Picking Up COINs

Hey Influence Traders,

There has been some positive news in Cryptoland the past week.

And that saw the asset class get a bounce yesterday.

It also allowed trading guru Andrew Giovinazzi to make a #PowerMove around a pick-and-shovel play.

Bank for International Settlements (BIS)

BIS, which is essentially the central bank to the world’s central banks, has endorsed the development of central bank digital currencies (CBDCs).

At least 56 central banks are considering digital currencies.

The Bahamas was the first country to launch a CBDC, known as the Sand Dollar.

China has indicated that it will launch the digital yuan, while Switzerland and the Bank of France have announced Europe’s first cross-border CBDC experiment.

The U.S. will not be long to follow, although many prognosticators believe that digital dollars or euros are at least two years away.

While the purpose of CBDC is to prevent “Big Tech” from taking control of money, it will have the effect of lending more credence to crypto as an asset class.

That should drive more investors who were previously skeptical to invest.

And that means investing in traditional cryptos like Bitcoin (BTC).

But how to invest still remains a question.

Bitcoin as Legal Tender

Meanwhile, Paraguay has become the second country after El Salvador to propose a bill to make BTC legal tender.

The BTC push is being led by South American countries in a effort to gain more financial leverage on the world stage. But those countries are facing an uphill battle.

The International Monetary Fund (IMF) has voiced concerns over El Salvador’s plans and the World Bank said it would not provide any help to implement BTC in its monetary system.

Energy usage is also a concern. Iran has banned BTC mining for three months because of the continuous blackouts in the nation, and Elon Musk and Tesla cited energy concerns in their flip-flopping on whether to accept BTC for payments.

But Paraguay believes it is attractive for BTC because it has a lot of cheap renewable energy.

Some also argue that Paraguay and El Salvador, which will continue to peg their BTC currencies to the US dollar, are merely proxies for the start of a US digital currency.

Banks vs. Platforms

When Basel III was announced, the BIS proposed a 1:1 capital requirement for banks to hold BTC on their balance sheets.

But banks are not set up to be efficient at trading, particularly at trading BTC, which settles in minutes with irreversibility

Banks typically settle once a day, which creates settlement risk for banks.

That’s why traditional crypto exchanges will remain the medium of choice to hold and trade BTC, at least for the near term, and that creates trading opportunities.

The Power Moves Portfolio

The live, updated trade log is here

The crypto exchange Coinbase (Ticker: COIN) has sold off 40% from the top and looks like it is poised to move higher after bouncing off of the bottom for several weeks.

The massive candle yesterday in the chart below means that COIN is finally reacting to the positive news of sovereign nations taking a look at bitcoin for legal tender, which could be a game changer.

Six-month COIN movement.

Andrew Giovinazzi and I bought one COIN July 23 250-/265-strike call spread for $3.10, spent a good part of the morning chasing that call spread and filled on the only pullback. 

We had the trade up 60% by the close.

We also closed our last Palantir (Ticker: PLTR) at $1.85 from a $1.18 entry. We like this stock for long-term, but short-term calls are tough unless we see a selloff to buy them.

By the way, look for big #PowerMoves Portfolio news coming soon …

Cutting Through the Noise for You.

Frank

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