Connect with us

Horseman: “The Bond Bull And Commodity Bear Markets Are Over” – Here’s How To Trade It

Horseman: "The Bond Bull And Commodity Bear Markets Are Over" – Here’s How To Trade It

Tyler Durden

Sat, 11/21/2020 – 18:30

After a remarkable start to the year, surging almost 30% when all other funds were tumbling, the fund former



Horseman: "The Bond Bull And Commodity Bear Markets Are Over" - Here's How To Trade It Tyler Durden Sat, 11/21/2020 - 18:30

After a remarkable start to the year, surging almost 30% when all other funds were tumbling, the fund formerly known as Horseman Global until its recent purchase by CIO Russell Clark (hence its current name Russell Clark Investment Management), has had a turbulent seven months, at one point in the summer even forcing the famously bearish hedge fund to throw in the towel on his well-known bearish/deflationary position and to not only turn net long for the first time in a decade (as we reported last month), but to shift its global outlook from deflationary to inflationary.

Unfortunately for Clark, just as he pulled a 180, going long such cyclical sectors as banks, mining and metals, and industrials while going aggressively short industrials (a bet on higher rates), a deflationary wave spurned by surging covid cacses hammered stocks and in October his fund lost 7.3%, bringing what was once a gain of as much as 25% YTD to just above 0%...

... something not lost on his LPs with the fund's AUM dropping to just $91MM as of Oct 31, down 9% from the $100MM as of Sept 30.

And since for most funds, $100MM is the critical minimum capital that most hedge funds need to remain viable, Clark may soon be facing extinction unless he can quickly turn around his performance, which for years suffered from fighting the Fed head on.

Which is not to say that Clark doesn't think he can do it.

In his latest letter, the hedge fund manager blames his recent volatility on the market's wild swings from a deflationary to a reflationary mode and back again (incidentally he could have just bought bitcoin which goes up no matter which of the two themes is prevalent and already be up more than 160% for the year), and in his latest slow the flood of redemption requests, Clark writes that one thing he is good at "is working out when a bull market is over" (referring to the nearly 4 decade-long bull market in bonds), a skill which the formerly bearish hedge funder thinks will allow him to position appropriately for what comes next (which reminds us that David Einhorn did a similar thing last month when he said that the tech bubble burst when the Nasdaq cracked on Sept 2, only for the S&P to soar to new all time highs just weeks later).

This is how Clark lays out his reflationary thesis, starting with the hayday of the carry trade era in the early 2000s:

All bull markets (and bear markets for that matter) have some combination of currency, bond and commodity cycle that is working for or against them. In my first decade, which started at the top of the dot com bubble, the overwhelming trade was the tightening of commodity markets, with the standout trade being iron ore moving from USD 20 a tonne to USD 200 a tonne. The commodity bull market, and a dovish Federal Reserve allowed “carry trading” – a very popular hedge fund trade – to become extremely lucrative, and the hedge fund industry prospered. 2000 to 2010 was the decade of the hedge fund. Other carry trades such as convergence trades in Europe (short bund long peripheral bonds) and in the US (long mortgage backed securities, short treasuries) also took off, until 2008 marked the beginning of the end.

Things changed after the financial crisis, but especially after the 2010 DOJ crackdown on expert networks (thanks in no small part to this website), which also ended the "information arbitrage" (read legal insider trading) popularized by Steve Cohen and countless spin off funds. To Clark, the defining feature of the last decade was not just the chronic inability of hedge funds to generate alpha (as they no longer had access to inside information presented as "expert networking") but the collapse of the carry trade and the advent of the capital arbitrage trade, i.e., issuing debt to buyback stock, something we have spent hundreds of articles discussing over the past decade:

The 2010s has really been the reversal of the 2000s carry trade. In fact, for many years we ran what could be called a negative spread trade – long bonds, and short emerging markets and cyclicals that worked fantastically well based off the oversupply of commodity markets. But if the 2000s was about the carry trade, then 2010s were about the capital arbitrage trade. Capital arbitrage is basically issuing debt to buy equity, either through M&A or buybacks to create “value”. Apple has been very successful at issuing large amounts of bonds to buy back shares. With 40-year Apple bonds only yielding 2.8%, this is a no brainer trade. The investment firms best placed to benefit from such arbitrage has been private equity, and without question the 2010s have belonged to the private equity industry.

Which brings us to today when, as hinted above, Clark calls an end to the "cap arb" trade. It is here also that the formerly bearish investor explains why he shed his bearish bias, pointing to the Fed's helicopter money which "essentially fixed yields to allow governments to spend as much as they want in order to maintain economic growth." This took any fundamentally-based bearish trades off the table - for the simple reason that there is no longer anything to be bearish about when the Fed controls the bond market - and "the upshot of this is that" Clark no no longer has to worry about private sector shenanigans: "all I need to do is focus on government bond yields."

Covid-19 and the response to it by Western central banks have made calling the top in this “capital arbitrage trade” much easier. Previously, I would be looking at government bond yields, and wondering how much corporate bond spreads could widen, particularly if problems in clearinghouses and autocallables came to the fore. When they did come to the fore in March, the Federal Reserve essentially lashed corporate debt yields to treasury yields. It also essentially fixed yields to allow governments to spend as much as they want in order to maintain economic growth. The upshot of this is that I no longer need to worry about private sector shenanigans (of which there is plenty), all I need to do is focus on government bond yields.

Which brings us to the punchline, and why after being a devout deflationist, Clark now sees inflation as inevitable and perhaps imminent: "I am bearish government bonds. As stated above, markets decided October was deflationary." And yet, not everything traded deflationary in October: "commodity markets with the exception of oil were marking inflation. Many commodities were up, some significantly. US corn, Chinese corn, crude palm oil, natural gas, natural rubber, the CRB Raw Industrial Index, Chinese pork, Brazilian rice to name a few. Even the US oil market looks to be tightening rapidly."

Additionally, and as we noted yesterday when we showed the record disconnect between US and Chinese 10Y yields...

... Clark writes that Chinese bonds have also gone their own way this year, with rising interest rates: "Why buy a 40 year Apple bond, when a Chinese 2 year bond offers the same yield in a potentially appreciating currency?"

There is another big change the former "Horseman" points out:

When we look at money supply M2 measures in Europe and Japan, Japanese M2 is growing at the fastest pace since the 1980s. Eurozone has the fastest pace since 2007. If M2 is growing rapidly, then why do these nations still need negative interest rates? Especially if a vaccine has been found.

While the answer is self-explanatory (the liquidity is not going into the broader economy but is merely serving to backstop risk prices), Clark derives two conclusions:

  • One is that the commodity bear market is over.
  • And two, the bond bull market is also over.

Incidentally, Clark is not the only one who believes the commodity bear market is over. In his latest Bear Traps report, Larry McDonald quotes a hedge fund manager who makes an interesting point:

The Fed could be in a tricky spot when they meet in December. The pressure to ease is significant given increased cases/mitigation measures, especially as fiscal impasse continues. However, financial conditions have never been easier.

It's a problem central banks at ELB face post-market stabilization, how to be countercyclical. This month, US CCCs (junk of the junk) are outperforming everything in credit, Goldman FCIs on multi-year lows (easy financial conditions), NYSE stocks % above the 200-day ma at 82% (the 2016 - 2019 high was 75%!). Market participants don't fear the downside. shorts are gone, options hedging not happening much, the sentiment is bullish, hedge funds have the most net exposure in 5 years. If there's one thing the market teaches over and over, is it's better to fade the crowd than to chase it. We are near term cautious, bullish (commodities, EM) for 2021.

Clark admits that for now it is unclear what the immediate implications of these two "markets" being over are, noting that it is unlikely that we get another decade like 2010 of carry trades "given yields are so low everywhere, that could be a problem." That said, he is confident that this "capital arbitrage" trade looks to have very poor risk reward from here.

For that reason, Clark is now focusing his shorts on companies that have benefited from low bond yields and low commodity prices - utilities, private equity and infrastructure assets. To those one could also add growth and momentum stocks, which as we showed yesterday, have a record high duration, making them extremely vulnerable to rising rates.

His final message is to those who wonder how he can short Private Equity firms: "People who wonder how we can short Private Equity firms have forgotten what happened to listed hedge funds through the 2010s!"

Clark then muses some more on this topic in his Sector Allocation section:

According to Deloitte, Private Equity assets have grown from less than USD 2 trillion in 2010, to over USD 4.5 trillion by 2019. Private Equity has many benefits over public funds. Leverage can be applied to companies, and short term losses can be tolerated while a firm builds market share. Private Equity managers can also choose when to sell assets. Over the decade, secondary buyouts, that is when a portfolio company owned by private equity is sold to another private equity buyer has increased from USD134bn in 2009 to USD600bn in 2019.

One huge tailwind for private equity has been falling corporate bond yields. During the financial crisis, high yield debt yielded 18%. As of today, that yield is 4.9%, close to the lowest on record. Corporate debt to GDP has also reached a record share of US GDP at 55% in Q2 2020, well in excess of levels seen in 1991, 2000 and 2007. A change in the interest rate environment would likely be negative for the private equity industry.

And while all that may be correct, and both listed hedge funds and the PE industry in general is facing the all too real danger of rising rates, at this point when every single redemption request matters a far more important question for Clark is what happens to one specific unlisted hedge fund namely his own, unless he manages a "home run" month in the very near future.

Read More

Continue Reading


Declining Bitcoin exchange balances show strong holding sentiment

Bitcoin’s climb past the $27,000 mark this week, after a prolonged period of hovering around $26,000 throughout September, has triggered a significant…



Bitcoin’s climb past the $27,000 mark this week, after a prolonged period of hovering around $26,000 throughout September, has triggered a significant market response.

Previous CryptoSlate analysis of the futures market found a marked decrease in derivatives trading. This trend signaled a waning interest among traders in both leveraged and futures trading.

This diminishing enthusiasm isn’t confined to the futures market alone.

The spot Bitcoin market mirrors this trend, as evidenced by the pronounced drop in Bitcoin balances on exchanges. Glassnode’s data reveals a notable reduction in the total Bitcoin held on exchanges, which fell by over 7,000 BTC since the beginning of October.

Graph showing the total amount of Bitcoin held on exchanges from Sep. 5 to Oct. 4, 2023 (Source: Glassnode)

A more granular look at the 30-day change in exchange balances shows an even larger decrease. As of Oct. 3, the amount of Bitcoin held on exchanges decreased by 16,351 BTC. This signifies that not only are traders holding back from selling their Bitcoin, but they are also moving them off exchanges, possibly to cold storage or other secure wallets. Such a trend often indicates a long-term holding sentiment among investors, suggesting they anticipate a future price appreciation.

bitcoin exchange net position change 7d
Graph showing the 30-day change of Bitcoin supply held in exchange wallets from Sep. 27 to Oct. 4, 2023 (Source: Glassnode)

The current 2.29 million BTC held in exchange addresses constitutes 11.74% of the total Bitcoin supply. This figure hasn’t been this low since Dec. 17, 2017, when exchanges held 11.70% of Bitcoin’s supply. For context, the all-time high of Bitcoin’s supply on exchanges was reached in March 2020, when 17.6% resided on exchanges. The trajectory since then has been predominantly downward, punctuated by brief upticks during Bitcoin’s bearish phases. This trend underscores a growing preference among Bitcoin holders to retain their assets rather than trade or sell them, further solidifying the long-term holding narrative.

bitcoin percent balance on exchanges
Graph showing the percent of Bitcoin’s supply held on exchanges from January 2017 to October 2023 (Source: Glassnode)

Looking at the exchange transaction dominance offers another layer of insight. There’s been a significant decline in exchange activity, reverting to levels last seen in July of this year. From Sep. 23 to Oct. 3, the exchange transaction count dwindled from 547,000 to 384,765. During this same timeframe, exchange transaction dominance swelled from 18.5% to 26.71%.

This indicates that while the overall number of transactions decreased, a larger proportion of those transactions were associated with exchanges. Furthermore, exchange withdrawals have consistently outstripped deposits since July, a trend that has persisted in October as well. This suggests that while fewer transactions are occurring, more Bitcoin is being moved off exchanges than is being deposited.

bitcoin exchange transaction dominance
Graph showing the dominance of Bitcoin transactions on exchanges (gray), exchange transaction count (orange), deposits (green), and withdrawals (red) from July 6 to Oct. 4, 2023 (Source: Glassnode)

The declining Bitcoin balance on exchanges, coupled with the consistent outflow of Bitcoin from these platforms, indicates a strong holding sentiment among investors. Many could be anticipating a bullish future for Bitcoin and are thus moving their assets to more secure storage solutions. This could lead to a supply squeeze on exchanges, potentially driving up prices if demand surges.

The current landscape suggests a market that is confident in Bitcoin’s long-term value proposition. If exchange balances continue their decrease, the market could be poised for potential bullish movements, driven by supply constraints and robust holding sentiments.

The post Declining Bitcoin exchange balances show strong holding sentiment appeared first on CryptoSlate.

Read More

Continue Reading


Crypto VC: Token investing and the next bull run with Digital Wave Finance

Cointelegraph sits down with Digital Wave Finance to talk about investment strategies and what could catalyze the next bull run.



Cointelegraph sits down with Digital Wave Finance to talk about investment strategies and what could catalyze the next bull run.

Venture capital has been a key driver for myriad startups in the blockchain space. Founders know how competitive it can be to secure valuable VC funding that can keep the lights on and employees paid during the critical first days of a new project.

In a new interview series, Cointelegraph sits down with executives at some of the most active funds investing in the crypto space to understand their perspectives, hear about their successes and failures, and find out what gets them excited about a new project in the Web3 space.

This week, Cointelegraph spoke with Andrei Grachev, co-founder of crypto trading entity Digital Wave Finance (DWF) and managing partner of market maker and multistage Web3 investment firm DWF Labs. DWF Labs has been highly active since late 2022, having invested in the Telegram Open Network (TON), Orbs, Radix, Crypto GPT (now Layer AI) and others.

Cointelegraph: It feels like DWF Labs emerged from nowhere and started aggressively taking over the industry. Tell us more about the history of the fund and the background of the partners.

Andrei Grachev: DWF Labs started operating in late 2021, founded by experienced partners from DWF, a highly successful high-frequency trading entity that had been operating since 2018. We recognized the potential of blockchain technology and wanted to explore investment opportunities in the industry. After making several small investments and token allocations, we refined our investment strategy and risk tolerance. Since then, we have been actively investing in promising projects and providing long-term financial support on a regular basis.

CT: DWF Labs invests exclusively in tokens. Many players in the industry consider this approach to be market-making. Can you explain the rationale behind this decision and why you believe investing in tokens is the best approach?

AG: First of all, let me clarify that every project we work on has different deal components. While some involve pure venture investment, others may include token purchases. Over the past 12 to 18 months, we have seen an increasing number of market makers entering the investment space. While I cannot speak for the entire industry, it appears to me that market makers offer significant support to projects that is crucial to their growth.

For example, market makers typically have established relationships with exchanges, and they can help projects with listing introductions. However, it is up to the exchange to accept the recommendations or not. Another advantage of working with market makers is that they can provide liquidity support to tokens when it is needed. In other words, market makers offer value beyond just executing trades, and this is why we believe that investing in tokens is the best approach.

CT: How do you evaluate the risks associated with investing in tokens, and what steps do you take to mitigate those risks? Are there any particular metrics or criteria you use to assess the potential of a token?

AG: As a Web3 investment firm, we have developed various investment theses over time to evaluate the risks and potential of a project. While we cannot fully disclose our current investment strategy, we have identified several verticals that we are interested in supporting. On our website, we categorize our investments into nine macro-categories, allowing us to diversify our risks within each vertical by selecting a few projects with significantly different attributes.

For example, if we identify a growing vertical where multiple players are developing or building value, we look at the possibility of supporting more than one project. If a project has a clear emphasis on infrastructure, the next project we select might be more focused on the B2B side, and the next one on retail. This approach provides us with a comprehensive coverage of the spectrum of an industry vertical.

When evaluating the potential of a token, we use various metrics and criteria that are specific to each project and vertical. We analyze the market size, competition, team experience and track record, tokenomics, and community engagement, among other factors. We also conduct due diligence and consult with industry experts to ensure that the project has a solid foundation and strong potential for growth. While investing in tokens does carry inherent risks, we believe that a diversified approach combined with thorough research and analysis can help mitigate those risks and generate positive returns for our investors.

Portfolio companies 

CT: What does the ideal portfolio company for DWF look like? What do you prioritize: The idea, personality of a founder, a team or traction?

AG: Our investment portfolio is diverse, but there are a few categories that stand out due to their weight in terms of the number of investments. Decentralized finance and trading, metaverse and GameFi, and infrastructure and enterprise are the categories that seem to have captured our attention the most.

When it comes to prioritizing investment factors, potential market adoption should be the primary consideration. This is because a great idea or product that doesn’t have a large potential user base will not be successful in the long run. Addressable market size is also an important factor, as it helps to determine the potential revenue and growth prospects of a company.

Recent: ETF filings changed the Bitcoin narrative overnight — Ledger CEO

However, even with a large potential market and a great product, the ability of the team to execute is essential for success. A talented and experienced team with a track record of success will increase the likelihood of successful execution and bring the product to market efficiently.

Grachev at the Meta Era Summit 2023. Source: X

Finally, while buzz and hype can be useful indicators of market demand and potential, they can also be misleading and should be taken with a grain of salt. It is important to evaluate the underlying fundamentals and potential for long-term success rather than being swayed solely by hype or trends in the market.

CT: Among others, you invested in TON and EOS. Both projects have a complicated history and a controversial reputation in the industry. What exactly did you find attractive in these projects?

AG: We invested in TON and EOS due to their potential for market adoption and addressable market size. Both projects were highly ambitious and aimed to address fundamental issues within the blockchain industry, such as scalability and usability. We were also impressed with the teams behind each project and their ability to execute on their vision, despite the challenges they faced. While there were certainly controversies and setbacks along the way, we believed that these projects had the potential to make a significant impact in the industry, and we were willing to take the risk. Ultimately, our decision to invest in TON and EOS was based on a thorough analysis of their potential for long-term success, rather than their current buzz or hype status within the industry.

CT: One of your recent investments is Crypto GPT. What is that?

AG: As outlined in our investment thesis, we strive to mitigate risk by diversifying our portfolio within specific industry verticals. This approach allows us to balance potential profits with the possibility of losses. Our investment in Crypto GPT occurred during a period when we were supporting various AI projects. While the initial version of Crypto GPT may not have been impressive, we believed our investment could have facilitated further development and led to something innovative in the market. It is premature to write off the project entirely based on its current implementation. For example, the first iPhone did not have the copy/paste feature, but subsequent iterations improved upon the initial model. The Crypto GPT team is actively developing and launching new products, and we look forward to seeing the results in the long run.

CT: What is the best way for the startup to catch your interest?

AG: Our investment strategy is a combination of various assessment criteria, such as the team, market, traction, competitive landscape and more. As we receive a high volume of funding applications monthly, we prioritize projects that catch our attention with something unique and extraordinary. This is what we would have referred to as the USP, or “unique selling proposition,” in traditional marketing jargon. We value when projects showcase their strengths, whether it be in their community or traction, as it allows us to easily identify potential gems and initiate our due diligence process.

CT: What is your fastest-growing portfolio company?

AG: There are several fast-growing projects in our portfolio, making it challenging to focus on just one when highlighting them. However, some projects have managed to grow their communities tremendously, such as Yield Guild Games, which has accelerated the adoption of GameFi; Conflux, with its signature partnership with China Telecom; and Coin98, which has seen massive adoption in Southeast Asia. Notably, Synthetix is a groundbreaking financial primitive that enables the creation of synthetic assets. Syscoin has been working for years to perfect a solution to the blockchain trilemma, and offers comprehensive tools for developing, deploying and monetizing applications.

CT: How do you find the best deals?

AG: I have to give credit to my partners and our team, who work tirelessly to stay informed and scout for new projects while evaluating the potential of existing ones. We also attend industry events to connect with the community, which is still very much connected through “decentralized human nodes.” These events provide us with an opportunity to network and expand our connections, which is crucial for discovering promising deals.

CT: Many big names — including a16z, Shima and others — are investing in Web3 gaming, but all the metaverse and gaming projects seem to be overestimated. Decentraland reportedly had just 38 daily “active users” at one point in a $1.3 billion ecosystem. What do you think about Web3 games and metaverses?

AG: We, like other VCs, are keeping a close eye on the Web3 gaming and metaverse spaces. While we see the potential for these projects to revolutionize the gaming and virtual world industries, we also acknowledge the risks and challenges they face. It is true that some projects have been overestimated, but this is a nascent industry, and we are still in the early stages of experimentation. As with any emerging technology, it takes time to develop and gain widespread adoption.

About the industry

CT: How will the industry change in the near future and in the long run?

AG: The industry has grown so big that it is hard to speak about it without diving deep into each of the verticals. For example, it would be impossible to ignore the tremendous impact that AI is bringing to the world. Also, the incredible growth of GameFi has already contributed significantly to growing adoption. And certainly, DeFi is here to stay.

Decentralized exchanges have been the talk of the day ever since FTX went bankrupt. More recently, there seems to be a renaissance of memecoins. There has been a tremendous amount of building behind the noise of token price. We are always interested in supporting builders. At the moment, we are particularly keen to support infrastructure projects, from layers to IoT and real-world assets. We believe that these projects will play a critical role in shaping the future of the industry.

CT: Some critics of token investing argue that many tokens are not real investments but speculative assets subject to price manipulation and volatility, which negatively influence the entire industry. How do you respond to this criticism, and what evidence can you provide to support the idea that token investing is a legitimate form of investment?

AG: Token investing is often criticized as a form of speculation that lacks legitimacy as an investment vehicle. However, tokens are attractive to both retail and institutional investors because of their liquidity. Tokens can be viewed as the next evolution of shares traded on a stock exchange. In traditional markets, the democratization of access to the stock market through platforms like Robinhood and eToro has given retail investors the ability to organize themselves into communities that can further their investment thesis beyond the market rationale. The growth of memecoins is a prime example of this community approach to crypto investment.

Total memecoin trading volumes. Weekly volume in black. Cumulative volume in green. Source: Dune

While some memecoins have evolved into projects with ambitious ecosystems, such as Floki, others exist solely as speculative tools. Ultimately, investing is about profit, and an investor who doesn’t want to profit is called a philanthropist. Therefore, token investing should be evaluated based on its potential for generating returns, as well as its potential risks and rewards. Some tokens will generate handsome profits based on their technological value, while others will thrive solely due to their growing community of enthusiasts.

CT: The recent collapses of FTX, 3AC and others didn’t add any trust or optimism to the crypto space, while recent events indicate that traditional financial institutions and the current financial system overall are in crisis. In your opinion, what’s the best way to overcome these challenges?

AG: Finance is a highly complex field, at a crossroads between the economy on the one hand and government regulation on the other. Financial institutions are a vital part of the economy in day-to-day terms, and it is unfortunate when such institutions fail to comply with regulations or intentionally implement malpractices.

As for overcoming challenges, there are a few approaches that could be taken. Firstly, increasing transparency and accountability within the industry is crucial. This can be achieved through regulation and self-policing by the industry itself. Secondly, embracing technological innovation and new business models could lead to more efficient and inclusive financial systems. Lastly, educating the public and promoting financial literacy is essential in building trust and confidence in the industry. Overall, a combination of these approaches could lead to a more resilient, trustworthy financial system.

CT: This is a fast-growing multibillion-dollar industry, but still, for the general public, it might look like something related to illicit activities such as money laundering. What can change this perception?

AG: This concern seems outdated, as over the past few years, there has been significant adoption of blockchain technology and Web3. Many portfolio companies have created a positive impact for communities globally. For example, World Mobile Token disrupts the trillion-dollar telecommunications industry by enabling connectivity for everyone through a sharing economy and distributing network ownership. [...] It’s essential to focus on builders and the real value they bring to the world to dispel negative perceptions about the crypto industry.

CT: What topics in the industry are the hottest nowadays? Just 1.5 years ago, nonfungible tokens were everywhere. Now, every primary protocol has its own NFT marketplace but very few users. Are NFTs gone, or do you expect them to evolve into something? What’s the next big thing?

AG: Undeniably, NFTs took the world by storm, demonstrating that massive crypto adoption is possible. Although their initial use case was closely related to self-expression, NFTs represented a mere speculative tool for some. In other words, the use case was not the most solid to build upon, but it was indeed a good starting point. Now, we see many more innovative use cases in NFTs, and we are sure that many more will come very soon.

For example, with the advent of advanced AI engines for art creation, the ability to launch a new NFT collection is no longer limited to those with the technical skills to execute; rather, the opportunity has been democratized to empower anyone with an idea to execute rapidly and easily. This simplification and democratization is already spilling over into no-code development, gaming and entertainment more broadly, like music and filmmaking. Trading will also be significantly impacted by AI integration, and we are already seeing some projects emerging in this field.

CT: In your opinion, what could catalyze the next bull run?

AG: GameFi will continue to lead in mass adoption as the lowest-hanging fruit. What is particularly interesting will be to see how AI integrations bring into existence a new breed of extremely interactive gaming experiences. For example, AI-driven nonplayer characters will have emotions and personalities of their own and will interact with players far beyond their scripted scope of existence. Therefore, we should keep a close eye on how AI will impact all industries.

CT: There are alarmists who think AI will “steal jobs” and positive thinkers who are sure it will make our lives better and easier. What is your point of view? What significant changes can AI bring to the crypto industry?

AG: The idea that AI will steal jobs is real, but in more practical terms, people who know how to master AI integration will be replacing other people’s jobs. AI, on its own, is not going to steal anyone’s job unless someone programs it to do so. There might be many ethical repercussions related to the first outcome of AI integrations. It is not too far-fetched to imagine AI being regulated in a similar way to finance, to a certain extent.

Magazine: 6 Questions for JW Verret — the blockchain professor who’s tracking the money

As for the positive impact of AI, it has the potential to bring significant change to the crypto industry. AI can be used for advanced data analysis and predictive modeling, helping traders make informed decisions and identify market trends. It can also be used to enhance security measures, detecting and preventing fraud and cyberattacks. Additionally, AI can assist in developing more efficient and effective blockchain protocols, leading to faster and more scalable networks. Overall, I believe AI will play a crucial role in the growth and development of the crypto industry, and its impact will be mostly positive if implemented ethically and responsibly.

Read More

Continue Reading


Yield Protocol to permanently ‘wind down’ operations by December 2023

Unfavorable crypto regulations in the United States, Europe and the United Kingdom was one of the factors for Yield Protocol’s untimely shutdown.



Unfavorable crypto regulations in the United States, Europe and the United Kingdom was one of the factors for Yield Protocol’s untimely shutdown.

Decentralized finance (DeFi) lending protocol Yield Protocol announced its decision to shut down by the end of the year due to a lack of business demand and global regulatory pressures.

Yield Protocol will cease to exist after its December 2023 series ends, which is slated to mature on December 29, 2023. In its announcement detailing the “wind down” operation, Yield Protocol confirmed that the March 2024 fixed rate series launch had been canceled. The protocol stated:

“While we think that the future is bright for DeFi and fixed rate markets in DeFi, we felt this decision was necessary because there is currently not sustainable demand for fixed-rate borrowing on Yield Protocol.”

Unfavorable crypto regulations in the United States, Europe and the United Kingdom were also among the reasons that ultimately led Yield Protocol to shut down. Starting today, “liquidity providers for the *MS (March-September) strategies won’t accrue any further fees,” it stated.

Finally, “all borrowing and lending will end by December 31st,” two days after the existing series will mature, an official tweet confirmed.

Related: Binance to shut down BUSD lending by October 25

2023 witnessed numerous other protocol shutdowns, which included the $29 million in total value locked lending platform Geist Finance and a Discord crypto trading bot None Trading valued at $16.5 million.

In both cases, the primary reason for their shutdown was attributed to an external attack. Geist Finance shut down permanently due to losses from a Multichain exploit. None Trading said it had “lost a significant amount of funding” and “team tokens” crucial for its operations.

Read More

Continue Reading