Why the TikTok Deal is Like Schrodinger’s Cat, Altcoins Plays & the KuCoin Hack #20
Market Meditations | September 28, 2020
Altcoins on my radar, why the TikTok deal is like Schrodinger’s cat and the KuCoin hack.
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Today’s Meditations:
Scan the Week
Altcoins on my Radar This Week
Over $150M Drained in KuCoin Crypto Exchange Hack
Uniswap Becomes First Defi Protocol to Hit $ 2 Billion in Total Value Locked
Bitcoin Balances on Exchanges at 2-Year Low and That May Be a Bullish Sign
Trump Faces New Scrutiny of Personal Finances Weeks Before Vote
Deadly Armenia-Azerbaijan Clashes Unlikely to Cause an Oil Spike, Analysts Say
CFTC Charges Crypto Futures Trading Platform for Failure to Register in the U.S
Why the TikTok Deal is Like Schrodinger’s Cat
Process > Goals
Crypto News
Sept 29. FirmaChain (FCT): Mainnet Launch
Oct 1. Datamine (DAM): Public Beta lLunch
Oct 1 (or later): Zcoin (XZC): StakedXZC product launch
Global News
Sept 28. ECB’s President Lagrade in European Parliament Hearing
Sep 29. BoE’s Governor Bailey Speech
Sep 30. US Presidential Debate and UK GDP (Q2)
Oct 1 and Oct 2. EU Leaders Special Summit
Altcoins on my Radar This Week
SWIPE / TETHER
Four Hour
$1.861 – Key Resistance. Huge upside potential past this level. If we approach this again without breaking $1.639 I expect continuation of the uptrend
$1.639 – Key Structural Level. If we get a 4h close below here we no longer maintain our extremely bullish structure
$1.466 – Danger Zone. Bullish case is completely invalidated
YFI / TETHER
Four Hour
$34221.98 – Key Resistance. Huge upside potential past this level.
$28861.61 – Key Structural Level. We’ve had 1 close below this level that was very quickly bought up and recovered. This could be viewed as a deviation should we continue up from here and a strong bullish argument remains intact.
$26158.73 – Danger Zone. Bullish case is completely invalidated
Over $150M Drained in KuCoin Crypto Exchange Hack. After some large unexpected token transfers on Saturday, the Singapore-headquartered cryptocurrency exchange Kucoin announced they over $150 million of exchange’s funds have been compromised in a security breach. In a livestream, Kucoin’s CEO said that the hacker(s) obtained the private keys to the exchange’s hot wallet and managed to transfer large amounts before Kucoin managed to save what was left in them. User deposits and withdrawals are currently frozen but any losses would be reimbursed by their insurance fund. Kucoin’s cold (offline) wallets were not affected by the hack. Read more
Uniswap Becomes First Defi Protocol to Hit $ 2 Billion in Total Value Locked. More positive numbers coming out of the decentralized finance (DeFi) ecosystem. Growth in (DeFi) doesn’t seem to have stopped yet, with Uniswap becoming the first protocol to cross $2 billion in total value locked (TVL). The ability to farm UNI, the governance token that was airdropped to early users, has been the biggest contributor to the latest jump in TVL. According to DefiPulse, Uniswap currently has $2.06 billion locked up with Maker following closely in second place at $1.95b. The combined TVL of all DeFi protocols currently sits around $11B with Uniswap dominance at 18.58% at the time of writing. Read more
Bitcoin Balances on Exchanges at 2-Year Low and That May Be a Bullish Sign. Bitcoin balances on major exchanges are at its lowest levels since November 2018. Two years ago, crypto was still in the midst of the bear market and numbers reaching this level in the current climate could indicate that a new wave of investors are putting their money in bitcoin for the long-term. In an earlier report, Arcane Research indicated that the decreased bitcoin balance on exchanges could also be caused by the latest DeFi craze, with bitcoin being tokenized on Ethereum by those lending the cryptocurrency in exchange for yields. According to Dune Analytics, more than 118,000 BTC worth over $1.2 billion has already been minted. Read more
Why the TikTok Deal is Like Schrodinger’s Cat
I spent a long time reading news stories on the TikTok deal… majority US owned? Majority China owned? It wasn’t until I came across a certain article on The Economist that I realised I was looking at it all wrong. Much like Schrodinger’s Cat, the TikTok deal seems to be in two states at once, one beneficial to Beijing but fatally flawed to Washington, the other vice versa.
Before we delve deeper into this, let us make sure we are all familiar with Schrodinger’s Cat. Afterall, quantum mechanics is not the most accessible field of study. For my visual learners, here is a video that provides a decent high level overview of the phenomenon. For those who prefer a short summary, please see below.
Schroginer’s cat is a thought experiment involving a cat in order to explain the flawed interpretation of quantum superposition. This states that an object in a physical system can simultaneously exist in all possible configurations, but observing the system forces the system to collapse and forces the object into just one of those possible states. So what does this have to do with cats? Well Schrodinger wanted people to imagine that a cat, poison, counter, radioactive material and hammer were all inside a sealed container. It is also possible to just consider a cat and a bomb. There is a 50/50 chance that the bomb goes off, killing the cat. However, until someone opens the container and looks inside, it is impossible to predict the cat’s outcome. Thus, until the system is collapsed into one configuration, the cat would exist in some superposition zombie state of being both alive and dead.
Source: The Financial Times
This brings us to the TikTok deal. Take the question of who owns TikTok Global, the new company to be spun out of ByteDance, TikTok’s Chinese owner, to give the data of American users a secure home in America. Well ByteDance insists that it will hold 80% of the new entity. This is difficult to comprehend because Americans say they will control a majority stake. Well which is it? Is the cat alive, dead or a zombie? To add to the mix, Oracle and Walmart, a supermarket titan which has joined in, will own only 20% of TikTok Global between them. But American venture-capitalists already own 41% of ByteDance!
Apply the right mathematics and lo and behold, both the Chinese parent and Americans own more than 50% of TikTok Global, which the deal values at $60 billion and which is supposed to go public within a year. Like our hypothetical cat, simultaneously dead and alive, the company will be simultaneously majority Chinese and American owned.
If only there was the option to lift the seal and look inside to see which state it is in. With that in mind, it seems as though our quantum mechanics thought experiment is more straightforward than who will have the majority stake in the TikTok deal. One thing that seems likely is that President Donald Trump will maintain ambiguity until November’s election.
Trump Faces New Scrutiny of Personal Finances Weeks Before Vote. President Donald Trump faces renewed scrutiny of his personal finances just weeks ahead of Election Day, after a report raised fresh questions about his business savvy and the integrity of his accounting. This news comes at an especially unwanted time; Joe Biden was up 10 percentage points in a Washington Post/ABC poll and by eight in NYT/Siena survey. Others showed him ahead in Michigan, North Carolina and Wisconsin. The New York Times report, published Sunday, portrayed a president in a financial vise who could potentially turn to investments that could threaten his independence as commander in chief. Citing tax documents, it said Trump, a billionaire, paid no income taxes in 10 of the past 15 years and only $750 in 2016 and 2017. Trump, in Trump fashion, called the report ‘totally fake news’ during a news conference just minutes after it was published. He reiterated that he’d only release his tax documents when an Internal Revenue Service audit was complete – a refrain he has employed since 2016. Shortly after the story ran, Biden’s campaign started selling stickers saying: ‘I Paid More In Taxes Than Donald Trump’. Read more.
Deadly Armenia-Azerbaijan Clashes Unlikely to Cause an Oil Spike, Analysts Say. Deadly clashes between Armenia and Azerbaijan (a tale as old as time) are unlikely to result in major disruptions to energy production and supplies, analysts say, despite the region being a critical corridor for pipelines transporting oil and gas to the global markets. The clashes between the two former Soviet republics in the South Caucasus are the latest flare up of a long running conflict over Nagorno-Karabakh, a breakaway region of Azerbaijan run by ethnic Armenians. At the weekend, Aremia said Azerbaijan carried out an air and artillery attack on Nagorno-Karabakh, but Azerbaijan said it has responded to Amernian shelling, according to NBC News, which has not been able to independently confirm the number of injuries or fatalities. Even so, the risk of further military action might not be enough to prompt a commodity price spike. This seems contrary to standard supply and demand factors, a testament to the extent to which demand has weakened. Market sentiment remains somber due to surging infection rates and escalating U.S. – China tension. New Covid case numbers are accelerating in major U.S. states, renewing fears of mobility restrictions challenging the ongoing oil demand recovery in the last quarter. Read more.
CFTC Charges Crypto Futures Trading Platform for Failure to Register in the U.S. On Monday, The Commodity Futures Trading Commission filed charges against Laino Group for soliciting U.S. investors to trade in futures on commodities including Ether, Litecoin and Bitcoin without registering with the commission. The CFTC regulates exchanges and futures products in the U.S. and ensures market participants adhere to its rules. One such rule being the CFTC Part 30 exemption, which is designed to protect U.S. investors from trading with non U.S. counterparties unless an exemption is sought from the CFTC. Increasingly, the CFTC is turning its attention to the regulation of cryptocurrencies. Particularly noteworthy here is the jurisdictional boundary being established. The CFTC has consistently called Bitcoin a commodity in recent years. The appearance of Ether and Litecoin in a list with Bitcoin as well as traditional commodities like gold and silver within an action from the CFTC suggests that the Commission is treating these others as commodities as well, which CFTC Chairman Heath Tarbert suggested last year. The question of which cryptocurrencies should be under CFTC jurisdiction came up in a pair of bills introduced to the House of Representatives last week. Read more.
Process > Goals
We tend to think that the best way to achieve something in life, whether that is improving our health,business or financials, is by setting specific and actionable goals to achieve them. The trick here is that goal oriented people exist in a constant state of failure until they’ve reached a specific goal. In contrast, people that focus on building systems win by simply sticking to systems, which eventually leads to reaching their goals anyway.
James Clear, author of the widely successful book Atomic Habits, has a whole segment in the book where he expands on this idea. He realized that his results had very little to do with the goals he set and nearly everything to do with the systems he followed. “If you’re a coach, your goal might be to win a championship. Your system is the way you recruit players, manage your assistant coaches, and conduct practice.” Consistently following your processes leads to tangible results. Losing ten pounds is a goal, learning to live a healthier lifestyle sets you up for life.
Striving to become better consistently brings you closer to your goals. Use goals as an overall direction, but think in systems for making the progress to get there. The series of actions or steps you take to achieve a particular goal are more important than the goal itself. Don’t let your goals become a limit, aim to become a person that continuously improves in the right direction.
Disclaimer: The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. I am not a financial advisor. Every investment and trading move involves risk. Do your own research when making a decision.
