MAY 8, 2022 | Issue 14
"HELLO? CRYPTO ENTHUSIASTS, WHERE ARE YOU?"
When I joined CØMPASS in November 2021, I spoke with several colleagues and managers about creating a crypto community for agents. I received a lot of support.
Crypto was front page news because bitcoin was poised to hit a new high.
Excitement was in the air and agents wondered how crypto would impact real estate.
I launched a Workplace group and shortly afterwards, I wrote my first issue of Crypto News for Realtors. Support for the newsletter, as measured by comments and open rate (over 70 percent) was high and it remains high.
This past week has been tough for all investors, not just crypto investors. However, I don't think the falling price of crypto will deter buyers who have considered using crypto to buy real estate.
Low crypto prices mean that a buyer's capital gain would be lower. Or, the buyer may even have a capital loss. This would appeal to crypto holders who may want to move some of their volatile crypto to real estate.
Anyway, that's my theory. As a wise friend has told me over the years – only time will tell.
Keep reaching out to me with your ideas and questions.
I hope you had a wonderful Mother's Day weekend.
Have a productive week and stay crypto curious! Rich Hopen firstname.lastname@example.org 908.917.7926 PS. You can find all CNR newsletters here.
CRYPTO & REAL ESTATE
▸ NAR Studying Crypto Opportunities For Agents Inman reported this week that NAR's presidential advisory group is examining crypto's impact on the real estate industry. The group is tasked with delivering a report by November. Kristin Smith, a Dallas Realtor, is heading the group and spoke at a midyear conference. Smith mentioned Propy, a crypto real estate startup that received funding from NAR's venture arm, Second City Ventures. Smith discussed developing a new crypto real estate product or platform. It would provide agents with an opportunity to invest and reap financial rewards if the product was adopted and became successful.
▸ Bitcoin Price Drops As Investors Sell Risky Assets
When the central bank Chair Jerome Powell announced a half-point rate hike, the markets fell as investors sold their risk assets, like growth and tech stocks.
When did investors start treating crypto like a Nasdaq stock?
In May 2021, when I first started following crypto, the sentiment that bitcoin was an inflation hedge, echoed throughout Twitter and crypto Youtube videos. Retail investors perpetuated the narrative that investors would flock to bitcoin once inflation took hold.
Crypto believers ("maximalists"), drawn to the promise of decentralized money, held onto their crypto as a long-term investment. The "hodlers" scoffed at speculators who were trying to time the market for a quick buck.
Then things started to change. A handful of corporate titans like Michael Saylor of MicroStrategy and Elon Musk captured headlines when they invested their corporate securities in bitcoin. NYDIG, a subsidiary of the asset management company Stone Ridge, introduced Bitcoin products to banks, insurance, and fintech. Institutions started jumping into crypto and as adoption increased, a surge of Wall Street professional money managers left the sidelines. According to Wall Street Journal reporter Dion Rabouin, this happened for three reasons. First, crypto's market cap shows greater mainstream acceptance and professional money managers saw an opportunity to earn management fees, trading commissions, and other revenue streams. Second, the market increased from $150 billion in March 2020 to $1.77 trillion in March 2022. This allowed the money managers to make big trades without moving the entire market. Also, they profited from crypto's volatility, whether or not the price went up or down. And third, highly regarded hedge fund leaders like Paul Tudor Jones, publicly discussed bitcoin's value in a market where stocks and bonds are not attractive.
▸ SEC Hires 20 Crypto Enforcers
SEC Chair Gary Gensler announced that the Crypto Assets & Cyber Unit added 20 people to its staff, bringing the total to 50 employees.
Their focus is virtual currency offerings, decentralized finance, trading platforms and stablecoins.
The SEC has investigated marketplaces that offer certain types on non-fungible tokens, and companies that offer crypto-lending products.
Furthermore, according to CoinDesk, $200 million in crypto went missing over the past two weeks. Given Gensler's propensity to lead with enforcement instead of policy or rulemaking, it's not surprising that he expanded to cyber unit.
As Gensler seeks to grow the SEC's crypto role, the crypto industry is responding.
A bipartisan group of House representatives support a bill that would bring crypto exchanges, like Coinbase and Gemini, under regulatory authority of the Commodity Futures Trading Commission ("CFTC").
The proposal defines tokens as "digital commodities." This would wrest control from the SEC.
CFTC would not, however, regulate crypto assets used to invest in or buy a piece of a business. Any real estate venture that tokenizes property would still be considered a security and thus regulated by the SEC.
▸ Senator Warren Dislikes Fidelity's Plan to Add Crypto to Its 401(k) Program
In response to Fidelity's announcement that they will offer bitcoin in their 401(k) plans, Sen. Warren (D-MA) sent a letter with Sen. Tina Smith (D-MN), expressing concern that bitcoin's volatility is not appropriate for retirement investments.
letter was sent to Fidelity's CEO.
Sen. Tommy Tuberville (R-AL) introduced a bill stating that retirement investors should not be restricted in how they choose to invest their retirement funds.
▸ Central Banks Looking at Digital Currencies
The Bank for International Settlements (BIS) is owned by 63 central banks and represents 95% of the world's GDP. It surveyed the banks, and 81 banks reported that they are working on developing digital currencies.
Two thirds of the banks are likely to issue a retail CBDC in the "short or medium term."
The paper, Gaining Momentum – Results of the 2021 BIS survey on central bank digital currencies, states that the rise of stablecoins and other cryptocurrencies motivated the banks to accelerate their plans to explore developing digital currencies.
CRYPTO CLASS – BITCOIN PIZZA DAY
Congrats to Debra Brown, a CØMPASS agent in McKinney, TX. Debra provided the correct answer to my question in the April 24, 2022 newsletter, "Who is this guy?" I showed the below photo of Jeremy Sturdivant. Sturdivant is famous in the crypto world. In 2010, Sturdivant replied to a post which offered 10,000 bitcoins in exchange for two large pizzas. He sent two Papa John's pizzas and received the BTC. It was valued at $41.
Had Sturdivant held onto the 10,000 bitcoins, he would be worth $360 billion!! Alas, he spent it all in 2010.
The bitcoin-for-pizza transaction was the first exchange of value for bitcoin. It is celebrated on May 22 as Bitcoin Pizza Day.
Debra's prize – two large pizzas.
INFLUENCERS - People to follow
Nathaniel Whittemore – @nlw
NLW hosts a podcast, The Breakdown, which I've cited several times. I listen to it everyday because of the stories he covers, his analysis, and perspective. NLW gives a lot of air time to macro economic issues. I have learned a lot from his reporting.
RESOURCES – Books, websites, podcasts, articles
The Block is a paid service that offers high quality, professional information, news, and analysis on crypto. If you don't want to pay, the site offers a lot of valuable content for free.
CRYPTO WORDS – WHALE
Whales are crypto investors who hold a large amount of bitcoin. They are called whales because, when they buy or sell large amounts of crypto, their actions disturb the waters where the little fish, like us, are swimming. Purported whales include Satoshi Nakamoto, Cameron and Tyler Winklevoss, and VC Tim Draper.
According to statista, an investment site that provides statistical analysis, crypto whales own 92 percent of BTC, but only represent two percent of ownership.
OH, ONE MORE THING – During the Berkshire-Hathaway annual shareholders meeting, Warren Buffet opined on bitcoin. I guess Warren was trying to make a point.