• Web3 Daily
  • Posts
  • šŸŒ Brace yourselvesā€¦volatility coming in hot

šŸŒ Brace yourselvesā€¦volatility coming in hot

PLUS: Why you should use a decentralized exchange

In partnership with

gm, and welcome to Web3 Daily

Do you think we'll see a rate cut this week? Or September?

(Click to vote / see results / comment šŸ‘‡)

Login or Subscribe to participate in polls.

Sup, nerds!

Hereā€™s what youā€™re getting in todayā€™s edition:

  • šŸ’… This is cool: Brace yourselvesā€¦volatility coming in hot

  • šŸ”Ž This seems important: Why the dip? (US selling Silk Road BTC?)

  • šŸ¤ Partner: Start earning today with Bettermentā€‹

  • šŸ”Ŗ Let's dissect this: Why you should use a decentralized exchange

Terms used in this edition (click for an explanation, or ask Web(GPT)3!):
Market Cap, wallet, fiat, DEX.

web3 daily divider

šŸ’… This is cool:

Brace Yourselvesā€¦Volatility Coming in Hot

In one sentence: Inflation and consumer is cooling, while the US has debt repayments approaching ā€” all suggesting weā€™ll see rate cuts in September (which should rally crypto markets).

Bitcoin is like a well-trained pooch just waiting for its owner to give the ā€œOK,ā€ so it can gobble up a bowl of kibble.

(The kibble in this analogy is investor dollars).

The ā€œOKā€ that Bitcoin investors are waiting for is a hint from the Federal Reserve that theyā€™ll soon start cutting interest rates.

(Making loan/credit repayments cheaper and allowing market players to take out larger loans and invest in higher-risk assets, like crypto).

The Fed meets this Wednesday, and while no one is really expecting them to announce a cut, most will be reading the tea leaves of Fed chair Jerome Powellā€™s public statements ā€” hoping to tease out the indication of September rate cuts.

If/when that happens thereā€™s a high chance the crypto market will rally.

Hereā€™re the indicators that suggest weā€™ll see a September rate cut:

  1. The price of stuff (aka: inflation) rose in June, but only modestly, indicating inflation is slowing and the Fed can cut safely.

  2. Consumer spending slowed last month, hinting at a weakening economy (a good fix to that = lowering interest rates).

  3. The US has payments coming up on **checks notes ** $35 trillion worth of debt. If the Fed lowers rates, the US pays less on those loans.

Hereā€™s what we can expect in the coming week:

Volatility. And lots of it.

Markets like certainty, and right now, a lot is up in the air economically (impacts of inflation, elections, US debt repayments, etc.)

Heck, yesterday we saw Bitcoin round $70k, then promptly dip back down below $68k (good news is, the overall trend is still positive).

Either way, brace yourselves!

web3 daily divider

šŸ„‡ Want the news before anyone else?

web3 daily divider

šŸ”Ž This seems important:

Why the Dip? (US Gov Selling Silk Road BTC?)

In one sentence: The US government moved $2B worth of seized Silk Road, causing a sell off that wiped billions from Bitcoinā€™s market cap (to prices we havenā€™t seen sinceā€¦yesterday).

So that BTC flush that took us from $70k to sub $68k?

It didnā€™t just end with Bitcoin ā€” it hit the entire market, and quickly (within a four hour stretch).

ā€¦but why?

Glad you asked.

Two days after former president Trump announced that, if elected, heā€™d stop the US from selling any of its seized Bitcoin ā€” the US government moved $2B worth of seized Silk Road Bitcoin.

It might not have been moved with the intention to sell (we still donā€™t know at this point), but when the market sees even a slight hint that that sort of of sell pressure might be about to hit ā€” investors take profits, just to be safe.

And when everyone is lead by the same idea, to the same action (in this case, selling), it can have a cascading effect.

As is the rule in crypto ā€” ā€œwhen in doubt, zoom outā€ and youā€™ll be able to see through the headlinesā€¦

For example:

ā€œBitcoin dumps billions in market cap!ā€

Turns into:

ā€œBitcoin dumps billions in market cap, to prices we havenā€™t seen since yesterday.ā€

This too shall pass šŸ§˜

 

web3 daily divider

šŸ¤ Partner:

We put your money to work

Bettermentā€™s financial experts and automated investing technology are working behind the scenes to make your money hustle while you do whatever you want.

web3 daily divider

šŸ”ŖLet's dissect this:

Why You Should Use a Decentralized Exchange

In one sentence: Gemini, just sent out a warning to their users requesting that they monitor their accounts for unusual activity; which we took as a good opportunity to discuss the value of a CEX vs. a DEX.

The ā€˜newsā€™ part of this story ainā€™t that exciting (actually, itā€™s kinda scary).

Here it is: Crypto exchange, Gemini, just sent out a warning to their users requesting that they monitor their accounts for unusual activity; and confirmed that around 15,000 of their customers might be affected by a data breach of its banking partner.

But this data breach is actually a perfect example of why itā€™s worth considering using a decentralized exchange (DEX) instead of a centralized exchange (CEX).

Hereā€™s what weā€™re on aboutā€¦

Gemini is a CEX which means itā€™s run by a company and itā€™s up to the company as to how they operate (which could be good, like Coinbase, or bad, like FTX).

On this occasion, Gemini has been working with a banking partner to let people onboard and offboard their fiat currency.

Allowing people a simple user experience to put dollars on an exchange, which they can then use to buy crypto, is one of the good parts of having such a close integration with a bank.

But the more integrations Gemini have, the more their users are exposed to potential hacks or vulnerabilities (like the 15k customers who may be affected in this one).

Whatā€™s the solution?

The solution is to take an approach which combines multiple decentralized experiences which are independent of each other and still provide a good user experience.

For example, you need to get your crypto in your wallet some way, so connecting your fiat bank and your crypto wallet to an onboarding solution like MoonPay is probably necessary.

From there, you could transfer your crypto to a DEX (i.e. a peer-to-peer crypto marketplace).

Et voila! Your crypto is disassociated from any traditional banking system and your identity is safe.

Alright! Now you know.

web3 daily divider

What is a DEX?

web3 daily divider

Wired's "rocket fuel of AI" label has Wall Street buzzing. Projections skyrocketing to $17 trillion, akin to 9 Amazons, signal a seismic shift. But here's the kicker: astute investors have a shot at riding the wave with a company primed for supremacy. Dive into The Motley Fool's exclusive report for your front-row seat.

šŸ‘‡ Other stuff you may have missed

Alright, thatā€™s it for today!
Love to the family,

Chevy, Seb & The Web3 Daily Team.

P.S. Want to learn how to research and value cryptocurrencies? We have a framework that does just that.

What did you think of today's edition?

Rate us and leave a comment!

Login or Subscribe to participate in polls.

Help us write content that's relevant to you!
Forwarded this? ā€‹Join here!ā€‹
Want to advertise with us? Get in touch with Seb: ā€‹ā€‹[email protected]

web3 daily divider

Uh oh! Now for the boring stuff:

This content is for informational purposes only. Such information should not be construed as legal, tax, investment, financial, or other advice.

Phew! Thanks for hearing us out. We promise to never be that mundane again.

Oh, and - whatever you do, do not click this link.