Sup, nerds!

Here’s what you’re getting in today’s edition:

• 💅 This is cool: Brace yourselves…volatility coming in hot

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

• 🤝 Partner: Start earning today with Betterment​

• 🔪 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.

💅 This is cool:

Brace Yourselves…Volatility Coming in Hot

In one sentence: Inflation and consumer is cooling, while the US has debt repayments approaching — all suggesting we’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 “OK,” so it can gobble up a bowl of kibble.

(The kibble in this analogy is investor dollars).

The “OK” that Bitcoin investors are waiting for is a hint from the Federal Reserve that they’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 Powell’s public statements — hoping to tease out the indication of September rate cuts.

If/when that happens there’s a high chance the crypto market will rally.

Here’re the indicators that suggest we’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.

Here’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!

🥇 Want the news before anyone else?

🔎 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 Bitcoin’s market cap (to prices we haven’t seen since…yesterday).

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

It didn’t just end with Bitcoin — it hit the entire market, and quickly (within a four hour stretch).

…but why?

Glad you asked.

Two days after former president Trump announced that, if elected, he’d stop the US from selling any of its seized Bitcoin — the US government moved $2B worth of seized Silk Road Bitcoin.

It might not have been moved with the intention to sell (we still don’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 — 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 — “when in doubt, zoom out” and you’ll be able to see through the headlines…

For example:

“Bitcoin dumps billions in market cap!”

Turns into:

“Bitcoin dumps billions in market cap, to prices we haven’t seen since yesterday.”

This too shall pass 🧘

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🔪Let'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 ‘news’ part of this story ain’t that exciting (actually, it’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 it’s worth considering using a decentralized exchange (DEX) instead of a centralized exchange (CEX).

Here’s what we’re on about…

Gemini is a CEX which means it’s run by a company and it’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).

What’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.

What is a DEX?