the McRib back, how are you feeling about the markets right now? Reply to this email with your quick answer!
a/ extreme fear - “Help mommy, I’m scared!”
b/ fear - I’m sleeping with the nightlight on during times like these
c/ neutral - call me Switzerland
d/ greed - Lovin’ the discounts! Keep em comin’
e/ extreme greed - Fear isn’t in my vocab. I feast while others diet
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MEME OF THE DAY
That's a wrap for today, ladies & gents. See ya tomorrow!
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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.
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