• Milk Road
  • Posts
  • đŸ„› 2 reasons prices crashed... đŸ€Ź

đŸ„› 2 reasons prices crashed... đŸ€Ź

PLUS: Breaking down crypto's new tax rule... 👀

Today’s edition is brought to you by Spotlight by Vincent – a weekly newsletter that brings you the latest news and insights from the world of investing in alts.

GM. This is Milk Road, the newsletter that treats crypto news like a speed dating round - fast, fun, and to the point.

Here’s what we got for you today:

  • WTF happened yesterday?! đŸ€Ź

  • Milkbusters: Breaking down crypto’s new tax rule 🧐

  • Michael Saylor plans to sell $200M in shares to buy more BTC đŸȘ

WTF HAPPENED YESTERDAY?! đŸ€Ź

What a start to the year, huh? 

We’re 3 days in and crypto’s already gone through the whole “we’re back → it’s so over” cycle


So, WTF happened yesterday? A mix of two things


1/ An article predicting all Bitcoin ETFs would get denied went viral.

Matrixport (a crypto financial services platform) published a report about Bitcoin ETFs earlier this week. This was the headline


A day later, they published another report. Except this time, Matrixport was changing up the tune like it was a T-Pain hit single
 

đŸŽ”I can put you in a mansion, somewhere in Wiscaansin đŸŽ”

(Side note: T-Pain’s the only guy who could pull off changing Wisconsin to “Wiscaansin” and still make a banger).

Anyway, here was Matrixport’s headline yesterday: 

Hmmm
 from “approval imminent” → “REJECTED” within 24 hours. 

No sources. No juicy insider info. Just one analyst’s opinion. But it was enough to send fear, uncertainty, and doubt throughout crypto. 

Some people think this could be one of the reasons prices started dropping. And to make things worse


2/ Overleveraged investors got liquidated.

Over the last few weeks, the crypto market’s seen more green than a text chat between two Android users. And when investors see green, they get greedy. 

Now, take that greed, sprinkle some FOMO (Fear Of Missing Out), and whatta ya get
? A crypto degen ready to risk it all.

And these risk-loving, FOMO-injected investors would leverage their first-born kid to get more money to buy crypto if they could.

Unfortunately Luckily, they can’t.

So they turn to leverage trading. Or borrowing money, to maximize gains.

Big leverage (50x-100x) can lead to big gains. But when prices drop, they turn into big pains. 

  • Leveraged positions get liquidated, bringing prices down. 

  • Other investors see prices drop. They panic and start selling their assets. 

  • Prices go lower and more leveraged positions get liquidated. 

Suddenly
 it turns into a “flash crash”. And at one point yesterday, $480M was liquidated within a single hour. 

I repeat. $480M. Gone in 60 minutes. 

Milk Road Take: Flash crashes happen all the time in crypto. They suck, but they’re necessary. 

They flush out all the crap (i.e. greedy, over-leveraged traders) and help reset the markets. 

It’s like when you pump your body with too much late-night McDonald’s. You know that eventually, that dump is coming. 

We’re long-term believers anyway, so no need to panic. We’ll just keep calm and HODL on.

We know that you’re interested in crypto and we are too - but savvy investors know that diversification is key. Boost your returns and lower your risk by expanding your portfolio into other assets like real estate, venture capital, collectibles, and art.

But alternative assets can be opaque and confusing. And the markets move fast.

For the latest news and insights from the world of alternative investing - in crypto and beyond - Vincent’s free weekly newsletter Spotlight has you covered. We do the work of cutting through the noise so you don’t have to.

Find out what you need to know in only a few minutes per week.

And for a deeper-dive, try our weekly real estate and venture-focused newsletters.

Trusted by 125,000+. Direct to your inbox. And free forever.

MILKBUSTERS: BREAKING DOWN CRYPTO’S NEW TAX RULE 🧐

We’re back again with another episode of Milkbusters, where we dive into some of the toughest questions to get you the simple answers.

Today we’re talking about
 the new crypto tax reporting rule in the U.S.

In case you missed it, here’s everything you need to know:

  • Anyone who receives $10,000 or more in cryptocurrency in the course of their “trade or business” must report it to the Internal Revenue Service (IRS) within 15 days.

  • The reports must include names, addresses, Social Security numbers, etc.

  • Failure to report may lead to a felony charge. 

The new reporting rule went into effect on January 1, 2024, and has been causing a frenzy within the crypto community. 

Rightfully so. It isn’t completely clear who this covers, what is considered a “trade or business”, or how to even report it. (Email? Fax? Carrier pigeon?)

To make it worse, talking to the IRS is like talking to a wall. And each year, we need to talk to this wall to pay taxes. 

For all of our non-American readers, this is the convo (and what it’ll look like this year):

IRS: It’s tax season! You know what that means
 time to give us your money. 

Me: How much?

IRS: You’ll figure it out. 

Me: OK. What about this new crypto tax reporting rule? Does it apply to me?

IRS: C’mon man! You’re smart. You’ll figure it out
 

Me: And if I’m wrong?

IRS: Tsk Tsk Tsk. Fines. Maybe jail. We’ll see what the weather’s like that day.

Me: đŸ€ŹđŸ€Ź

Our advice? Talk to a certified tax professional. 

It might cause some headaches and the convo might get a little weird



 but in the end, it’ll likely keep you out of prison!

P.S. - there is one other option
 send us $10K and force The Milk Man's accountant to figure out the reporting rule for you!

BITE-SIZED COOKIES FOR THE ROAD đŸȘ

Michael Saylor plans to sell $216M worth of MicroStrategy shares to buy more BTC. There are 3 certainties in life: death, taxes, and Michael Saylor buying more Bitcoin.

Goldman Sachs eyes authorized partner role for multiple Bitcoin ETFs. Goldman Sachs's involvement would aid high-profile BTC ETF bids from BlackRock and Grayscale.

The U.S. government now holds more than $8B in Bitcoin. Thanks to the recent pump, the U.S. government’s holdings are up from $5B less than three months ago.

Etherscan acquires Solscan to expand blockchain data services. Etherscan plans to integrate useful features across both Etherscan and Solscan.

MILKY MEMES đŸ€Ł

RATE TODAY’S EDITION

What'd you think of today's edition?

Login or Subscribe to participate in polls.

ROADER REVIEW OF THE DAY

VITALIK PIC OF THE DAY

WANT TO SPONSOR THIS NEWSLETTER?

Over 250,000 subscribers are throwing a party, and your brand is invited!

Tap into our network of savvy (and good-looking) crypto & Web3 enthusiasts who are eager to learn and invest.

Your Brand + Our Crypto Clan = Magic Waiting To Happen. RSVP to the party!

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.