17th October 2024 > > Madness, liquidity, & ATOM.
tl;dr
The only way is up for fiat liquidity. There are potential problems concerning ATOM and the Cosmos environment which you might want to take note of.
Market Snap
Market Wrap
Several breaches of $68k to the upside overnight suggests that with a fair wind an assault on $70k may not be far off, which will be nice. But the really good news is that nearly another half a billion dollars flowed into the spot BTC ETFs yesterday, giving us a grand total of $1.64bn in the last four working days. The institutions are finally here.
Occasional Series – The world has gone mad
Apparently, issuing an invitation for “plus one” is polyphobic (as in polycule).
Is there nothing left in life at which some self-obsessed twat won’t deliberately take offence, though none was meant?
Curious Cryptos’ Commentary – Fiat liquidity
Fiat liquidity – one of the many tools in the politicians’ box used to manipulate bond and stock markets – is key to the price performance of all risk assets. The riskier the asset, the greater the outperformance, when governments and their minions’ the central bankers deign to add liquidity.
Or let’s call it as it is. Money printing.
Despite their protestations otherwise, this is a process whose overriding objective is to make the rich richer, and the poor poorer. As a useful side effect (from their point of view), it does help to embed the technocratic elite into an almost insurmountable position of influence, regardless of their own personal incompetence and arrogance.
…
I know, that is a long intro to the main point, but it is useful background stuff.
This graph shows correlation, whilst also undoubtedly demonstrating causation, between the price of BTC and M2, a widely used measure of fiat liquidity. Note that the price of BTC is on a log scale.
Fiat liquidity is only going in one direction.
Follow it or not, that decision is yours to own.
Curious Cryptos’ Commentary – ATOM and Cosmos
Cosmos is a multi-chain environment using PoS (proof-of-stake) consensus mechanism.
Originally designed with an unhealthy and unwarranted 21-day un-bonding period, even hard-core supporters would baulk at committing their entire bags to staking with this delay in getting access to the funds. To attempt to overcome this problem, a Liquid Staking Module was released in September last year. Investors can take their staked ATOM and swap for an LST (liquid staking token) version which can then be deployed in the usual way. This also removes the need for continually re-staking to take advantage of the eighth wonder of the world, the power of compounding.
ATOM’s price action, and indeed most if not all other coins within Cosmos, has long been a source of disappointment to investors. Priced at $12 or so at the beginning of 2024, ATOM is now languishing at just over $4, with potentially worse to come.
Co-creator Cosmos, AiB (All in Bits) has issued a very concerning warning about the new Liquid Staking Module:
The development of this module was managed by Iqlusion with contributions from other sources. It turns out that the coding appears to have been largely completed by two North Korean coders who are under investigation by the FBI. I don’t know about you, and without wishing to cast aspersions on the individuals themselves, any coding coming from North Korea, China, and Russia must surely be assumed to be circumspect.
An audit in July 2022 uncovered some critical vulnerabilities, some of which were accepted by Iqlusion claiming they were design features. Some of the vulnerabilities were fixed, but laughably the fixers were the original coders, rather compromising the point of doing the fixes in the first place. There has been no subsequent audit.
Remarkably none of this information was disclosed by Iqlusion prior to releasing the module.
All ATOM investors (and that includes the CC Treasury) are encouraged to ponder the suitability of an ongoing investment in ATOM.
…
If you decide to continue with your ATOM investment or you haven’t made your mind up yet, it makes sense to swap for the LST stkATOM for it can be swapped back immediately for ATOM on the Osmosis app, or unbonded immediately for a fee. If you don’t swap for stkATOM you remain locked into the 21-day un-bonding period, and that really is the worst of all possible worlds.
The steps to take are as follows:
i) Un-bond using whatever staking service you initially used.
ii) Wait 21-days.
iii) Head on over to the app below and swap for stkATOM.
Note that swapping for stkATOM is, laughably, a taxable event, and so has the advantage of realising capital gains prior to the growth and productivity destroying tax grab due at the end of the month in Rachel Reeves’ first budget.
It is more likely you will realise capital losses, so from a tax perspective waiting until after she tries to get her claws into your investment gains, gains made at no risk to HMRC, might make more sense, depending on your personal tax situation.
One last comment – all of the above applies equally to OSMO and stkOSMO.
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