Bitcoin looks beyond the cult
In today’s edition, Bitcoin BFF Fidelity, and ETHW tanks?
Good morning! Welcome to The Daily Moon. Crypto messiah Sam Bankman-Fried is at it again. His crypto exchange FTX is the frontrunner to buy out bankrupt crypto lender Voyager. Guess SBF’s donned the white knight avatar to “save” crypto.
Moving on, it’s a brand new week. Today we talk about Fidelity’s BTC trading plan, and Ethereum PoW gets off to a rocky start.
The markets absorbed the Merge impact. Bitcoin was just above $20,000 while Ethereum was at $1,450 levels. Nasdaq fell on recession fears. Back home, Sensex and Nifty crashed on a selloff across sectors.
Image by Petre Barlea from Pixabay
Fidelity And Bitcoin Are Going Public
Bitcoin love always existed. But Fidelity is ready to make it public. After dabbling with crypto for eight years, the company wants to launch Bitcoin trading for retail investors.
The investment firm was, let’s say, crypto curious for the past decade. It even began bitcoin mining in 2014. But the attraction grew, it added crypto products to its pie of investments. And now it’s out. Announcing to the world that you can add Bitcoin to your retirement savings kitty.
It’s a big deal. Not just because mainstream firms are cautious about crypto, but also because it gives a pseudo-legal status to Bitcoin. Regulators across the world are undecided, but large finance companies are making the choice for them.
And the fun part is that it’s not unrequited love. Crypto firms want to become banks and finance companies want to offer crypto trading. For instance, while Fidelity’s en route to offer Bitcoin trades, US-based crypto trading firm Abra will launch a bank.
Why is crypto a must-have?
The markets are volatile. Even if you’ve invested $10,000 across stocks and bonds, there’s no guarantee of returns. The crypto entry is no coincidence. Here’s why:
Nasdaq is down ~26% since the beginning of the year.
Bond market returns are down ~17% since January.
Now the idea is to diversify. The more you spread the risks, the better the chances of gains.
That’s exactly what prompted the OGs of finance to move to crypto. Fidelity entered crypto in 2018 when it launched a digital assets vertical. Through a partnership with crypto exchange Coinbase, Fidelity customers can also view the balance of their digital assets.
Since then, there’s been more progress. Just last week, Fidelity Digital Assets backed a new crypto exchange EDX Markets. This was just days after investment behemoth BlackRock made crypto available to its institutional investors via Coinbase.
Fidelity has 34.4 million brokerage accounts. Bitcoin trading on its platform is a reassurance for retail clients who were crypto-shy because of regulatory scrutiny.
What’s in it for the crypto market?
That’s an easy one. More participation. When there are more buyers, there’ll be more crypto tokens generated. Bitcoin has a finite supply, 21 million to be precise. After that, you’ll just trade your Bitcoin with someone else. Higher demand for Bitcoin will boost the crypto’s price.
Also, since regulators such as the US SEC haven’t been too kind to crypto, this is another path to get customers. Fidelity, for example, had tried to launch a spot Bitcoin ETF, but the SEC rejected its proposal.
How does it affect you?
When more institutions offer crypto among their investment options, it gives some legitimacy to the tokens. After all, prices don’t move if investors don’t trade.
It is good news for job-seekers as well. Fidelity plans to double its headcount in its digital assets vertical. Unlike crypto companies that may find it tough to weather market risks, large financial institutions have a backup in other assets. So this could be a “safer” employment option for candidates who want to work in crypto.
Increased competition will motivate financial institutions to offer better returns to attract and retain clients. Abra, for example, will open crypto-yield accounts where you can earn annual returns from your crypto deposits. Net-net, you have the potential to earn more. It’s going to be a busy season ahead.
Fork-ing Hard Work for ETHW
Ethereum’s Merge went down well, but not so much for the handful of miners who want to keep the proof-of-work blockchain alive. Things didn’t quite go as planned with ETH PoW (native token ETHW), which was supposed to go live 24 hours after the Merge.
What happened?
To begin with, users reported error messages trying to access the new Chain ID for ETHW. A chain ID points to a unique network, and ETH PoW needed a new ID to separate data from its digital transactions from that of the proof-of-stake chain. The chain ID that ETH PoW took to separate from the original ETH network was already taken. Result? Chaos.
Where does it go from here?
Most crypto exchanges have kept an arm’s length from the forked Ethereum. Only a handful of exchanges, the most notable being FTX, have listed ETHW so far. The newly forked crypto soared shortly after the Merge on Thursday. But fell more than 70% in a few hours.
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Who are we? There is a lot happening in our world. Everything has layers, and each layer has to be carefully peeled so you, the reader, know how the world of money is changing every day. That’s our promise. Help you unpeel the onions, which are the public markets in the US, India, and crypto, so that you know just a little more.