Volatility remains, but is the market starting to strengthen? After plunging to lows of $30,800 recently, Bitcoin staged a strong recovery on Monday above $40,000. Some of the news the market might be responding to includes El Salvador becoming the first nation to adopt Bitcoin as legal tender, miners’ continued exodus from China, and the crypto industry’s embrace of renewable energy — including Elon Musk’s promise that Tesla will accept Bitcoin again when more than half of mining is powered by renewables.  In the meantime, Bitcoin’s core protocol is planning to implement its first major upgrade since 2017, called Taproot. 

China’s Stance Mixed; Texas Going Pro-Crypto

  • Even as China cracks down on crypto trading and mining, the South China Morning Post reports that the nation “plans to accelerate blockchain development and adoption in push to become a world leader in the technology by 2025.”
  • “Nearly half of millennial millionaires have at least 25% of their wealth in cryptocurrencies” according to a CNBC survey: “The results highlight a new generational divide in wealth creation from crypto, with younger investors able to earn vast fortunes from the surge in the prices of bitcoin, ether and other digital currencies.”
  • In the latest pro-crypto move by Texas, which seeks to become a hub for the industry, the Texas Department of Banking has allowed banks there to hold crypto for clients. 
  • Interactive Brokers, one of the largest of the U.S.-based “e-brokers,” announced it will offer crypto trading by the end of the summer.
  • One other possible reason prices rose this week? A major global banking regulator announced it would introduce capital requirements for banks dealing in crypto. 
  • Another week, another round of Bitcoin ETF applications: “Invesco, a U.S. investment firm with $1.3 trillion in assets under management, has filed two applications for crypto-specific exchange-traded funds,” Decrypt reports. “The two applications join more than a dozen other hopefuls looking to launch cryptocurrency ETFs.

El Salvador makes Bitcoin legal tender

Last week, Salvadoran president Nayib Bukele pushed legislation through the country’s congress that allows citizens to pay taxes in Bitcoin and requires businesses to accept the cryptocurrency as payment for goods and services. Around 20 percent of El Salvador’s GDP comes in the form of remittances — money sent home by El Savadorans living abroad (primarily in the U.S.). “Bukele says that a large chunk of this gets lost in transfer fees, which Bitcoin can help to reduce,” Bloomberg reports. “El Salvador is a so-called dollarized economy, which means that the fiscal and monetary decisions of the U.S. government and Federal Reserve have a tremendous impact. Adopting Bitcoin could give the nation more independence.”

The Central American nation’s Bitcoin adoption may have sparked a global trend: in the past week, officials across Latin America (where high inflation rates and expensive cross-border payments have long been the norm) have been adding laser eyes to their profile pics. And officials in India, which had recently considered banning crypto, are reportedly seeking to make Bitcoin an official asset class.

  • The crypto movement in El Salvador first began in 2019 in a coastal town popular with surfers nicknamed “Bitcoin beach.” There, Bloomberg reports, “some 500 fishing and farming families use bitcoin to buy groceries and pay utilities, something the government envisions for the country at large.”
  • Officials from Latin American countries including Panama, Mexico, Colombia and Argentina have signalled their intention to support bills inspired by El Salvador’s. In Paraguay, congressman Carlos Rejala told Coindesk he hopes to soon pass a bill that would draw crypto businesses to the South American nation: “The project allows cryptocurrency companies … to finance their Paraguayan operations with cryptocurrencies, remit dividends abroad and capitalize their cryptocurrency profits in local banks.”
  • Reportedly inspired by El Salvador, officials in India may move to classify Bitcoin as a regulated asset class: “Top sources tracking the industry told this publication that the government has moved away from its earlier hostile stance towards virtual currencies,” reports the New India Express, “and is now considering classifying crypto as an asset class.” 
  • In Africa, Forbes reports that Tanzania’s new president  has called on the country’s central bank “to begin ‘working on’ facilitating widespread use of cryptocurrencies in the East African nation.”
  • How do El Salvadorans themselves feel about the bill? According to Coindesk they are divided: “some El Salvadoran residents are excited by the thought of bitcoin being treated as legal tender, while others are concerned it may just be a tool for corrupt officials.”

Insula Fund Highlights

This week we will be looking at the cryptocurrency Sandbox (SAND) in the new Insula Scheria investment fund. 

Launched in 2011 by Pixowl, The Sandbox is a blockchain-based virtual world allowing users to create, build, buy and sell digital assets in the form of a game. By combining the powers of decentralized autonomous organizations (DAO) and non-fungible tokens (NFTs), the Sandbox creates a decentralized platform for a thriving gaming community.

According to the official whitepaper, the Sandbox platform’s main mission is to introduce blockchain technology to mainstream gaming. The platform focuses on facilitating a creative “play-to-earn” model, which allows users to be both creators and gamers simultaneously. The Sandbox employs the powers of blockchain technology by introducing the SAND utility token, which facilitates transactions on the platform.

By focusing on user-generated content, the Sandbox creates a metaverse of involved players who contribute to the platform’s further development. Not only that, by introducing the SAND token, the Sandbox promotes decentralized governance and allows users to share their views and ideas about the development of the project. Thanks to the evolving technology, decentralized governance is becoming a must-have in blockchain-based projects.

We hope you have enjoyed our weekly email and that it has been effective in informing you about Insula and the crypto market as a whole. If you would like to invest Insula’s diversified crypto funds you can view more information at https://insulainvestments.com/fund or reach out directly at info@insulainvestments.com