The Breakdown

Monday, Coinbase CEO Brian Armstrong published the innocuously titled “Coinbase Is a Mission-Driven Company.” 

While the post talked a lot about Coinbase’s core mission, its real goal seemed to be to make clear Coinbase would not be engaging with any other social or political issues beyond that, and to the extent employees wanted to do so they needed to do it on their own time. 

The reactions were intense, immediate and in many instances, totally opposite. 

In this episode, NLW breaks down the entire social media reaction and the arguments for and against this policy.

DeFi is one of the breakout crypto categories of 2020. Indeed, yield farming and the grand game of “money legos” has been so profitable that many are following every new protocol with rapt attention. 

This is all the more true for projects graced by YFI creator Andre Cronje. So when word got out about a new, pre-release game economy engine called “Eminence,” the DeFi degens took advantage of the permissionless nature of DeFi to pump $16 million or so into EMN. 

What happened next was arguably the first pre-release hack in DeFi’s history. This episode breaks down what happened and what it means for the fledgling field.

Today on the Brief:

• After four weeks down, bitcoin bounces back on suspicions that recent bearishness was overblown
• KuCoin exchange gets hacked for somewhere between $150 million and $280 million
• Jack Dorsey outlines Twitter’s blockchain and bitcoin beliefs during Oslo Freedom Forum appearance

Our main discussion: Digging in to bitcoin’s 64-day run over $10,000

Bitcoin has been above $10,000 for longer than any time in its history. Its volatility is also at recent historic lows. In this episode, NLW puts this in the context of broader market movements and explains why new price floors are self-reinforcing. 

This week’s Long Reads Sunday is a reading of “The Currency Cold War: Four Scenarios” by Jeff Wilsner – part of CoinDesk’s Internet 2030 series. 

In it, Wilsner talks to experts about four scenarios:

• A multi-currency scenario, where exchange is abstracted away via digital wallets
• A China-led scenario
• A U.S.-led scenario
• A bitcoin/non-state currency-led scenario

In addition to reading, NLW gives his take on which scenario is most likely.

On this edition of The Breakdown weekly recap, NLW looks at the fourth painful week for traditional markets in a row. 

He discusses the factors contributing to the trouble, including: 

• A normal correction from too-high valuations
• The return of COVID-19 lockdowns
• The end of easy recovery gains 
• Diminishing likelihood of a stimulus bill
• Election volatility

Sven Henrich is the founder and lead market strategist at NorthmanTrader. Well known for his appearances on CNBC, CNN Business and MarketWatch, Sven is also the host of the Straight Talk podcast. 

In this conversation, he and NLW discuss:

• The ever-weakening economic cycle
• Why the Fed has boxed itself in 
• Why the asset price bubble is contributing to wealth inequality 
• How market capitalization-to-GDP reached all-time highs
• What the election means for markets 

Find our guest online:

Twitter: NorthmanTrader

Website: northmantrader.com

Today on the Brief:

• Initial U.S. jobless claims up to 870,000
• Partial lockdowns begin in earnest in Europe and Israel
• The global demand for American stocks

Our main discussion: Did corporate insiders perfectly time the market top? 

August saw the largest volume of insider selling since 2015, with more than 1000 corporate officers offloading $6.7B in stock. Subsequently, the market has seen a 10% decline since the S&P500 all time high of Sept. 2. What’s more, according to new statistics, insider selling is happening at the fastest pace since 2012. 

The question is: What do these executives know that the rest of the market doesn’t?

Corey Hoffstein is the founder and Chief Investment Officer of Newfound Research LLC, a quantitative research and investment fund. He is also the host of the “Flirting with Models” podcast. 

His most recent research is “Liquidity Cascades: The Coordinated Risk of Uncoordinated Market Participants.” 

In it, he examines three popular narratives about what is driving radical swings in markets, including:

• The increased role of the Fed
• The rise of passive and index investing
• The growth of volatility-correlated strategies 

He finds that, individually, none could explain the radical market shifts we’ve seen. However, when combined, they create a market incentive loop that is causing markets to move and react to exogenous shocks more quickly and aggressively than ever before. 

Find our guest online:

Twitter: @choffstein 

Website: Newfound Research

Today on the Brief:

• Where the digital euro fits in Lagarde’s economic integration plans
• New stablecoin guidance from the OCC
• Mnuchin and Powell head to the Hill

Our main discussion features Marty Bent. 

Marty is the author of one of the best known daily bitcoin newsletters, as well as the host of “Tales From The Crypt” podcast. He also is one of the leaders of Great American Mining, a new project using bitcoin mining to make big energy more efficient and profitable. 

In this discussion, we talk about how bitcoin and big energy are unlikely allies, how that alliance can bring more bitcoin mining back to America, and how it is working to reduce America’s energy dependence. 

Find our guest online:

Twitter: @MartyBent

Twitter: @GAMdotAI

Website: https://gam.ai

Today on the Brief

• Stocks down, dollar up on COVID-19 resurgence fears
• People’s Bank of China says digital yuan needed to fight USD dominance
• 140,000 have claimed UNI tokens
• Judge stops Trump WeChat ban
• Nikola founder resigns

Our main discussion: The FinCEN Files 

The FinCEN Files are a leaked cache of suspicious activity reports filed by banks with the U.S .Financial Crimes Enforcement Network. The more than 2,000 files, representing $2 trillion in transactions, were leaked to BuzzFeed News more than a year ago. BuzzFeed, in turn, shared them with the International Consortium of Investigative Journalists, who then helped distribute them to 108 publications in 88 countries. 

This episode provides an overview of the leaks and explains why they show that, despite lots of PR bluster, banks are happy to file their reports and then keep on banking likely money launderers.