Bitcoin Crashes Amidst Iranian Attack

Gm friends. 

Uptober kicked off with a particularly rough start, due to Iran’s ballistic missile attack against Israel earlier this week. Let’s discuss the details. 

So pour that coffee and strap in, because this is your mid-week crypto update.  ☕️📰

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Chart of the Day

The power of adopting bitcoin as a strategic reserve asset is truly something to behold. 

Since news broke in April of Metaplanet’s first bitcoin purchase, the company’s stock has appreciated approximately 464%.

After the company’s latest purchase on Monday, Metaplanet now holds 506 BTC, which are currently valued at $31M. Metaplanet’s bitcoin holdings make up 24% of the company’s total market cap. 

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News Now

Bitcoin Crashes Amidst Iranian Attack

Bitcoin and the crypto markets were looking pretty damn good as we entered into October. That was until Iran decided to attack Israel. 

On Tuesday, Iran fired approximately 200 ballistic missiles at Israel. This was the largest ballistic missile attack that Iran has ever conducted against Israel. But thankfully, most of Iran’s missiles were intercepted by Israel’s “Iron Dome” defense system. 

Iran’s attack was a response to some high-profile killings of Hezbollah and Hamas leaders by Israeli forces. And Israel’s prime minister has vowed to respond to Iran’s Tuesday attack. So buckle up, because unfortunately there is probably more conflict to come between these two countries. 

The crypto markets did not like these developments. News of the attack removed $160B from crypto’s total market cap. Bitcoin fell from $64K to $60.6K (-5.31%). Ethereum dropped from $2.6 to $2.4K (-7.69%). And a ton of altcoins experienced double-digit percentage declines. Meanwhile, gold appreciated about 1%. 

Now, bitcoiners in particular have been arguing that the asset is a risk-off, gold 2.0 for the internet age. So does the price action after Tuesday’s attack invalidate this argument? I don’t believe so. 

Fundamentally, the majority of bitcoin (i.e. 76%) is held by “long term holders” (i.e. addresses that have held bitcoin for 155 days or more). I think these holders understand bitcoin’s value proposition, and so they’re most likely not the sellers here. The short term traders were Tuesday’s sellers. They trade bitcoin like it’s a tech stock. 

But the problem with trading bitcoin like a tech stock is the fact that there’s a hardcore contingent who hold the line, as evidenced by the on-chain address data. Moreover, the fact that bitcoin didn’t break below $60K during one of the largest Middle Eastern attacks in recent history shows just how resilient the asset has become. 

Japan’s Pick for New Prime Minister Helps Trigger Crypto Sell-Off 

But even before Iran’s attack, bitcoin and the larger crypto markets were already looking a bit weak. 

Those who watch prices closely will know that bitcoin over the weekend was comfortably trading around $66K. But then Monday hit, and bitcoin dropped to $64K. So what gives? 

Enter stage left, Shigeru Ishiba, Japan’s new prime minister. 

Over the weekend, Mr. Ishiba was selected by Japan’s Liberal Democratic party to be the country’s next prime minister. But the issue with Mr. Ishiba is that he’s a bit more hawkish when it comes to Japan’s monetary policies. Essentially, the Bank of Japan is more likely to raise rates in the near term under the new prime minister’s leadership. 

So when Japan’s stock market opened on Monday, the yen strengthened as traders unloaded Japanese stocks (e.g. the Nikkei dropped 5%). And so the theory goes that bitcoin was getting sold off as well.

Fundamentally, this all goes back to the “yen carry trade”, whereby traders borrow yen for cheap to then buy US bonds, stocks, and crypto. So, as the yen carry trade continues to unwind, expect downwards pressure on bitcoin and crypto. 

Former Chinese Finance Minister Asks Country to Re-Examine Crypto 

Heads turned in Beijing on Saturday when Zhu Guangyao, China’s former vice minister of finance, called on his government to re-examine its crypto policies. 

Mr. Guangyao made the comments during a panel discussion at an economic forum. He served as China’s finance vice-minister from 2010 to 2018. This government position is the second most-powerful in the country in relation to economics and finance. 

Specifically, Mr. Guangyao stated that crypto is a “crucial aspect for the development of the entire digital economy”, and that due to the U.S. embracing the industry, China should re-evaluate its positions in order to remain economically competitive. 

Mr. Guangyao did note that crypto poses a problem to China in terms of money-laundering, terrorist financing, and other issues. However, he claimed that criminalizing it is counter-productive because it only pushes the industry underground, while at the same time removing the government’s ability to reap positive benefits from the industry. So, the former minister concluded that China should “study new issues, confront them directly, discuss, and resolve them.” 

And apparently, Mr. Guangyao isn’t the only high-profile voice calling for a crypto change, as multiple news outlets are reporting that several other Chinese economists and policy wonks are publically singing the same tune. 

Bitwise Files for XRP ETF & Ripple Receives Regulatory Approval in Dubai

We’ve got two big XRP stories to share with you. 

First, news broke Tuesday that Bitwise submitted some initial paperwork for the launch of a spot XRP ETF in the U.S. Specifically, Bitwise filed some incorporation documents for the proposed ETF in the State of Delaware. The paperwork was filed on Monday, and Bitwise has since confirmed that the filing is the real deal. 

Bitwise’s application comes approximately two months after the end of a multi-year legal battle between the SEC and Ripple Labs. In August, Federal Judge Analisa Torres ruled that most of Ripple’s XRP sales did not violate securities laws, with the exception of a smaller subset of sales to institutions. However, it is possible that the SEC will appeal this ruling

Regardless, it will be very interesting to see how the agency treats Bitwise’s application. 

Also on Tuesday, Ripple Labs announced that the company received in-principle regulatory approval from the Dubai Financial Services Authority (DFSA). This approval means that Ripple can now introduce its menu of blockchain-based, cross-border payments services to the U.A.E. Ripple’s CEO, Brad Garlinghouse, said that Ripple is the first blockchain payments provider to receive such an approval from the DFSA. 

Ripple Labs operates the Ripple payments protocol, which is seen as a competitor to the SWIFT system. Ripple’s protocol provides banks and institutions across the globe with near-instant exchange settlement for a large number of fiat currencies. And XRP is utilized on the protocol as an intermediary.

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Today On Chain

AAVE’s total value locked (TVL) currently sits at $12.44B. Thus, the protocol’s TVL has grown by 79% since the beginning of 2024.

AAVE is currently DeFi’s most popular protocol for lending and borrowing, when sorting by TVL. Additionally, the protocol’s native token – AAVE – has appreciated significantly over the past several months.

Part of the appreciation is attributed to speculation that AAVE’s developers might activate a “fee switch”, which will funnel a portion of the protocol’s accrued fees back to AAVE’s stakers. 

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Altcoin Alpha

• Celestia [TIA] holders, heads up! Celestia is unlocking 175M tokens, or 16.4% of total supply, on October 30th. Large token unlocks are often associated with price dumps, given the obvious supply and demand dynamics. 
• Thorchain’s [RUNE] new THORChain App Layer is rumored to be launching soon. Developers are saying that the new app layer will be “a L1 DeFi behemoth that can rival Solana.” 
• Avail Project [AVAIL] recently announced that the Lens Protocol has chosen Avail for its data availability services. This latest announcement follows a similar one with concerns to Layer Lab’s utilization of the project. Avail Project is a direct competitor to Celestia. 

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Coinbase’s cbBTC Opens Yet Another Market for Coinbase

Coinbase launched its own version of wrapped Bitcoin: cbBTC. Like WBTC, it is an ERC-20 token, backed one on one by BTC.

The difference is that it is integrated with both the Ethereum network and Coinbase’s Layer 2 Base. It allows ‘DeFi’ curious people to experiment with DeFi – albeit a hybrid form, where you have to trust Coinbase to do a good job of custodying your BTC.

TO READ THE REST OF THIS ARTICLE, CLICK HERE – “Coinbase’s cbBTC Opens Yet Another Market for Coinbase”

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Legal Disclaimer

Wealth Mastery (Lark Davis, and the Wealth Mastery writing team) are not providing you individually tailored investment advice. Nor is Wealth Mastery registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. Wealth Mastery is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.

You can find a full disclosure of all my crypto & venture investments here.