INSTITUTIONS ARE KICKING THE CRYPTO DOOR DOWN!

Hello, fellow crypto fanatics!

Well, the crypto market has once again blown away all expectations.

This week, Bitcoin has soared by more than 18% to secure brand-new yearly highs 📈 🥳!

So, kick back on this awesome Saturday, grab your coffee, and let's take a look at all of the positive signals to take away from last week 🎯!

Recognise - Institutions Are Not Just Knocking on Crypto's Door, They Are Kicking It Down 🚪!
Respond - What is Crypto Staking? And How Does it Make You Money 🥩?
Research - A Contender for DeFi 2.0?: New Crypto to Watch 👀

RECOGNISE - INSTITUTIONS ARE NOT JUST KNOCKING ON CRYPTO'S DOOR, THEY ARE KICKING IT DOWN 🚪!

I won't lie - with Bitcoin closing below the 200-week MA average last week - I was preparing for far more downside 😔💔.

A sentiment I think I shared in last week's Issue 🗞️.

So, you can imagine my surprise when on Tuesday, Bitcoin sliced through all of the bearish confluences that could have turned the price lower 📉 :

50-day moving average
200-week moving average
Resistance zone at $27,500
Descending 4H trend line

And basically stuck two fingers up to all of the FUD that has been plaguing the markets since mid-April 🖕🐻🌧️.

The one thing that I did mention in last's week's newsletter was that the S&P 500 had just posted a two-year high, which - for me - suggested that there was still an appetite to invest in risk-on assets such as crypto.

And we clearly saw that last week. But, why exactly did Bitcoin increase by over 18%?

Two words - FINANCIAL INSTITUTIONS 💼💰

Here is the timeline of key signals that I took away this week:

Friday 16th June - BlackRock ETF. Last Friday, BlackRock, the largest asset manager in the world kicked things off by submitting an application for a Bitcoin Spot ETF. Why did this lift the market? Well, many have tried to create a Bitcoin ETF in the past, but BlackRock has never tried. And with a hit rate of 546 for 547, the market believes that the odds of it getting approved are high ⚫🚀.
Tuesday 20th June - Fidelity, Schwab, and Citadel. A brand new exchange, called EDX Markets, launched on Tuesday and it is backed by an institutional-heavy lineup - including the leader of the World Economic Forum, Fidelity, and Citadel! Now, I wouldn't trust Schwab as far as I could throw him, but what an endorsement for crypto!
Tuesday 20th June - Deutsche Bank. The $1.4 trillion investment bank applied for a license in Germany to operate as a crypto custodian. Crypto is coming to Germany 🏦💱!
Wednesday 21st June - Federal Reserve. On Wednesday the Fed Chair, Jerome Powell, blew the crypto community away after he said that cryptocurrencies, like Bitcoin, have "staying power" AND that the Fed sees "stablecoins as a form of money." Yep, talk about a U-turn 🔄!
Thursday 22nd June - Valkyrie. And then finally, hot on the heels of BlackRock, the financial services firm, Valkyrie, applied for another Bitcoin Spot ETF, with the ticker symbol "BRRR" - a subtle hint to the money printer joke associated with Central Banks (which is a brilliant touch).

So, with all of that institutional adoption, it's not surprising that Bitcoin is now currently sitting above $30,000 🤝.

And it now means that I'm looking at a whole host of new technical things as we head into a brand new week:

Bitcoin has moved higher in 3 distinct short movements since the start of the year: 11th-20th Jan, 12th-17th Mar, and now 16th-21st Jun - so, I'll be looking to see if the pattern continues to repeat - which could mean we see a bullish flag start to form before price pushes higher once more to create a local top (see chart below) 📈🏳️.
Resistance zone at $31,000 - price needs to close above this level on the daily timeframe to move higher
Daily RSI has just tipped into oversold so the market is becoming overstretched but, remember, this doesn't necessarily we will see price pullback
DXY is at a zone of key support - a bounce higher will likely mean Bitcoin pulls back, but, if support is lost, Bitcoin will move higher

It's interesting that after such FUD brought on by the SEC filing charges against Coinbase and Binance, so many financial institutions took the opportunity to start showing their hands 😱💼.

But, the important thing is that we take note of those hands as they are laid out in front of us ✍️.

One thing to take away from this week?

Financial institutions are still interested in crypto (regardless of what mainstream media might suggest) 🌐📺.

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RESPOND - WHAT IS CRYPTO STAKING? AND HOW DOES IT MAKE YOU MONEY 🥩?

Before diving in I first want to thank @brankogrbovic for suggesting this as a topic. It was a brilliant suggestion 😊.

Cryptocurrency staking is a huge part of the crypto industry. But it's a topic that can often seem confusing. And that's a shame because it can offer many opportunities.

But it's not surprising that many are put off - it's another sector of the crypto industry that is littered with jargon.

What is staking 🤔?

So, starting off with the correct technical definition - staking is a process that stems from proof-of-stake blockchains.

It involves locking up native cryptocurrency coins, such as ETH, in the associated proof-of-stake blockchain (Ethereum), to help secure the network 🔒.

In return for locking up coins, you can earn a reward 💰.

Now you might be wondering, "hang on, does this mean I have to actually do something to secure the network?"

And the answer is - not really.

While some may want to take on an active role in securing a blockchain network - which involves setting up a validator node and helping to check transactions - the majority of us (me included) just want to access the passive rewards that are on offer.

And we can do that.

Thanks to a whole host of different staking platforms, we can deposit cryptocurrencies and those cryptocurrencies can then be staked on our behalf. We then receive a percentage of all rewards.

These rewards are usually described as an annual percentage yield (APY) and come from the block rewards and transaction fees that are distributed by each blockchain.

That's how you can make 'extra money' from staking 💸.

Where can you go to stake?

Where you go to stake a cryptocurrency depends on the blockchain involved and whether or not you favour ease or self-custody.

For self-custody, those wishing to stake typically need to complete the process through a crypto wallet that is native to the ecosystem.

For example, those wishing to stake SOL in the Solana blockchain typically delegate SOL coins to validators through the SolFlare wallet.

In comparison, those wishing to stake AVAX in the Avalanche blockchain typically delegate AVAX coins to validators through the Avalanche Wallet 🌐.

But then for those looking for pure ease, most cryptocurrency exchanges, crypto lending platforms, and other centralised websites offer staking products that allow investors to access the same rewards.

The key difference 🔑?

Staking cryptocurrencies through centralised platforms means that you are not technically in control of your assets anymore.

If the platform goes sideways, your crypto assets could go with it ⚠️.

What are the risks of staking?

Based on what I know, staking cryptos in a blockchain comes with 2 key risks: 1) lock-up periods and 2) slashing risk.

Lock-up periods. There are sometimes set periods that coins need to be locked up for. Therefore, those staking need to be okay with leaving assets locked inside the blockchain for that set period. If the price of that crypto changes (whether positively or negatively) you will not be able to sell while staking ⏳.
Slashing. Staking ensures that those operating a blockchain have some "skin in the game". If someone that is staking cryptos acts maliciously towards the blockchain, such as checking transactions incorrectly, that person can be punished through a process known as slashing. This is when a portion of their staked amount gets burned. So, if you delegate coins to a validator who then gets slashed, a portion of your coins will also get burned. This risk can be negated by taking the time to choose the right validator 🔥.

So, with those key risks in mind, is staking worth it?

Well, it allows you to put idle cryptos to work AND it helps you to support blockchain ecosystems.

So, yes, staking might be worth looking into more if you are willing to handle the risks of slashing and can accommodate any associated lock-up periods ⚖️.

Oh! And don't get confused between staking and DeFi staking - which is a whole other ball game and perhaps one that I'll cover in another newsletter if people are interested 😉📰.

RESEARCH - A CONTENDER FOR DEFI 2.0?: NEW CRYPTO TO WATCH

As we ebb out of crypto winter (I can feel my feet beginning to thaw) ❄️, decentralised finance (DeFi) continues to be a sector that catches my attention.

The sector of DeFi first exploded in 2020 - the DeFi Summer of 2020 as it's more affectionately known ☀️.

The power of DeFi was thrust onto the world, which led to the total value locked within the sector increasing to over $180 billion.

Unfortunately, as crypto winter set in, a lot of that value exited decentralised finance applications so that funds could be sheltered elsewhere.

But as we can see on the TVL chart below - it looks as though the bleeding from DeFi may have stopped and a market bottom may have been found 📉📈.

TVL has been hovering around the $60 billion level for the past 12 months now - which is extremely exciting - because it could mean we are nearing the start of DeFi Summer 2.0 🎉☀️.

But gaining exposure to this sector of the crypto industry is no easy feat. There are a lot of extremely poor projects with no clear direction and dodgy tokenomics. A lot is often promised and little is often delivered.

But one DeFi project that I think bucks that trend and one that appears to be gaining traction is Frax Finance.

Frax Finance is a DeFi protocol that is primarily focused on the development of a decentralised stablecoin. But it has now expanded well beyond that and is carving out a dominant position within the sector.

Its core product is FRAX, a collateral, and algorithmically-backed stablecoin that aims to improve upon the failings of stablecoins that are either 100% collateral-backed or 100% algorithmically backed. And it appears to have garnered attention 👥💪!

It is currently the 6th most used stablecoin after USDT, USDC, DAI, BUSD, and TUSD 6️⃣📊.

And alongside its hybrid stablecoin - which could be revolutionary on its own inside the DeFi sector - the protocol now also offers a swap function, a lending protocol, and staking services.

But that's not all. What really caught my attention upon researching this project was that the Frax Protocol owns a large percentage of CRV tokens.

"Now, what the heck are they?", I can hear you ask 🤔❓.

Well, CRV tokens are native to a protocol called Curve Finance which has become the dominant, go-to, platform for those wishing to swap stablecoins.

And to gain leverage within that stablecoin ecosystem, you need a lot of CRV tokens - which Frax Finance has been continually accumulating.

So, not only has Frax Finance developed a suite of products that are unique, useful, and interoperable, but it has also been cleverly carving out its own dominating position within the space.

So, if you are looking to dip your toe into the DeFi liquidity pool (excuse the pun), remember that there are risks involved, but Frax Finance's native token - FXS - might be one to dig into a little further 💦⛱️💰 .

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And with that small plug, that wraps up this week's 80/20 newsletter.

As always, thank you so much for subscribing, and if you ever have any thoughts, or suggestions or would like a particular topic covered, ping me an email or a message on socials any time 🙌.

Have a great weekend and I'll see you for the next one!