The Wolf Den #731 - Roll Out The Red Carpet

More Institutions Are Here... Cool

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In This Issue:

1. Roll Out The Red Carpet

2. Bitcoin Thoughts And Analysis

3. Legacy Markets

4. Fictional Reserve Banking

5. KYC Doesn’t Work

6. Goodbye Jump Crypto And Jane Street

7. Tibetan Lama Believes Bitcoin Can Bring World Peace… And Hit $1 Million | Shyalpa Tenzin Rinpoche

Roll Out The Red Carpet

What if I told you that a new massive crypto project is underway, backed by top-tier tech, finance, and crypto firms, but I'm not excited? Would you call me crazy?

What if I told you that Microsoft, Goldman Sachs, Deloitte, S&P Global, Digital Asset, Cboe Global Markets, and VERT Capital are just a few of the names behind this project, and I'm still not impressed?

Maybe you think I'm just jaded to 'MAJOR ANNOUNCEMENTS,' but actually, no – I think I've learned to see through them. Let me explain.

Before diving into the recent 'big' news story, let's revisit September of last year when EDX Markets was announced. Does this name ring a bell for you? For me, it's just an old name filed away in the back of my mind. When the announcement was made, I thought it was a revolutionary moment for crypto – spoiler alert, I was wrong.

There’s no shame in my game. Take a look at my previous coverage below.

I don't think I was crazy for thinking that a non-traditional exchange built by traditional finance titans with multi-trillion dollar firms' backing was a big deal. But have you heard of anyone using EDX since it launched? I didn't even know the platform was live until I started writing this article, and to find out, I had to hunt down the press release.

I don't mean to pick on any particular crypto platform unnecessarily, but the EDX story is relevant today. The website is underwhelming, there's just one press release, press articles about the exchange have been deleted, and there's no team mentioned on the site. It's shocking to compare what was promised to what exists now.

So, let's talk about today's news. Initially, I was eager to cover a story with substance: the Canton Network. It does exist! You can read the official press release and view their website here. It is also being covered by crypto media.

To briefly explain, the Canton Network aims to capture institutional adoption specifically for blockchains. Market participants can join the network to synchronize with each other and build upon the infrastructure Canton provides, offering benefits like legal and regulatory guarantees, privacy, control, and scalability.

Here are their exact words:

It creates a ‘network of networks’, allowing previously siloed systems in financial markets to interoperate with the appropriate governance, privacy, permissioning and controls required for highly regulated industries. For example, asset registers and cash payment systems are distinct and siloed systems in today's markets. 

With the Canton Network, a digital bond and a digital payment can be composed across two separate applications into a single atomic transaction, guaranteeing simultaneous exchange without operational risk. Likewise, a digital asset could be used in a collateralized financial transaction via connection to a repo or leveraged loan application.

However, as I read through the Canton announcement, I couldn't help but notice similarities to the EDX story:

Big names - Yes.
Big promises - Yes.
Major legacy backing - Yes.
More products we don't need - Yes.

Although EDX and Canton have different goals, I worry their outcomes might be the same. I'd like to be proven wrong, but I fear that's less likely.

Major legacy institutions aren't meant to build crypto platforms, nor should they seek out non-crypto platforms either. Crypto doesn't need more platforms; we need regulatory clarity. Coinbase, Fidelity, Binance, Amazon, and BlackRock already offer excellent crypto products. Another exchange or a shiny new blockchain isn't the answer. The infrastructure is here; we just need to continue building on it.

It's time for the community to be more critical about what we release and how we praise it. Not a single crypto press release covering the Canton Network raised even a hint of suspicion.

We live in an era of obsessive news consumption and regurgitation, thirsting for the next story. While I'm bullish on the platforms guiding us, I'm bearish on futile attempts to reinvent the crypto wheel.

Progress isn't always about blazing new trails or following others blindly. Sometimes, it's nurturing the path behind us and advocating for the roadmap that aligns with our goals.

I'm not discouraged, and neither should you be. We just need to be better.

Bitcoin Thoughts And Analysis

4-HOUR CHART

We are grasping at straws to look for things to analyze, as meme coins go nuts left and right.

However, a drop and close below $27,340 on the 4-hour chart would give us potential oversold bullish divergence. We would need a clear higher low on RSI and lower low on price. Then we probably move back to the top of the range.

Legacy Markets

• Stocks Slip as Caution Prevails Before US CPI Data: Markets Wrap

Happy CPI Day, to those who celebrate.

European stocks and US equity futures have experienced a slight decline as investors await a US inflation report to gauge the Federal Reserve's rate hike trajectory. Retail and consumer shares have negatively impacted European stocks, while some companies reported positive earnings news. Contracts for the S&P 500 and Nasdaq 100 retreated, and Asian stocks declined. Investors are closely watching Wednesday's US inflation figures, which are expected to show a 5% YoY increase in headline CPI for April, significantly above the Fed's 2% target. Meanwhile, traders remain wary of risks from the ongoing standoff in US debt talks, with concerns about potential long-term damage from a default.

Key events this week:

• US CPI, Wednesday

• China PPI, CPI, Thursday

• UK BOE rate decision, industrial production, GDP, Thursday

• US PPI, initial jobless claims, Thursday

• Group of Seven finance minister and central bank governors meet in Japan, Thursday

• US University of Michigan consumer sentiment, Friday

• Fed Governor Philip Jefferson and St. Louis Fed President James Bullard participate in panel discussion on monetary policy at Stanford University, Friday.

Some of the main moves in markets:

Stocks

• The Stoxx Europe 600 fell 0.2% as of 9:29 a.m. London time

• S&P 500 futures fell 0.1%

• Nasdaq 100 futures fell 0.2%

• Futures on the Dow Jones Industrial Average fell 0.1%

• The MSCI Asia Pacific Index fell 0.4%

• The MSCI Emerging Markets Index fell 0.4%

Currencies

• The Bloomberg Dollar Spot Index was little changed

• The euro was little changed at $1.0958

• The Japanese yen was little changed at 135.16 per dollar

• The offshore yuan was little changed at 6.9270 per dollar

• The British pound was little changed at $1.2627

Cryptocurrencies

• Bitcoin fell 0.3% to $27,577.62

• Ether fell 0.6% to $1,838.46

Bonds

• The yield on 10-year Treasuries was little changed at 3.51%

• Germany’s 10-year yield was little changed at 2.35%

• Britain’s 10-year yield advanced two basis points to 3.87%

Commodities

• Brent crude fell 1.3% to $76.40 a barrel

• Spot gold fell 0.3% to $2,028.51 an ounce

Fictional Reserve Banking

• Is our Money Safe During The Banking Crisis?

If you're looking for an up-to-date perspective on the current banking crisis, I recommend this article by Brad Mills. However, before I endorse it, I want to make you aware of the author's bias: Mills is a staunch Bitcoin maximalist. Even if this perspective doesn't align with yours, there are still valuable insights to be gleaned from the piece. One particularly intriguing section discusses fractional reserve banking, which Mills refers to as "fictional reserve banking."

The underlying premise is that banks issue new loans not based on their actual reserves, but on the principle of what has been deposited. This process essentially multiplies money, adding risk, as loans create deposits, which in turn create more loans—until the entire system collapses. While plenty of intelligent people reject this notion, I find myself in agreement with Mills, believing this accurately reflects our banking reality.

It’s “fictional reserve” banking, because the money lent out by banks is not backed by anything tangible and the debt that the government issues continually expands. The national debt will never be paid off and the banks have no reserve requirements anymore. Most of the “money” in the system is actually just created from nothing this way by banks — and as icing on the cake, when you deposit this created-from-nothing-by a bank “money” into a bank, they also take your deposits and invest them in the treasury market or deposit them to the central bank as bank reserves to make even more profits.

KYC Doesn’t Work

• ‘Kim Jong-Un’ gets approved for Gate.io crypto account

Recently, multiple major crypto exchanges have faced scrutiny for KYC violations. Gate.io is the latest example, but such incidents are widespread even beyond the crypto world. According to several sources, Gate.io's KYC approved blatantly fake names like Kim Jong-Un, along with absurd background information such as "notlazarus" as an email address.

Crypto isn't the only culprit, though. Just two months ago, Cash App was exposed for having between 40%-75% of its accounts being fake. There was even a Cash App card approved and delivered with the name Donald Trump on it – utterly absurd. KYC issues are not solely a crypto problem; they represent a broader financial issue, and the crypto world is not immune.

For instance, Wells Fargo faced a massive lawsuit in 2016 for creating fake accounts. Employees engaged in unethical practices by opening unauthorized accounts on behalf of customers without their consent or knowledge. JPMorgan, Bank of America, TD Bank, and Citibank have all had their own KYC blunders within the past decade. While I may not be an expert on KYC, it's clear that crypto isn't the only sector at fault.

Goodbye Jump Crypto And Jane Street

• Regulatory Uncertainty Has Made The Business More Difficult

The news isn't all bad, but it's not ideal either. Jane Street is scaling back its global crypto efforts, and Jump is reducing its presence in the U.S. This may lead to more volatile market moves, both up and down, because these are the main companies making markets and keeping spreads and liquidity appropriate. But crypto will continue to push forward. As mentioned earlier, institutions are clearly still interested in what the crypto world has to offer; however, it's not easy for them to get involved, and they sometimes end up creating products with little value. Creating a new asset class is no easy task, and every day presents challenges.

Tibetan Lama Believes Bitcoin Can Bring World Peace… And Hit $1 Million | Shyalpa Tenzin Rinpoche

In this video, His Eminence Shyalpa Tenzin Rinpoche, a revered spiritual leader born in the Himalayan Mountains, offers insights on how to realize the true essence of our human existence. From his early years as a recognized holy child, Rinpoche has trained as a lama, and now he shares his wisdom on how to live life to the fullest and embrace its joys. He discusses the differences between poverty and wealth mentalities and his surprising bullishness on Bitcoin and cryptocurrencies. Join us for a thought-provoking conversation with this esteemed teacher.

In this episode, we discussed:

• Crypto mentality

• Charity

• Are rich people happy?

• How important is Bitcoin

• Bitcoin will be $1 million

• Meditation

• Role of money

• Poverty mentality

• Wealth mentality

• What Lama is building

• Ask yourself questions

• Celebrating life 24/7

• Please donate

The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.