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Weekly Axis - December 16, 2023

Everything is UP. Stabelcoin news. Jamie again

The Weekly Axis - Dec. 16, 2023

Volitility and some adoption news

The tokens went down, the tokens came back up. We’ll discuss this market volatility in this issue.

We’ll also hit on a couple big items from the week and how they affect you:

We’ll also take a deep dive on the role blockchain technology might play in the insurance industry.

We’ll hit a couple of these here, with more explanations, analysis, and discussion on the site

If you haven’t started down the crypto education path, we would love to help.

Certified Digital Asset Advisor course - 12 hours including:

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Axis News Updates

📉 Bitcoin’s volatility was back last weekend. Let’s look at why.

Did you catch the crypto rollercoaster last weekend? Bitcoin took us on a wild ride, plunging from around $44,000 to $40,000 in just a few minutes. This kind of volatility can be jarring, especially if you're new to the game. Let's break down what might have happened and why it's important for you to know.

🎢 The Weekend Effect in Crypto

First, crypto markets are a whole different beast on weekends. Volume generally dips as traders in the US and elsewhere take a break. Lower volume often equals bigger price swings, whether that's up or down. And here's a twist: crypto assets like Bitcoin and ETH trade 24/7 globally, without the usual safeguards like circuit breakers that you find in traditional markets.

💥 The Domino Effect of Leverage

Now, imagine traders around the world getting super excited, pushing Bitcoin up for eight straight weeks. There's chatter about a Bitcoin spot ETF, and people are leveraging like crazy – we're talking 10, 20, even 100 times their trade. All it takes is a slight dip, and those over-leveraged positions start to crumble. This triggers a cascade of liquidations, where traders are forced to sell, pushing prices even lower.

🌍 A Global Chain Reaction

Here's where it gets global. These liquidations aren't just happening in one place; they're triggering stop losses and sales across the world. Since Bitcoin and ETH are universal assets, a price drop in one region quickly ripples across the globe. Suddenly, you've got a massive sell-off happening everywhere, with no built-in system to pause or slow it down.

💸 A Silver Lining for Some

While this may sound like chaos, it also opens opportunities. Some sharp traders had set bids around $40,000, snagging Bitcoin at a discount when it dipped. That's the beauty and the challenge of a decentralized system – it's unpredictable, but it can also offer surprising opportunities.

🔮 Looking Ahead: Will an ETF Stabilize the Market?

There's a thought that once a Bitcoin spot ETF is approved, we might see less of this extreme volatility. More volume from market makers could mean more stability, less prone to wild swings caused by leveraged trades. But remember, weekends in crypto will always have their quirks, with volume typically lower until something big happens, triggering a flurry of activity.

How does this affect you?

You’re likely not trading crypto for your clients. You do need understand the volatility so you can set the expectations for your clients. They’ll see the wild price swings, and you can better explain that this is just “normal” behavior.

Keep in mind also the potential effect on the spot ETFs, which will trade market hours, not 24/7/365. Imagine the price of BTC drops 15% over a weekend…what does that do to the ETF open Monday morning?

 🌟 DTCC's Big Move and Coinbase's Project Diamond: A New Era for Finance

Two big pieces of news have just dropped, and they're set to change the game for financial advisors and investors alike. Let's dive into what's happening with the DTCC's acquisition and Coinbase's new venture, Project Diamond. This is the kind of stuff you'll want to keep an eye on!

💼 DTCC Acquires Securrency: Tokenization Takes Center Stage

First, the Depository Trust & Clearing Corporation (DTCC) – yeah, the bigwigs who handle all the stock transaction clearings – have just wrapped up acquiring a company called Securrency. These folks are pros at tokenizing assets, turning everything from private equity to real estate into cryptographic tokens. And this isn't just a small move; it's a clear signal that the DTCC is gearing up to clear transactions on-chain. Imagine tokenized funds or assets, maybe even public stocks, being traded and settled on a blockchain!

🚀 Why This Matters to You

If you're a financial advisor, this is huge. You're going to need to brush up on tokenized assets. We're talking about assets that are not just some digital representation of a company or fund but could potentially be custodied directly by your clients. This move promises more transparency, instant settlement, and all the blockchain goodies that make transactions smoother and more efficient.

🌐 Coinbase Launches Project Diamond

Next, let's talk about Coinbase's Project Diamond. They're always pushing the envelope, and now they've launched this project that lets asset managers and fund guys issue tokens directly on a Layer 2 blockchain called BASE, built on top of Ethereum. And here's the kicker: it's all regulatory compliant. Starting in Abu Dhabi, they're making sure everything's above board, and there's already been a transaction on this network.

🤔 What's in It for You

For you, as a financial professional, this is another piece of the puzzle falling into place. It's not just about understanding crypto anymore; it's about grasping how real-world assets can live and thrive on the blockchain. This move by Coinbase is paving the way for a financial system where traditional custodians and banks might not hold all the cards. You'll see more assets being self-custodied, more instant transactions, and a whole lot of transparency.

💥 The Bigger Picture

Both these developments – DTCC's foray into on-chain settlement and Coinbase's Project Diamond – are pointing towards a future where more financial activities happen on the blockchain. This could mean a higher demand for Ethereum, as more transactions take place on its network. It's a bold new world out there, with more companies, fund managers, and investment managers looking to launch directly on-chain.

How does this affect you?

It's time to buckle up and dive deep into the world of on-chain finance. The lines between traditional finance and blockchain are blurring, and staying ahead means understanding how these two worlds are merging. Get ready for a future where assets aren't just stocks and bonds in your portfolio but could be tokens living on a blockchain.

Deep Dive

🌐 Blockchain Revolution in Insurance: A Whole New World of Possibilities

With the exciting places we think crypto and blockchain will go, we rarely think of boring industries like insurance. However, I think the insurance industry is definitely in dire need of updating, and blockchain technology is in the perfect spot to take advantage.

🔄 Back to Basics: What is Insurance?

Insurance, in its essence, is a pooling of risk. We all chip in to create a safety net, so if something unfortunate happens to any of us, we're covered. This is the foundational principle of mutual insurance, and it has evolved into the insurance companies we know today.

🏦 The Role of Insurance Companies

These companies manage pools of money, collecting premiums and investing them in various assets to ensure they have enough to cover claims. However, this system is not without its flaws. The lack of transparency and participation in the growth of these funds by policyholders are just a couple of issues that need addressing.

 💥 The Potential for Disruption

That's where blockchain, crypto, and DeFi come in, promising a much-needed shake-up in the insurance industry. Here's how it can unfold:

🌍 Democratizing Insurance with Blockchain

With blockchain technology's transparency and efficiency, we can create smaller, more accessible pools of funds. This opens up insurance to people and areas that traditional companies might overlook due to economic constraints. Imagine farmers in remote areas getting insurance through these decentralized pools, where premiums are paid in stablecoins, and claims are automated using smart contracts.

💡 Taking Control with Decentralized Pools

Blockchain could allow us to take a more active role in our insurance needs. We could participate in pools for health, property, or casualty insurance, where we have visibility into the pool’s health and claims process. This could mean lower premiums and a more personalized insurance experience.

🚀 Investing in Insurance Pools

Here’s an exciting possibility: what if you could invest in these insurance pools? As these pools become more transparent and open, they could attract investors. Your investments could help reduce premiums for those insured, while you earn a return from the pool's growth.

Welcome to the future of insurance – more transparent, more inclusive, and more efficient, thanks to blockchain technology. 🌐🔐💡

I love the mix of adoption and investment news. For advisors, we need to be keeping up with both. Crypto and blockchain present investment opportunities, as well as potential to disrupt or change our industry.

We’ll be here to help you understand.

And remember, if you know someone who might want to read this, please pass it on.

Have a great weekend

-Adam and Ron