Feb 22nd, 2021: Watch Yo Coin

With great volatility comes great…liquidation. The Markets took a dive today and over $25 mil of ETH loans were liquidated. Plus, China continues to make forward progress toward a CBDC, and Pat and Amy debate what exactly billion dollar crypto inflows to exchanges mean.

Automatic Transcript

Amy 00:00:00 Hello, and welcome to the DeFi daily, a 10 minute or less defiant crypto update. I’m Amy here with Pat and today is Monday, February 22nd, 2021.
Pat 00:00:09 Coin is taking a hit, Oh my God. What a day on the Marcus? Um, you know, for anyone that’s been in crypto for a while, they probably don’t worry too much about this. Like I, you know, I’ve been in crypto a long time and plus we’ve seen a 398% gains Oh, year, year to date. So you know what, not going to worry about it, but for everyone else, who’s new to it. Or perhaps people who bought in if $58,000 CDA dropped down to a $10,000 drop in one day, the, the low today was 47,000. See the $10,000 drop. Uh, it can be pretty shocking, but I’ll tell you what everyone bear with us the world is okay. Everything’s okay. As long as you didn’t take out a bunch of loans and, uh, like people on, on Reddit did to buy crypto, you should be just fine.
Pat 00:00:52 So trying to avoid that. So a Bitcoin is down $3,000 at this point, it’s down to 54, 54,002 55, uh, which is up from before. So, so that’s good rebound a little bit. Ethereum’s down to a 1781, down $155. Everything across the board is down. It was a, it was a bloodletting on the, uh, the market today. Uh, Cardona is a one exception. It’s a little bit up as well as for some reason, XRP. And I’ve been thinking about this because it pisses me off. The XRP is up every day. Uh, not because like, I don’t hate XRP. That’s not my, my view of the whole world here, but it, it does annoy me very deeply that it’s, it’s been actually counter like counter correlated with Reza crypto market. And I’ll tell you why. I think it is, uh, it is my opinion that it is because, uh, it is not tradable right now.
Pat 00:01:43 So I’ve thought about it. I was thinking about it. It was bugging me. And then I went and I tried the other day. I tried to sell some XRP, uh, cause I, I was decidedly a bag holder and I was unable to do it because it was so hard to find exchange where you could sell it. So, so it occurred to me that the reason we’re seeing extra P D correlated from the rest of the markets is purely because of liquidity. If you can’t sell it then. And like on the one or two exchanges that still support it, you know, large exchanges, uh, you know, you can do these really targeted attacks. The, the actual XRP people and part of the XOP strategy is to do buybacks. That was a whole stated goal of their entire of their entire mentality is at different points to do buybacks. So if the XRP group is buying back and you can’t buy it anyways, like you literally can’t go and buy XRP right now, um, that it makes sense. Why is D correlated? But besides that, everything’s there. All right, sorry about that, Amy. I just went off on a tangent because I was annoyed about something
Amy 00:02:40 That’s okay. I just want to just say the deep ideally is sponsored by bit wave. That wave is a digital asset management platform that does tax tracking for crypto Antifa, as well as gain loss, reporting accounting and crypto invoicing. You can check them out online at fit. We’ve got IO or on Twitter at FitLife platform. So a person, the news 10 cent back we bank at ant financial backed. My bank will reportedly be the first private banks to join China’s digital wan project.
Pat 00:03:11 You know, aunt aunt is super, um, is a big company that is tightly tied in with the, the Chinese, uh, you know, Chinese government and the Apollo Bureau and everything. So it’s not surprising that this was the direction is going. I get frustrated. I get frustrated, not because of what’s happening in China, but because of what is not happening in the U S it continues to like, and I can’t decide if this is the way it should be or not. I mean, at the end of the day, when you have a regulated, essentially run economy with kind of like these nepotistic, uh, relationships between between companies and the government, maybe it makes sense that in certain cases you can actually move faster. Like maybe it does in fact, make sense that China should be moving faster because they can pick a vendor without a vendor process.
Pat 00:03:56 Like in the U S the, the process to pick a bank to partner with, to launch a us digital currency would be a, uh, I don’t know, the right way to be gargantuan, like to put it very mildly. Um, but that same process in China was probably a much more brutal but efficient process. So maybe this is the way it has to be. And I just need to give up on, on expecting great things out of America and the ability for us to move, move fast on this, but it just continues to him. And we were like, we’re not even to the starting gate, like the U S the, the, the CDBC for the Yuan is, is already being trialed with customers. The us doesn’t even like, I think there’s been a couple pilot projects and that’s about it. That to me is what’s most frustrating. That to me is what’s unacceptable excusable for, uh, for a major, uh, country. So I know that they’re working on, I know there’s people in the treasury department and the office of the controller, a currency OCC, but nothing has gotten anywhere close to that. It just continues to be very frustrating. Good on China. This is ultimately going to be incredibly good for their economy.
Amy 00:05:00 Yep, definitely. So next, uh, 25 million in DeFi loans were liquidated as ether prices fell.
Pat 00:05:08 Let this be a, a really harsh lesson to a lot of people who are new into crypto. So, so you have to remember like people. And so there’s two parts of this story, right? So one is that there was an enormous, uh, yesterday there was, or today there’s an enormous amount of liquidation yesterday. The story was that there was a $7.5 billion of crypto lending, which is amazing. I mean, the TVL has gone through the roof. Crypto lending has gone through the roof. All this stuff is out of control. The corollary of that is you probably have a lot of people putting money in who are not used to it. There’s two parts of it. One is there’s probably a lot people putting money into like borrowing money against crypto assets that were not used to it. And it’s not the end of the day. I mean, a liquidation like this, you take a 10% haircut plus whatever, you know, whatever they had to sell to, to get you back in, in a good standing, you know, that really sucks, but, uh, it’s, you know, sort of the price you pay.
Pat 00:05:56 But first of all, there’s quite a lot of people doing this who are just not used to this yet. I’m sorry, everyone that sucks. The other side though, is the tooling around. This really is not good right now. It is really hard to do liquidation monitoring. Like I have a little bit of like loans out just for fun. And I actually have no idea what my liquidation rate is right now. I honestly could not tell you. I have, I have no idea, um, how close I am to liquidation. And that’s because, you know, the, you know, I, I think I did that through an ad. Doesn’t get surface up like zapper fee and a few of the other tools don’t really surface the liquidation, uh, percentages or probabilities, or I guess the collateral requirements. And so it’s, it kind of is slipping out. It’s hard to kind of keep an eye on.
Pat 00:06:38 So I think one thing that I would say that would be good for the overall market would be if, if we would go, and if some of the tools that are acting as like the middleman for, for these products, like, like zapper fee, they really need to figure out how to, first of all, because none of the DAP wallets take your email address right now, none of them take your phone number. That’s a good thing. There is the next step of this, which is they need to take your email address so that they can provide value, add services, like, like alerting you to liquidation and Hey, that’s a great way they can start making money because right now they’re really not making a lot of money, maybe a little bit on some exchanges here and there, but, but for the most part, not a lot. So I’m, I’m looking for a soon future where there is better tooling around liquidation monitoring.
Amy 00:07:22 Yep. Makes sense. All right. So next in the news blockchain data showed investors moving billions of dollars worth of Bitcoin onto exchanges, ostensibly preparing for a quick sale, which could mean some more down sell pressure.
Pat 00:07:40 I don’t, I don’t know, I guess, is that, is that the only way to, I, I spent some time thinking about this, is that the only way to interpret money moving on to exchanges is down movement. I think that it’s not, I think it’s, and I, and in fact, I don’t even think it’s the primary interpretation, I would say. Yeah. I would say the primary interpretation would be rebalancing portfolios. It could be, maybe I could probably be convinced of either way on this, but the end of the day, like, I don’t think if you’ve been holding all this time, you’re not going to get the 57,000. You’re not going to start dumping a theory. You’re not going to start dumping your Bitcoin right now. Uh, I don’t think, I think there’s a lot more likely than if you see, if you are in crypto, to the extent where you have millions, billions of dollars in crypto, then what you would probably want to do is start to readjust your balances.
Pat 00:08:33 I mean, right now Bitcoin’s at a high, it’s a total total market cap high in terms of market dominance, it’s at a high it’s at a physical high. It is all these other things. It’s a great time to do some rebalancing into Ethereum or Zcash or any other coins that are out there. Uh, I think that that could be what people are doing right now. Is it, is that there, is it more that they’re doing a primarily rebalancing or that they’re dumping Bitcoin profit taking either way? It probably is. Does it probably does not bode well for the Bitcoin price itself. So any move out of Bitcoin to other assets is going to be bad for Bitcoin, but good for the other assets. So, I mean, maybe, maybe we go with this in terms of total, total market cap for all crypto stays relatively consistent, but the, uh, but Bitcoin goes down one of the remember, so we, we talked about yesterday, um, the market cap for Bitcoin crossed a trillion dollars over the weekend.
Pat 00:09:21 I actually hadn’t had the numbers by what looked at it before we got on this call. The market cap for all crypto is sitting pretty at 1.7 billion, a trillion dollars. I can’t even say it. It doesn’t even like, I can’t believe it is, is spectacular where we are sitting on this. I can’t even believe it. I can’t even believe it myself. Um, yeah. All right. Well, Hey, any, any questions from the audience? I mean, we’re, we’re recording on clubhouse for the first time. This is a, or I guess second time now, this is pretty fun. Uh, we got a few people on, uh, anyone, any, any questions before, before we started recording, one of the people listening was asking us about, uh, Zcash. So I was going to talk about it a little bit briefly, just so everyone knows some of the background you’re over the, over the weekend.
Pat 00:10:05 We talk deeply about Bitcoin and the Bitcoin cash history and Ethereum, and how that all forked off, uh, Z cash is a really funny little project that is actually, it is, it is a fork of Bitcoin. It’s actually very, very similar to Bitcoin in a lot of ways, but it is a privacy centric coin. So we don’t have time to go super deep or technical or anything like that. But I did want to share one thing that I was talking about with his audience member, which was that Z cash is a great investment right now with one really big caveat. So I like Z cash. I own some Z cash. I think it’s, it fulfills one of the major use cases for crypto, which is privacy centrism. And it does it really well. Z cash to me has the best privacy mechanism of any of the coins that are out there.
Pat 00:10:45 Um, by personal opinion, obviously that’s debatable, but that’s my opinion. The problem is what’s happening right now. And, and I think you can look at like what happened with Donald Trump? And I know that’s a funny analogy, but like when they de platform Donald Trump, I stopped hearing about him, period. It was remarkable how quickly he went from being in the news every five minutes to being a non-existent. And I don’t know what there’s a feedback, or like, I don’t know exactly what happened, but something happened that changed the dynamic of all of that. And somebody said, it’s so, so deep platform is an incredibly powerful mechanism in our modern day and age, privacy coins have been getting de platformed, and there’s not a lot of guidance essentially in the us. The us government is putting pressure on exchanges, not to support coins that do not have full public ledgers.
Pat 00:11:36 The reason is that essentially they, it is more or less untraceable that goes from a narrow Z cash. All of these, even though I like some more than the others at the end of the day, they all are essentially untraceable. And so there’s a huge issue. So there is a big issue when you saw there was that treasury requests that sort of like RFP that went out the other day, the other month, it was asking for people’s thoughts on if we had to require AML for every individual address on the blockchain. Well, take that like that’s the most extreme, or like the most minimal version of this, but the end of the day, like you can’t even, you can’t do anything with Z cash. You can’t tell anything about it if you set it up correctly. So that’s a huge issue for exchanges that are out there that might not want to get, especially someone like Coinbase that might not want to be, uh, bringing forward the ire of the sec today, uh, you know, six months before their, before their IPO.
Pat 00:12:27 So you’re going to see this. So the privacy coins are uniquely susceptible to D platform issues. They’re pretty much don’t affect any of the other major coins that are out there. So, and th th because he cashed his own protocol, you can’t really go to Dexis. Like there’s not a great Z cash or Z cash that gets onto a theorem. There’s not a lot of stuff around there, and you lose a lot of the privacy benefits when you do that anyways. So there’s not great. There’s not great, uh, uh, deck support for them. They are getting D platform. So you have this counterparty liquidation, risk, liquidity risk on those coins that you probably just, aren’t going to see as many gains as you possibly could for other coins, but all have been said, you certainly might. And honestly, if the world keeps going the way it is, there’s always good chances that privacy becomes a more important, uh, part of the equation. So
Amy 00:13:12 That’s it. All right. Well, Pat, I think that’ll do it for today then. That’s it? Well, thank you everyone for listening to the DeFi daily. All right. Take it easy.

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