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- đ¨ Milk Road Q1 Recap đ¨
đ¨ Milk Road Q1 Recap đ¨
PLUS: Here's who secured the bag this week
GM. This is Milk Road - the crypto newsletter that gives you the same feeling as when youâd hear the ice cream truck come into your hood and knew you were about to get a Choco Taco.
It's Friday. Let's boogie:
Q1 Recap: 3 takeaways in 3 minutes đ
Funding Friday! đ°
Prices as of 9:00 AM ET
Today's edition is brought to you by CoW Swap, a decentralized exchange that lets you swap tokens on Ethereum & Gnosis at the best rates.
Q1 RECAP: CRYPTO BANKS FALL, OPERATION CHOKE POINT 2.0, & BITCOIN WINS đ
Itâs March 31 - which means Q1 is over. And the end of each quarter in crypto kinda feels like Report Card DayâŚ
You get your grades back, see how well you performed, reflect on what couldâve gone better, and wonder whether your teachers are secretly plotting against you.
Well, this first quarter was a rollercoaster for crypto:
Prices were in the green across the board, with Bitcoin up 70% and ETH up 51% (AKA crypto got good grades)
There were a lot of regulatory crackdowns and lawsuits against the industry and its partners (AKA crypto and its friends got a lot of detention, with some getting expelled)
Just in case you blinked and missed something, weâre coming at ya with The Milk Road Q1 Recap. Here are 3 big takeaways, all in under 3 minutesâŚ
1/ TRADFI SUFFERS, CRYPTO DOES TOO
This year was off to a solid start. Bitcoin was on the up-and-up, Rihanna sang at the Super Bowl, my mom finally learned how FaceTime worksâŚ
But then came the collapse of the three Sâs - Signature, Silvergate, and Silicon Valley Bank.
Each one was a big on-ramp connecting the crypto world to the banking system and made it easy for companies to exchange customersâ digital assets into real dollars.
So what? Now crypto firms have to:
Find new reputable banks to work with. While regulators make it very hard for them to do thatâŚ
Team up with sketchy, unregulated banks. Thatâd be an L for customers.
Buy one of the real-time payment networks that Silvergate/Signature offered. The FDIC is trying to sell Signet (Signature's) right now.
Start their own bank. Kraken already did.
Store their funds overseas. The U.S. could lose out bigtime if this started to happen.
Or rely more heavily on the smaller banks theyâre already partnered with.
The banksâ collapse also kicked off a Blame Game about why exactly they failed.
Was it because they each decided to interact with the crypto space? Or because of the financial system that crypto was designed to replace?
Which brings us toâŚ
2/ OPERATION CHOKE POINT 2.0
All year Iâve been hearing about something called âOperation Choke Point 2.0â. At first, I thought it was a new action movie. Turns out itâs a real thingâŚ
But first, let's talk about the original Operation Choke Point. This was an initiative started by the U.S. government back in 2013 that targeted risky, âfrowned uponâ businesses like online gambling, pawnshops, firearm sellers, tobacco sellers, etc.
It had one goal: find a way to cut these businesses off from the traditional finance system.
How? Coordinate a regulatory attack on the businesses and all their banking partners.
By targeting the banking partners and launching massive investigations, the U.S. government slowly âchoked outâ these risky businessesâ access to the finance system.
Sound familiar?
Fast forward 10 years to today and weâre seeing a lot of similarities. Hereâs what happened in Q1:
Cryptoâs top banking partners - SVB, Silvergate, and Signature - were all shut down or seized by the government.
A Signature Bank board member said he believed it was an âanti-cryptoâ message since the bank wasnât insolvent or in deep financial trouble
Signature Bank was finally sold, but U.S. regulators said its crypto business must be shut down. Crypto clients have until April 5 to close their accounts.
Kraken got sued by the SEC and was forced to shut down its staking services.
Coinbase received a Wells Notice from the SEC for offering unregistered securities.
Binance got sued by the CFTC for offering unregistered futures & options trading .
Paxos got sued by the SEC and was forced to stop issuing its BUSD stablecoin.
In other words, crypto got sent to the Principal's office a bunch this quarter. Except the Principal is the U.S. government and instead of getting detention, you get sued.
The cherry on top? U.S. Senator Elizabeth Warren has just announced sheâs building an âAnti-Crypto Armyâ.
No, this isnât A.I. generated... Mrs. Anti-Crypto posted it herself.
P.S. - Remember how I said sometimes Report Card Day made me wonder if teachers were plotting against me to give me bad grades? (*cough*...all my science teachersâŚ*cough*)
Turns out thatâs exactly whatâs happening with crypto right now.
And even though U.S. regulators say they arenât targeting crypto, here at Milk Road we take actions > words. We arenât alone either...
Cooper & Kirk, the law firm that successfully sued the Federal Reserve, FDIC, and other regulators in Operation Choke Point 1.0, is back again and is claiming that Operation Choke Point 2.0 is happening now - with crypto as the new target.
So buckle up, ladies & gents - it could be a wild couple of months. But the good news throughout it all isâŚ
3/ BITCOIN IS STILL HOLDING STRONG
Bitcoin is finna have its best-performing quarter in 2 years. Donât call it a comebackâŚ
Bitcoin went from $17K â $28K and is up a whopping 70% in Q1. It hasnât performed this well since Q1 2021 (+103%).
Why is it up? A few reasons:
Regular banks teetering made people see why crypto, like BTC, matters.
The Feds printed $300B to help banks that were struggling after SVB fell. Balance sheet increases are good for risk assets like crypto.
Itâs the safe haven within the crypto space. The governmentâs going after every crypto firm. Plus, Bitcoin is the only asset that the SEC doesnât think is a security.
Tether minted $5B worth of its USDT stablecoin in mid-March. Major Tether issuances have been linked to Bitcoin gains.
And the cryptocurrencyâs broader network also has had a "capital-m" Moment this year. Ordinals gave NFTs the best crossover from Ethereum to the Bitcoin blockchain since Jay-Z/Linkin Parkâs collab.
Itâs the first time Bitcoinâs network has been used for something other than purely monetary purposes. Ordinals even have their own OpenSea-like marketplace now, thanks to Magic Eden.
And miners are getting back in the game after a sh*t year in 2022. Mining machines did not go brrr last yearâŚ
Bitcoin miners that survived 2022 made quite a comeback in Q1. With #BTC up 65% YTD, a roaring rise in hashrate soon followed đ
In @coinmetrics SOTN #200, we survey the PoW landscape, drilling into chain splits, shifting pool alliances, eye-watering power rates, & more âď¸ http
â Parker Merritt (@ParkerMerritt)
8:16 PM ⢠Mar 28, 2023
Looks like nature is healing.
But we wanna know - how are YOU feeling after crypto's Q1 performance?
A) Extreme fear - âHelp mommy, Iâm scared!â
B) Fear - Iâm sleeping with the nightlight on during times like these
C) Neutral - call me Switzerland
D) Greed - I ain't scared! I'm still holding & buying more crypto
E) Extreme greed - Fear isnât in my vocab. I feast while others diet.
Reply to this email with your response and we'll pick 2 random Roaders to win $100.
Feeling lost in the crypto maze trying to buy tokens at the best prices?
Well, we found a GPS.
CoW Swap is a decentralized exchange that lets you swap tokens on Ethereum & Gnosis at the best rates.
Hereâs how it works:
CoW Swap aggregates all the prices on DEXs for you. It scans all the prices to find the best bang for your buck.
It finds on-the-fly peer-to-peer trade opportunities. This âCoincidence of Wantsâ cuts out the middleman, so you get an even better price.
Protects your trades from bad actors. CoW shields you from other traders extracting MEV to make sure youâre always safe.
Ready for lower prices, eth-less trading, and a safe way to execute multiple trades at once?
FUNDING FRIDAYđ°
Itâs Funding Friday - this week, $230M+ was raised by crypto companies. Hereâs who secured the bag:
Ledger got $108M to build hardware wallets. Not the heroes we deserve, but the heroes we need.
Fetch.ai got $40M to develop infrastructure for smart, autonomous services. It lets developers build, deploy, and connect smart agents to automate web3 systems.
SO-COL got $1.5M to create a web3 social platform powered by StarkWare. And we ain't talkin' about Tony Stark...
Cega got $5M to build the next evolution in Defi derivatives. It helps investors find safer yields in volatile market conditions.
Check out the full database of companies that have raised money this year, right here.
MILKY MEME đ¤Ł
That's a wrap for today. Meet us on Twitter to talk all about it. Itâs kinda like a family BBQ but better - no screaming kids, awkward photos, or drunk uncles telling weird stories (@MilkRoadDaily)
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Happy Friday - Let's finish this week strong!
â Milk Road (@MilkRoadDaily)
12:53 PM ⢠Mar 31, 2023
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.
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