May 16, 2021
Crypto’s one-man show
Elon Musk almost single-handedly tanked the crypto market last week. What happened to democratizing finance?
Re-sharing below the latest edition of #Web3 Weekly, my regular newsletter about decentralization. If you’d like to get it in your inbox every Sunday, subscribe here.
One person all but single-handedly tanked crypto markets last week. That’s a big problem, even more troublesome than the decline in token prices itself.
A quick summary of the damage: Global crypto market cap showed a weekly decline of 9% to $2.25 trillion as of late Saturday. Leading the way lower were bitcoin (off 19%) and dogecoin (off 17%), according to CoinMarketCap data.
Enter Elon Musk. DOGE’s woes started right after the billionaire’s gig hosting Saturday Night Live on May 8, which included a joke about DOGE being “a hustle.” This offended fans greatly, to say the least. Then Musk tweeted on Wednesday that Tesla would stop accepting BTC as payment for its vehicles due to environmental concerns, which pushed BTC lower.
Anyone who’s been around the crypto space for more than 20 minutes knows it’s volatile, so a pullback in prices is no big deal and, frankly, probably temporary. But for such a selloff to happen in this particular way, at the whim of just one uber-rich guy, is a really bad look for the industry.
A big part of crypto’s promise is its potential to democratize finance for everyone. This Musk-driven selloff was the exact opposite. It supports the impression that the crypto market is “thin” and easily manipulated. This just isn’t how a Serious Asset Class™️ is supposed to work, period.
Hopefully, the market will become less susceptible to such episodes as participation continues to broaden over time. There have been so many announcements lately of planned investment by Wall Street institutions and new integrations of crypto into existing financial platforms that it’s hard to imagine the trend reversing on a dime. But it seems we’ll have to keep an eye out in the meantime while all that new stuff is actually being implemented.
Some quick disclosures and disclaimers: I’m long BTC and wouldn’t touch DOGE with a 100-foot pole. Nothing in this newsletter is intended as financial advice. Please, please, please do your own research before risking any money. Yadda yadda yadda.
The week’s other news:
- Ether’s valuation topped $500 billion. The world’s second-largest token was a notable exception to the week’s broader crypto selloff. Its valuation is now greater than those of of J.P. Morgan and Visa, CoinDesk reports. Separately, Ethereum founder Vitalik Buterin donated $60 million to charity from sales of several meme coins.
- Registration is open for Consensus 2021. The popular conference will take place virtually for the second year in a row. It’s slated for May 24–27.
- Tether disclosed details about its reserves for the first time. Almost half the popular stablecoin’s backing consists of unspecified commercial paper. Hmmmm…
- Coinbase announced its first quarterly earnings as a public company. The exchange posted first-quarter net income of $771 million, up more than twentyfold from a year ago. Yowza.
- U.S. authorities are investigating Binance. Both the Internal Revenue Service and the Department of Justice are looking into possible illicit activity on the exchange, Bloomberg News reports.
- EBay opened to sales of non-fungible tokens. The e-commerce giant is the first mainstream tech platform to enable NFT features alongside its other offerings for users.
- Brave unveieled new features. The browser maker said it is adding support for websites served via blockchain using .crypto domains. Separately, Brave’s chief scientist unveiled also unveiled new research into using machine learning to protect user privacy.
- Diem is coming to the U.S. The Facebook-backed stablecoin, formerly known as Libra, said Wednesday it has withdrawn its application for a Swiss payment license and will instead shift its operations to the United States. The Diem token’s planned implementation is shaping up very differently than the controversial initial idea for Libra, according to CNBC International.
- China’s digital yuan is getting mixed reviews from early users, according to Bloomberg News.
- On a happier note, China landed its first rover on Mars. The vehicle, dubbed Zhurong, reached the Red Planet on Friday.
- America’s Colonial Pipeline restarted after a painful ransomware attack. The oil and gas conduit’s operators paid $5 million in crypto to Eastern European hackers to resume operations.
- There’s going to be a bitcoin-sponsored car in the Indianapolis 500 this year. Bitcoiner Jack Mallers, who’s organizing a community-based donor campaign to fund the race entry, says 70% of the money raised will go toward supporting open-source development of Bitcoin software.
That’s it for now. Thanks for spending some time with the newsletter today! A full revision history of it, including earlier drafts, is available here if you’re interested. If you’d like to get updates like this in your inbox every Sunday, please join our email list here.
