Hedge Fund Chief’s Inflation Prediction And What it Could Mean for Crypto (Opinion)

In a CNBC interview over the week, a major hedge fund manager predicted that “massive inflation” will lead the Fed to hike interest rates six times by 2024. Crypto traders are keeping a close watch on the macro-financial environment as they wrap up another volatile month.

Federated Hermes has over $600 billion in assets under management. Phil Orlando, the investment firm’s chief equity strategist, has been a long-time stock market bull but expects the big changes at the Federal Reserve to dampen this year’s surging stock market rally.

Orlando: Big Inflation and Fed’s Actions

Speaking to Stephanie Landsman on CNBC’s “Trading Nation” Wednesday, Orlando projected a slew of rate hikes ahead, but probably not until Q3 of next year:

“Our best guess is that we will see two quarter point rate hikes out of the Fed in the second half of next year, and perhaps another four quarter point rate hikes over the course of calendar ’23.”

While the White House administration and Federal Reserve have progressed from saying deflation is the real danger to insisting inflation is only temporary, Orlando doubts they believe what they’re saying:

“The Fed has been, I think to some degree, talking a good game along with the Biden administration in terms of the temporary or transitory of inflation.”

He cited as evidence the minutes from the November Federal Open Market Committee meeting, in which members said they believe current conditions already warrant tapering back the Fed’s massive liquidity operations.


That includes the Fed’s ongoing shopping spree with a blank check to buy U.S. Treasury bonds, mortgage-backed bonds, and overnight money market loans.

Fed’s Impact on Crypto

The crypto industry’s products are in some ways a market substitute and competitor with government fiat currencies and the conventional investments like stocks that are denominated in those currencies and are priced in markets that operate far upstream in global finance, close to the Fed’s sources of new credit in the U.S. banking system.

But as institutional and mainstream retail investors continue to embrace and adopt digital assets, they are increasingly becoming a complementary financial product. As a result, central bank efforts to tame inflation could hit crypto valuations with a double headwind.

While the digital gold thesis underlying Bitcoin made the world’s first successful cryptocurrency a non-correlated asset to equities for a decade, hastening mainstream adoption has seen the price correlate with stock markets starting around a year ago and continuing into this year.

As interest rates increase, investors can get higher returns than usual from less risky investments than peer-to-peer cryptocurrencies or corporate shares.

And if Washington shores up the U.S. dollar, deflationary cryptocurrencies used to shelter savings from inflation might lose some of their appeal.


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Crypto Giant Grayscale Exploring Two Ethereum Rivals After Launching Support for Solana

The world’s largest digital asset manager just announced the launch of a single-asset investment product exposing its holders to Solana (SOL) – and support for more Ethereum competitors may be imminent.

In a press release, Grayscale announces the new Solana Trust, which will join its other 13 single-asset crypto investment products.

“The Trust is solely and passively invested in Solana (SOL), the native token of the Solana network, a smart contract platform first conceived in a 2017 whitepaper. Like the Ethereum network, the Solana network is one of a number of projects intended to expand blockchain use beyond just a peer-to-peer money system.”

In addition to Solana, the crypto management firm says it’s now taking a close look at whether it will add support for the smart contract platforms Terra (LUNA) and Avalanche (AVAX).

Both assets have had breakout years in terms of price and adoption, with LUNA rising from $0.66 at the start of 2021 to its current price of 58.66.

In the same time frame, AVAX has shot from $3.37 on January 1st to its current price of $120.70.

Grayscale CEO Michael Sonnenshein says that investors are increasingly looking to expand their portfolios beyond the Bitcoin (BTC) and Ethereum (ETH) staples.

“For the last eight years, Grayscale has been at the forefront of offering investors efficient exposure to the ever-evolving digital currency ecosystem,

We have had a front-row seat to the mainstream acceptance and adoption of crypto and increasingly find that investors are diversifying their exposure beyond digital assets like Bitcoin and Ethereum.”

According to the press release, the Grayscale Solana Trust is the sixteenth crypto investment product from Grayscale. Other single-asset investment products include Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Decentraland (MANA) and Filecoin (FIL).

Grayscale also offers a Digital Large Cap Fund, an investment product exposing investors to the upper 70% of digital assets by market cap.

Earlier this month, Grayscale recorded nearly $60 billion in assets under management.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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Number of Bitcoin Addresses Smashes All-Time Highs As BTC Attempts Bull Market Recovery: Crypto Insights Firm Glassnode

Despite Bitcoin’s price correction this month, the number of addresses with a BTC balance has surged to an all-time high, according to the crypto insights firm Glassnode.

The number of Bitcoin addresses with a non-zero balance hit a new all-time high last week, Glassnode reports on Twitter.

“The number of Bitcoin addresses with a non-zero balance has reached a new all-time high of 38.76 million addresses. The previous high of 38.7 million was set seven months ago on April 23rd, taking 213 days to fully recover.”

Source: Glassnode/Twitter

Glassnode also notes that the number of BTC addresses holding 0.01+ BTC skyrocketed to an all-time high of 9.33 million on Monday.

Source: Glassnode/Twitter

Additionally, Glassnode says that the number of addresses holding 0.1+ BTC hit 3.28 million on Sunday, another all-time high.

Bitcoin is trading at $57,330.08 at time of writing, down over 16% from its all-time high of $69,044.77 that it posted earlier this month.

Due to BTC’s recent correction, the number of Bitcoin addresses that are underwater hit a one-month high of 5.62 million on Sunday, according to Glassnode.

The analytics firm does note, however, that November’s overall price correction is actually the least severe pullback of 2021 in terms of a drawdown from BTC’s all-time high.

Bitcoin has traded down -21.8% off the all-time high (ATH) during this month’s correction.

“It may be a surprise that this correction is actually the least severe in 2021, measured in terms of drawdown from ATH.

Jan = -29.4%

Feb = -24.2%

Apr = -26.5%

May-July = -54%

Sept = -37.2%

Nov = -21.8%”

Source: Glassnode/Twitter

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any loses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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David Marcus Leaves Meta, Facebook, and Novi

Key Takeaways

  • David Marcus announced today that he will leave Facebook—or as it has recently been rebranded, Meta.
  • For the past few years, Marcus has headed Facebook’s Novi cryptocurrency wallet and its other payments products.
  • It is unclear whether Marcus will remain involved with the Diem cryptocurrency, which is not exclusively run by Facebook.

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David Marcus, head of Facebook’s financial efforts, has announced that he will leave Facebook parent company Meta.

Marcus Leaves Meta

“Personal news,” Marcus posted to Twitter on Tuesday. “After a fulfilling seven years at Meta, I’ve made the difficult decision to step down and leave the company at the end of this year.”

In 2014, Marcus joined Facebook as the head of Messenger and helped to introduce payment services there. In 2018, he became the head of Facebook’s blockchain operations, where he began two interrelated projects: the Diem stablecoin and Novi wallet. Finally, in 2020, Marcus became head of Facebook Financial.

Marcus’ latest accomplishment was a limited launch of the Novi wallet this October. Novi’s initial launch was aimed at remittances between Guatemala and the U.S. utilizing the Paxos stablecoin.

Shortly after the launch of the Novi wallet, Facebook rebranded all of its financial products under the Novi brand name. This was related to Facebook’s larger decision to rebrand as Meta, a change that represented its new focus on the Metaverse.

Future With Diem Is Unclear

Marcus will no longer head Facebook’s Novi product line, which includes the Novi cryptocurrency wallet. He will be replaced by company executive Stephane Kasriel.

Marcus did not mention whether he would continue working with Diem, the Facebook-led stablecoin project. Though Novi is intended to serve as a wallet for the Diem cryptocurrency, Diem itself was always intended as a group effort between several companies. Facebook has only a partial role in operating Diem.

Marcus is still listed as a board member on the website of the Diem Association as of Tuesday, Nov. 30.

The news comes just one day after Jack Dorsey announced that he would leave his position as CEO of Twitter after more than 16 years of involvement with the company.

Disclaimer: At the time of writing this author held less than $100 of Bitcoin, Ethereum, and altcoins.

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Bitcoin Mining Continues to Strain Kazakhstan’s Power Grid. Here’s Why

When China banned Bitcoin mining in May, plenty of crypto natives scoffedand not just because China’s tried and failed to ban crypto before. 

The mining rigs would be loaded up and shipped elsewhere, they said, because the beauty of decentralized networks is that they’re borderless. Crypto finds a way. 

But the miners that arrived in nearby Kazakhstan have overtaxed the country’s power grid so much that the government has gone from welcoming them to capping consumption and sourcing auxiliary power from Russia, according to a recent story in the Financial Times.

From the start of the year to August, Kazakhstan has gone from accounting for 6% of hash rate on the Bitcoin network to 18%, according to the Cambridge Bitcoin Electricity Consumption Index (CBECI). That makes it the country with the second largest presence on the network behind the United States, at 35%, and leaves a sizable margin between it and Russia, at 11%. 

chart showing kazakhstan bitcoin network hash rate share at 18%
Credit: Stacy Elliott / Decrypt

But even that figure falls short of capturing the magnitude of how much crypto mining has picked up in Kazakhstan. 

Since the CBECI last released hash rate estimates per country for August, the total network hash rate has increased by 43%. It fell dramatically as mining rigs went offline following the China ban and has steadily climbed back to where it was in April.

Even if Kazakhstan’s share of the network has remained the same since August, it would have gone from 19.7 terahash per second (TH/s) to 28.2 TH/s.

To put that in context, a 2,500-rig mining farm like the one crypto mining service Xive had to recently shut down in south Kazakhstan would have generated roughly 57,500 TH/s if it was using the popular Antminer rigs. The hash rate increase from the start of August until now is the same as building 147 more facilities that size.

graphic showing the total bitcoin network hash rate since 2020
Credit: Stacy Elliott / Decrypt

From what Xive co-founder Didar Bekbau said in an October livestream with Compass Mining, the writing has been on the wall for a while. Miners in the country were already starting to disconnect from the grid because of electricity shortages. 

So it wasn’t much of a surprise when, last week, Bekbau posted on Twitter a video of a shipping container being packed up with the last of the company’s south Kazakhstan mining rigs, saying Xive was shutting down its mining farm.

It’s the risk of chasing cheap energy prices, even in a country that’s previously been welcoming of the crypto mining community.

Kazakhstan has historically produced twice as much power as it consumes, according to non-governmental organization International Energy Agency

The country’s energy prices averaged $0.04 per kilowatt hour (kWh) in March, according to GlobalPetrolPrices. That’s half what electricity cost in Mainland China at the time, $0.08, and one-third what it cost in the United States at 12 cents.

The country has been expecting crypto mining to add $1.5 billion to its economy over the next five years, according to the country’s National Association of Blockchain and Data Center Industry. But the organization says it’s very aware that a large portion of crypto mining companies aren’t properly registered. 

“The figure of 98 billion tenge [Kazakhstan’s native currency] is just an economic effect from companies that are officially involved in mining,” association chairman Alan Dordzhiev said in a statement at the start of November. “If we take into account ‘gray’ miners, then this figure can be safely multiplied by two.”


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Cardano Ambassador Addresses FUD Surrounding The Project

Cardano has been in the middle of some major FUDs these past weeks and this has not been good for the value of the digital asset. Numerous negative news circulated around the asset, the most prominent being the delisting of ADA for U.S. users from the eToro crypto exchange. Since then, the altcoin has suffered massive dips that have sent the price of the digital asset towards three-month lows.

Related Reading | Cardano Founder Addresses Liquidity Concerns Over eToro Delisting

Although news of the delisting is a week out, the FUD surrounding the project has not subsided. This has prompted a Cardano ambassador to take action and has led to a run-down of why the FUD around the digital asset has refused to die out.

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Cardano Is A Legitimate Alternative To Ethereum

The Cardano ambassador took to Twitter to address all of the FUDs that have been circling the altcoin in recent weeks. For one, they explain that most of it have been because Cardano presented the only legitimate alternative to the leading smart contracts platform, Ethereum. This leans into the fact that Cardano has often been proposed as an “Ethereum killer” after smart contracts capability has debuted on the blockchain.

They pointed to the network activity that showed that Cardano’s activity has consistently been on the rise in the past few weeks. While Ethereum had maintained momentum in the same time period, Cardano had spiked significantly, pointing to increased adoption. Yet, the market continued to treat the digital asset like it is a failing project.

Furthermore, Cardano had recorded such heavy spikes in network activity despite still being a bit away from the first decentralized exchanges launching on the network. Right now, NFTs are the only avenue with which both blockchains compete and Cardano has already recorded more activity.

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Chart comparing Cardano vs Ethereum network activity

Cardano network activity spikes above Ethereum | Source: Twitter

The ambassador closed out the Twitter thread by saying pointing out that the network has not really been given any benefit of the doubt since it launched. Nevertheless, the project has proved the market wrong and will continue to do so.

Cardano price chart from TradingView.com

ADA continues to suffer dips | Source: ADAUSD on TradingView.com

ADA Struggles Against FUD

The impact of all the FUD that has been circling the project has shone through in the price of ADA. The digital asset had dipped below $1.5 for the first time in three months and had touched the low $1.4 before recovery back up again. All progress that Cardano had made during this period had been buried underneath the FUD and panic among investors as sell-offs continued.

Related Reading | Cardano Active Addresses Shoots To New Highs Amid Downtrend

Despite this, the asset has not lacked support from its community. Taking to Twitter, others expressed their outlook for the future of the cryptocurrency. Choosing to focus instead on the potential of the blockchain instead of the current situation.

Cardano founder Charles Hoskinson also took time out to approve of the message being passed. The founder tweeted that others were terrified of Cardano due to being a self-sustaining project that doesn’t need outside help to grow.

Featured image from Bitcoin News, chart from TradingView.com


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What Is Decentralized Finance (DeFi)?

In Brief

  • DeFi, shorthand for “decentralized finance,” is a catchall term for a group of financial tools built on a blockchain.
  • The idea is to allow anyone with internet access to lend, borrow and bank without going through middlemen.
  • DeFi is one of the fastest growing areas of the blockchain and decentralized web space.

Bitcoin—a payment system in which anyone on earth can send money to anyone else—was just the start of the crypto revolution. The people building DeFi applications seek to take accessibility one step further. Decentralized finance has been touted as a possible solution to lowering the barrier of entry for those who struggled to access bank accounts. And more recently, it’s being utilized by cryptocurrency owners for another purpose: to make more money.

Let’s take a look.

What is DeFi?

Taken collectively, DeFi apps are financial products that run on a public blockchain, such as Ethereum. These products are permissionless, meaning they don’t use third parties. Instead of financial intermediaries, such as brokers and banks, everything is automated into the protocol via smart contracts

Want to take out a loan? You don’t need the bank to hand you money. You can get a loan directly from your peers. Ready to bet on Bitcoin futures and other derivatives? Forget finding a bookie. You can let the protocol handle it. Looking to swap one asset for another? Decentralized exchanges can facilitate the transaction without taking a huge cut.

Who invented DeFi?

There is no single inventor of DeFi, but DeFi applications first appeared on top of Ethereum, which was invented by Vitalik Buterin. They have since expanded to other networks that use smart contracts to automate transactions. These include Solana, Binance Smart Chain, and Avalanche.

Did you know?

Prominent venture capital firm

Andreessen Horowitz led multi-million dollar investment rounds in both Compound and MakerDAO–pillars of the current DeFi ecosystem.

What’s so special about it?

DeFi has several key features.

First, it’s “open,” meaning you can use the applications by creating a wallet—often without displaying any identifying information, such as name and address. That’s theoretically (if not technologically) simpler than having a bank account. 

Second, you can move funds around near-instantaneously via a blockchain, so no waiting for the bank transfer to clear. 

Third, the rates (for now, at least) are much better than at traditional banks, though transaction costs vary depending on the blockchain network.

Last, DeFi applications work together like “money Legos.” This “composability” allows anyone to create, modify, mix and match, link, or build on top of any existing DeFi product without permission. Unfortunately, this feature may also be DeFi’s biggest weakness, because if a key component, such as the DAI stablecoin, becomes vulnerable or corrupted, the whole ecosystem built around DAI may come crashing down.

What can you do with DeFi?

There are three basic types of DeFi applications.

Lending/borrowing: If you own cryptocurrency, you can lend it to a protocol such as Aave or Compound in exchange for interest and/or rewards. Likewise, you can borrow digital assets from such a protocol, which is particularly useful if you want to make a trade. Be careful, though! Most DeFi protocols use over-collateralization, meaning you must put up more than the amount you want to borrow; if the asset’s value falls too much, the protocol may take your collateral to avoid losses.

Many DeFi users utilize this as a way to earn assets through “yield farming,” in which they lock up funds in a pool of assets to get rewards. Since rates vary depending on protocol and asset, skilled yield farmers move their assets to capitalize on the best rates.

Trading: With centralized exchanges such as Coinbase and Binance, you’re relying on the exchange to take custody of your assets with each trade. Decentralized exchanges remove the intermediary so people can trade directly with one another. Moreover, DEXes such as Uniswap and PancakeSwap allow people to list new tokens for trading. The lack of vetting increases the risks, but it also allows people to “get in early” on new assets before they hit wider markets.

Derivatives: Sometimes you don’t want to be limited to trading particular coins or tokens. Derivatives platforms such as dYdX and Synthetix allow people to do more than spot trading. For example, users can make leveraged trades in which they bet more than they have, or even create “synthetic assets” that mimic traditional stocks and commodities.

How are DeFi applications produced? 

Anyone capable of writing smart contracts is able to create DeFi applications. There are several tools for testing and/or deploying smart contracts, among them Truffle and Ganache for Ethereum. After downloading a framework to build smart contracts, you can create a token that allows a protocol to utilize the blockchain network. On Ethereum, this is an ERC20 token; on Solana it’s called SPL; and Binance Smart Chain has BEP20s. 

Having a token allows the protocol to interact directly with the layer-1 blockchain’s coin. But projects have also promoted their tokens to push decentralization. Lending protocol Compound, for instance, uses COMP as a governance token; those who hold it get to make decisions about the protocol’s code and treasury allocations.

How do you use DeFi products?

Anyone can use DeFi products by going to an application’s website and connecting with a DeFi-enabled crypto wallet, such as MetaMask on Ethereum or Phantom on Solana. Most DeFi dapps do not require users to give up any personal information or register. However, because the applications are built atop a blockchain, you must use that blockchain’s coins to pay for transactions. ETH is required in order to pay for transactions on the Ethereum network, SOL is necessary on the Solana blockchain, and so forth.

The Future

As of November 2020, less than $20 billion worth of value was locked in various DeFi products, most of them on Ethereum. By the following year, it was worth more than $250 billion, with $19 billion coming from Binance Smart Chain alone. If the trend continues and the DeFi maximalists are right, this is just the beginning of a massive DeFi wave. True believers argue that the advantages of an open and decentralized financial system are simply too compelling to not capture trillions of dollars of value.


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Ethereum approaches a new ATH, but derivatives data reflects mixed emotions

Today Ether (ETH) price briefly touched $4,760, exciting investors and reminding the world that the altcoin is a mere 2.2% below the $4,870 all-time high reached 20 days ago. While the spot price action might be intriguing, let’s see what’s happening in Ether’s derivatives markets.

Ether ETH/USD price at Bitstamp. Source: TradingView

While it is possible to draw a descending channel that shows support at $3,960, today’s 5.4% positive move seems decoupled from Bitcoin’s (BTC) negative performance.

Earlier today, commodities and stocks took a hit after the U.S. Federal Reserve acknowledged that inflation is more than just a “transitory” trend and Fed chair Jerome Powell said that the bank’s relaxed money policies could end sooner than anticipated.

Retail traders are not fully confident

To understand how confident traders are about Ether’s price recovery, one should analyze the perpetual contracts futures data. This instrument is the retail traders’ preferred market because its price tends to track the regular spot markets.

In any futures contract trade, longs (buyers) and shorts (sellers) are matched at all times, but their leverage varies. Consequently, exchanges will charge a funding rate to whichever side demands more leverage, and this fee is paid to the opposing side.

Ether perpetual futures 8-hour funding rate. Source: Coinglass.com

Neutral markets tend to display a 0% to 0.03% positive funding rate which is equivalent to 0.6% per week. This indicates that longs are the ones paying and data shows retail traders have been mostly neutral since Nov. 4 and the last move above 0.07% happened on Oct. 21.

Top traders have reduced their long positions

Exchange-provided data highlights traders’ long-to-short net positioning. By analyzing every client’s position on the spot, perpetual and futures contracts, one can better understand whether professional traders are leaning bullish or bearish.

There are occasional discrepancies in the methodologies between different exchanges, so viewers should monitor changes instead of absolute figures.

Exchanges top traders ETH long-to-short ratio. Source: Coinglass.com

Despite Ether’s 17% rally over the past four days, top traders at Huobi and OKEx decreased their longs. This move was even more evident at OKEx because the indicator made a drastic move from favoring bulls by 120% on Nov. 25 to a meager 30% advantage three days later.

Currently, data indicates that whales and arbitrage desks have reduced their long exposure, while retail traders remain suspicious of the recent bull run.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.