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GM. This is Milk Road, your daily crypto briefing - with zero filler and extra memes.

Here’s what we’re serving up today:

• 2 reasons crypto prices are in the red 🧐

• Graph of the day: 11 straight weeks of inflows 📊

• Presenting… the Milk Road Award nominees 🏆

• FIFA, NFTs, and the World Cup Final 🍪

2 REASONS CRYPTO PRICES ARE IN THE RED 🧐

The crypto market looks like my shirt after Pasta Night… 

red stains everywhere! 🤬

So, why are prices bleeding? There are a few theories…

1/ A few U.S. legislators proposed a bill to “crack down on crypto”.

Elizabeth Warren is a U.S. Senator. And she’s been trying to build an “anti-crypto army” over the last few months.

Yesterday, she proposed a new bill called the Digital Asset Anti-Money Laundering Act of 2023. If passed, it would:

• Extend the Bank Secrecy Act (BSA) requirements to digital wallet providers, miners, validators, and other network participants that facilitate digital asset transactions.

• Impose bank-like Know-Your-Customer (KYC) rules on non-custodial software products and wallets.

In simple terms… 

*gulp*

The good news: Elizabeth Warren has proposed over 300 bills over the last 8 years and… checks notes.... 0 became laws.

ZERO. Zip. Zilch. Nada. Nothing. 

She’s all bark bills, no bite laws.

2/ ‘Risky’ players are getting flushed out.

The crypto market is one big game of “liquidation dominoes” right now. 

Just pretend there are 4 players:

• Player A – takes HUGE risks.

• Player B – takes big risks.

• Player C – takes small risks.

• Player D – takes no risk.

In this case, the risk is ‘leverage trading’. Or borrowing money, to get more money, to maximize gains.

And what we’re seeing is Player A takes on a ton of risk (50x-100x leverage), then prices drop, and they get liquidated. 

The liquidations drive prices down even more. 

Now, Player B (another trader taking on small risk, 5-10x leverage) is at risk. They panic, sell what they can, and do everything in their power to avoid getting liquidated. 

The general market slides, and other traders start offloading their assets too. Suddenly, it’s an avalanche of selling.

Now Player C (who was only taking a small risk using 1-2x leverage) and Player D (who was taking NO risk) are suddenly in trouble and start to panic. 

Some people HODL. More people sell. Prices end up dropping more.

This is how liquidation dominos happen in crypto. 

So, should you be worried? No. It’s painful, but it’s necessary. 

And it happens during every rally. Just check out all the drawbacks during the bull run in 2021: 

Crypto is a high-stakes game. Fortunes can be built (and lost) overnight, which is why it attracts the most brilliant engineers & investors… and the most brilliant scammers & risk-takers too. 

It’s like a mechanical bull at a bar - it’s all fun and games ‘til the drunk girl starts projectile puking everywhere. 

For crypto to work, reckless players need to get rekt. You need the game theory to reward long-term believers and punish short-term reckless risk-takers. 

Even if it causes prices to go down for a while, it’s necessary for long-term survival.

So, for the love of God… stop doom-scrolling Twitter, stop refreshing crypto prices, and give your brain (and thumb) a break!

GRAPH OF THE DAY: 11 STRAIGHT WEEKS OF INFLOWS 📊

The latest results from CoinShare’s weekly report are in…

Digital asset investment products saw $43M in inflows last week. 

(PSA: Everyone remain calm. That’s now 11 straight weeks of inflows)!

Here’s everything you need to know about the report:

• BTC led the way for cryptocurrencies with $20M in total inflows. That brings its year-to-date total to $1.7B.

• ETH saw $10M in inflows. That’s now 6 straight weeks of inflows, totaling $140M in that span.

• SOL and AVAX saw another week of inflows. Even institutional investors are lovin’ the altcoins!

• On top of that, blockchain equities saw $126M. It’s the largest week of inflows on record. Period.

Big week. Big results. We’ll see if the momentum continues for another week.

PRESENTING… THE MILK ROAD AWARD NOMINEES 🏆

Ladies & gents, the stage is set…

The spotlights are on…

The digital red carpet has been rolled out…

The nominees have been chosen… 

It’s showtime - the Milk Road Awards. 

You can check out the finalists and submit your votes here. 

P.S. - you must be subscribed to Milk Road to enter!

BITE-SIZED COOKIES FOR THE ROAD 🍪

Phemex, a top spot and derivatives exchange, is launching PT Staking. The platform allocates 0.01% of the daily USDT contract trading volume to repurchase PT and distributes it as staking rewards to all vePT holders.*

FIFA is launching NFTs that give holders a chance to secure World Cup finals tickets. Futbol. NFTs. World Cup Final. What’s not to love? Plus it shows the power of NFTs - sure, you can “click-save-as” the image, but you can’t copy the perks. 

Google will update its crypto ad policy starting on Jan. 29, 2024. The new policy will allow “crypto coin trusts” (i.e. funds that invest in cryptocurrencies) to serve ads in the U.S. upon completing a “certification process” and registering with the SEC.

Binance’s spot trading market share has plummeted from 55% → 30% over the last year. From January to September, the exchange’s monthly spot volumes declined by over 70% from $474 billion to $114 billion. Ooof. 

Decrypt signed a letter of intent to merge with Rug Radio. The merger marks the third major crypto media deal in the past month. 

*This is sponsored content

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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.