$5B Bitcoin Whale Has Promised to Sink Bitcoin

August 29, 2019
“Trading effectively is about assessing probabilities, not certainties.”
― Yvan Byeajee

5-Day Change

  • Bitcoin $9,430
  • Ethereum $168
  • S&P 500 2,916
  • Dow Jones 26,287

The mysterious Satoshi Nakamoto promises to sell $5 Billion worth of Bitcoin

No one wants to trade equities... when their value rests on the whims of a tweet. That’s according to traders on the Street, as trading volumes fall up to 15% due to continuing uncertainty surrounding the US-China trade war. But despite worries, the S&P 500 rose 0.7%, while the 10-year T-note fell one basis point to 1.47%, and the 

2-year fell 3 to 1.50% (continuing the inverted yield curve and raising recession fears.) The UK pound sterling continues its slide to USD parity, falling to $1.22, while the dollar continues strengthening, gaining 0.2% for a nine-month high (despite the wishes of US President Donald Trump.)

What about crypto? Crypto, broadly isolated from trade tensions and fiat currency pressures, has still been seeing red for the past week - largely due to Bitcoin’s continuing fluctuations in the $9,000 to $12,000 range, currently bouncing off support at $9,400 - and the market seems unworried about a proposed flood of up to $5 billion in Bitcoin entering circulation. 

Woah, five billion USD of Bitcoin? It may seem like a large number, but you can make up whatever number you like (if you’re lying.) It’s all part of the long-running saga (or scam, depending on who you talk to), of Australian programmer Craig Wright, who maintains that he is the mysterious Satoshi Nakamoto, founder and creator of Bitcoin. The five billion is a number that Wright dropped after losing a lawsuit against the brother of his late business partner, Ira Kleiman. David Kleiman alleged that Wright stole Ira’s IP and was trying to seize his Bitcoin holdings - allegedly valued at $10 billion - which would mean that Wright owes the Kleiman estate at least half.

But the market hasn’t responded? Not as much or explosively as someone would assume given the potential news. But seeing as the market is a gauge of opinion, then public opinion seems squarely stacked against Wright’s claims - founder of the Bitcoin Satoshi’s Vision fork of Bitcoin - and BSV lost 6.44% on yesterday’s news. And while Bitcoin fell as well, it’s much more likely to be part of the same pattern that’s been evident since June.

Wut We Think: Of course, there’s no way to truly verify whether or not Wright has access to $5 billion of bitcoin, though it does seem unlikely. Still, a prudent trader could always tighten up their risk management with tight stop-losses and bigger trade volumes - even disregarding Wright’s claims, crypto sentiments (and price) can change on a dime. Especially if, as one expert estimates, Bitcoin becomes a truly safe-haven currency.


Boris Johnson to Suspend Parliament, Triggers Backlash: Brexit Update

Suspending Parliament isn’t usually a big deal... unless you’re suspending Parliament during one of the most chaotic periods in recent British politics. But that’s the choice UK Prime Minister and Conservative Party leader Boris Johnson made when he ‘prorogued’ Parliament, cutting debate time on Brexit down to two weeks - just in advance of the Brexit deadline on October 14th.

What does prorogation mean, anyway? A prorogued Parliament is just the name given between Parliamentary sessions, which have no fixed term but generally run from spring to spring or autumn to autumn. Typically, this suspension of Parliament usually lasts for a week or two, but this time Boris Johnson has suspended Parliament for about five weeks. Seeing as the Brexit deadline is October 31st, and Parliament cannot reconvene until October 14th, this leaves only two weeks for Parliament to come with a way to avoid ‘no deal’ Brexit.

What do the markets think? The FTSE 100 is up 1.17% - mostly due to the falling pound, which makes British exports more attractive abroad. But the pound has fallen and fallen hard, reaching $1.22 - the lowest level since October 2016 - not coincidentally, the start of the Brexit slide. And it may still fall further, with estimates placing the pound as low as $1.10 in case of no-deal, and USD parity is still a risk.

So does this mean no-deal is certain? Nothing is ever certain in life or politics, but cutting short debate about Brexit will most likely not have a positive effect on finding a deal. But cutting Parliament short has other drawbacks, as well - for one thing, it means that lawmakers will have even less time to rewrite financial regulations that banks rely on to do business, along with other industries. But not everyone is so pessimistic - EU officials have indicated that the long suspension may even help Britain avoid a hard Brexit.

Wut We Think: Brexit has been one of the more uncertain developments in international politics in a while, as an entire country plays ‘will-they-or-won’t-they’ with a major regional economic power. And even if the UK decides to go through with Brexit, there are still alternatives for traders and investors in the British isles - safe havens like Bitcoin, for example, which are more or less insulated from global turmoil. And given that there’s only a month and a half until the Brexit deadline, no deal is becoming more and more likely, possibly meaning a Bitcoin price jump as people trade their pound sterlings for more promising assets. But until then, the saga of Brexit continues.


Cycling Startup Peloton Files for IPO

Soulcycle wishes it could be as hot as Peloton... especially with the number revealed in the home cycling startup’s S-1 filing ahead of its IPO - said to be one of the biggest IPOs this year. The company, which describes itself in its filing as a ‘Technology, Media, Software, Product, Experience, Fitness, Design, Retail, Apparel, Logistics’ company (yes really) boasts of over $900 million in revenue for FY2019 to date, and a truly impressive 95% retention rate.

What is a Peloton, seriously? At its core, ignoring the Tech/Software/Fitness mumbo-jumbo, the company sells home exercise bicycles and treadmills - but that’s not the money maker. The real value-add comes from its streamed training sessions with live instructors. It’s gained fans ranging from Virgin owner and billionaire Richard Branson to former US President Barack Obama, and boasts of having 1.4 million users.

So it’s an exercise company, what’s the big deal? For one thing, its numbers are fantastic for a tech company. Revenues rose from $415 million to $915 million in just a year - and though losses have similarly jumped, from $47.9 million to $195.6 million, that’s still more than a doubling of revenue in just a year. And with cancellations of only 0.65% per month, it boasts loyalty that other tech firms would kill for.

What about the downsides? There are risks, of course. Peloton is vulnerable to trade war shocks, as some of its bike parts are sourced from China. And it’s fighting lawsuits related to music used on its streaming platform. And it may just be a passing fad. Like all new tech companies, Peloton carries more than its share of risks. But that may not matter, if it can keep attracting new users and keep their retention rate as high as they claim in their prospectus.


Wut We Think: Peloton isn’t exactly an Apple-level innovator - but at the same time, it definitely offers something that many have been missing. While companies like Soulcycle have walked back their IPO dreams, it may just be Peloton’s combination of live streaming content and top-shelf hardware (its bike costs $2,245) that gives Peloton the edge it needs to thrive in the competitive fitness market. A company that manages to replicate the gym experience but lets you stay in the comfort of your own home? There’s definitely a market for that.


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